The contracting business basics - Part 1

Jan. 1, 2009
Whether you are new in business or are an established subcontractor with solid gold clients, concentrating on the basic elements of your business is essential for survival in the near term and for healthy growth in the long term.

Just as in sports, basics are something that cannot be overemphasized. Working on the basics is time well spent whether in football, baseball, basketball, hockey or soccer, be it blocking, fielding, free throws, slap shots or passing. Practice, as they say, makes perfect. This is no less true for a subcontracting business, especially in these tough economic times. The foundation of a business begins with the basics too. Whether you are new in business or are an established subcontractor with solid gold clients, concentrating on the basic elements of your business is essential for survival in the near term and for healthy growth in the long term.

What are the basics?

We can define basics in several ways. There are the basic requisites of licensing, office management and organization, insurance, bookkeeping techniques, taxes, municipal and state requirements, and so forth. We'll call those “soft” basics because, while they are important to your business, they are peripheral to the actual work of making a profit, and making a profit is what it's all about after all. We are assuming that you already have clients, or at least client leads that you bid to, so we'll leave prospecting and finding new clients for another time.

Work load management, estimating, inventory control, manpower allotments and scheduling are the nitty gritty of what we will call “hard” basics. If done properly and well, these are the things that will help to make your business successful. To me, it is surprising that I know of so many guys who have been in business for awhile that have forgotten these basic things or don't give them the respect and consideration that are due. Don't get me started on how many newbies to the wonderful world of subcontracting don't have a clue about any basics beyond getting a job and working until they can get another one. So, for the sake of these articles, lets look at the “hard” basics and how practicing them can mean getting better projects, improving reputation for reliability, “getting it done” with your clients and a fatter bottom line.

Work load management

Remember when everyone had so much work that they were turning it away? Today that's not such a problem. In fact, it is quite the opposite. Controlling your work load is a delicate process and needs to be taken seriously if you want to avoid things like having to tell your best client, “Sorry, I can't man that job for you.” With critical path and scheduling software now in common use, most general contractors can provide fairly detailed and realistic time lines for phases of work within a project. Even small projects can be scheduled this way. Once you have a job on the books, take the time to read through the schedule, and plan your manpower needs accordingly.

You should make a spreadsheet or graph (you can even use Post-it Notes or your desk blotter calendar, it really doesn't matter how you do it) with the proposed start date, projecting how many men you will need for a particular phase of the project and when you will be better able to determine how much more work you can safely take on during the coming weeks or months. By looking at rough scheduling data on new jobs before you commit to them, you can avoid a potential train wreck down the road. It will pay dividends to have that information early on, allowing you to make minor adjustments well ahead of time.

We all know that there are unforeseen events (change orders are a biggie) that can and do alter or derail projects. I am not suggesting that anyone turn down work because of a potential conflict. What I am saying is that by making use of all available information, you will be aware of that potential conflict. Then you can make a more informed decision about the risks of taking on that new project. If it seriously overlaps an existing project or one that you know will be starting at the same time, you won't be blindsided.

In previous articles, we've discussed the lack of available, qualified manpower. Getting bound up, manpower-wise, and trying to “hire” your way out of it is not likely to be a viable solution to the problem. It's not a perfect system, to be sure, but it is information that you should have at your disposal for making critical decisions, even if that decision is to pass on bidding a job.

Work load management is probably the most often overlooked basic in the plumbing/HVAC subcontracting business. At the same time, it is the source of some of the most stressful and costly issues facing the subcontractor. In these times, it is wise to remember that and to make it a part of your regular job management procedures.

Next up: Estimating — a pain in the butt or a foundation of your empire?

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].

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