Should I start my own Construction Company?


This the KEY question!

Should I start my own Construction Company is a thought that haunts and in some cases liberates the individual involved in construction, if they are like me, EVERYDAY!

When I was young and influenced by the environment around me, I had all the ambition, energy and, I thought, the talent to create my own Construction Company. Why not, I was making, what I thought at the time tremendous money for “ others “ , and I was making a mere salary and benefits for me. No one was interfering with my management of projects and I felt invincible handling all my own issues.

Heh, if I can perform so well for others why not me?

As I look back, I clearly realize that although I was performing at a high level of success, there were a number of circumstances that were being taken care of without my involvement, concern or even knowledge.

Since that time, I have been experienced the creation of two separate construction businesses, I feel I can reflect on my experiences, knowledge, lack of knowledge, etc. to assist you in the answer to:

SHOULD I START MY OWN CONSTRUCTION COMPANY?

As I young, aggressive Civil Engineer, I became interested in construction as a framing carpenter for my Dad, then the Alaskan pipeline where I designed the VSMs ( Vertical Support Members ) used to support the pipeline. Returning to the lower 48, I experienced a number of different positions with general contractors, subcontractors and engineers. Based upon this experience as well as my aggressive and ambitious personality, I refused to rest until I started my own construction company.

What I didn’t know at the time, or simply took for granted;

  • Payroll / I was aware of the payroll responsibilities on Thursdays when employees were paid on Friday. In my day, the checks were paper, and computers were not quite as efficient as they are at the present time. However the money still needed to be available on Thursdays for payroll support on Fridays. When this did not occur automatically and without thought, the pressures of Thursdays became very real.
  • Insurance / Again, I could preach the gospel when it came to insurance when it was not my responsibility. I knew that the Certificates of Insurance needed to match the project requirements whether it was the normal limits of insurance, or increased levels needed to match the individual contract needs. What I failed to understand, was that every insurance requirement cost money, and did not automatically fall into place for others to criticize.
  • Benefits / I was a pro at critiquing the benefit packages given to me as an employee. The acuteness of the responsibility and the amounts of money required became extremely exposed and up front, when it was all my responsibility.
  • Estimates / My opinion was, that I could estimate anything, and was better than the individuals specifically hired to perform this task. Of course, looking back, I now realize that my estimating was performed on change orders for an already contracted project. This is much different that the pressure of estimating, to obtain the project.
  • Management / I felt that I was the best construction manager possible. I understood engineering being a graduate Civil Engineer; I understood cost control, change order management, RFI management, submittals, etc. I was great at what I did. I did not realize how difficult it is to convey this ability or even understanding to others!
  • Communication / I was the best. My daily reports were full of all the issues of the day. I made sure that all my timesheets were properly identified, my certified payrolls were in on time, and my OSHA compliance was diligent. Again, to convey this to others is an entirely different scenario.
  • Owner, Architect, Engineer interaction / once again, I had it going. My abilities to communicate and understand project issues and problems, discuss and resolve coordination mistakes, etc. was excellent. To convey these skills to others became a difficult task.

So, yes, I did start my own business, and basically performed all of the following, myself;

  • Marketing
  • Contract Negotiations
  • Estimating
  • Scope Review and contract finalization
  • Submittal process and approval
  • Procurement scheduling in conjunction with the construction scheduling.
  • Buyout and purchasing, both purchase orders and subcontractors
  • Insurance coordination and management
  • Project coordination, field construction
  • Project supervision, analysis and subcontractor coordination
  • Material procurement
  • Equipment procurement
  • Labor management, Certified Payrolls, Minority reporting.
  • Project completion
  • Project punchlist management
  • Project guarantees and warranties
  • Project monthly or weekly billing
  • Subcontractor payments
  • Material and equipment payments
  • Retainage management
  • Project yearly warranty period management
  • HR requirements for my employees as well as my family

Needless to say, when I got into it, I was inundated with not only work, but total responsibility. The repercussions of failing at one endeavor caused the rest of the dominos to fall. If you were unsuccessful with an estimate and did not obtain a project, the time was wasted. Other obligations did not stop, the insurance, the payroll, payments to material suppliers, etc. continued on. The pressure mounted, and as the pressure mounted, the obstacles in the way of success appeared larger and more intimidating.

OK, did I scare you enough to make you decide, forget it, I will simply work for someone else, criticize them, ask for more money and complain about my benefits, and all the money they are stealing from me!

If I haven’t yet convinced you, let me try to create a legitimate process for attempting to start your own construction business, by offering a few suggestions;

  • Obtain financial support / as my accounting son says, any new company needs sustainability, which is money through the tough times! Much easier said than done!

In today’s marketplace, it is important to have financial support that can withstand the delays in payments, as well as dry spells throughout your startup months or years.

 

  • It is nice to have a niche. For example, when I started, I had a niche in interior fit-ups. I had performed a number of larger fit-ups in the area and I was somewhat noted for this ability. When starting up, it is nice to have a special product, service, or skill.
  • Labor loyalty / it is always a good situation if you start off a new business with a loyal labor situation. For example if your company specializes in carpentry, and you start with a key carpenter or two, that makes it much easier to start off. In addition, if this labor is aware of the financial limits of a startup, they may be offered some special appreciation if they are patient with their full salary, or agree to a reduced salary to start the company off.

 

  • Material and supplier contacts and established accounts. If this is at all possible, again in today’s marketplace, to start off with accounts and stabilized credit with vendors is a wonderful position. Obviously this is not a standard situation with a startup business; however, it is a big boast if this situation exists.

 

  • Work time / Be prepared to work at least 10 hours a day, 6 days a week. I am sure there are several successful business owners that actually laugh at this, and state they nearly double that effort.

 

What do you have at the present time, if you are a successful employee with the ability to complain and criticize the boss?

  • Security / no matter how insecure you may feel, it is many times more secure than you would expect.
  • Weekly or bi-weekly guaranteed payroll check which is probably deposited directly into your account without you even thinking about it.
  • The opportunity to complain and bitch every time there is any glitch to the payroll schedule and your magical input of funds is delayed.
  • Paid vacation, where you actually are paid for your time at Disney, at the beach, skiing or just simply doing nothing.
  • Paid Holidays, days that are totally yours where you actually get a paycheck.
  • Health, Dental, Vision insurance where you are covered for very expensive health insurance at no cost to yourself.
  • Maybe a Pension, maybe a 401 K, maybe other compensation that is in your best interests.
  • Probably a car allowance, as well as a company credit card.

I admit, there are several individuals, that are considering their own businesses, that do not collect all of the ( 8 ) benefits listed. Some may actually collect more, and certainly others collect less. However they are without your personal worry and concern. These benefits are provided for you, by your employer, as payment for your services.

I personally have been blessed in my construction career to have experienced both worlds, the employee and the employer. I wish everyone could have the same experiences and the ability to compare both situations. What is the better quality of life? That is a totally personal question that can only be made by the individual.

As a summary of the important guidelines I would offer to try and answer this question;

SHOULD I START MY OWN CONSTRUCTION COMPANY?

  • How important is the independent business owner’s life to you?
  • Will you have the support of your family?
  • Are you willing to make sacrifices on your own accord as well as towards your family?
  • How do you handle the responsibility for other’s livelihoods?
  • Do you have the experience to make an independent business work?
  • Do you have the training and or schooling to make an independent business work?
  • Where is the startup money or the circumstances to finance going to come from?
  • Do you have an adequate launching pad such as, promised work, pre-developed clients, friends and or family to provide the first opportunities for your business?
  • Is there ample manpower that will support you, in your work?
  • Do you have any accounts previously set up, or have you anticipated the necessity for accounts?
  • Do you have the personal emotional ability to handle the pressure and the responsibility?
  • Do you understand the amount of real work this will entail?
  • Are you ready to sacrifice for this commitment.
  • Can you survive with no one to blame, other than yourself?

I am sure there are several other comments, questions, concerns, statements and observations that individuals who have both successfully started a construction business, and those that failed, have to add to this list. This is one of the most difficult questions in our industry and if you are an aggressive self-achiever, you will struggle with the answer all your lives.

I still struggle with it! Good Luck!!

 

 

 

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