Never fear the competition. Never speak badly about the competition publicly. Just beat the competition with a better business plan, better financial management, better services and products, competitive pricing, and a reputation for doing good job.
As mentioned earlier, industry associations can benefit you as an entrepreneur. One excellent way to benefit from your competition is to join your local or regional industry association. Many of these groups schedule monthly meetings where members meet for dinner and listen to a speaker. It’s not only an excellent time to learn about new initiatives in the industry but also a very good time to network with other owners and learn about their problems and successes. Supplier members usually attend these functions and can provide insight into new products or methods of installation. Associations also offer educational seminars during the year for both the business owner and key employees.
Employers who stand still, never changing their methods of operation, will eventually get run over by their competition. Skilled entrepreneurs are constantly on the alert for ways to improve all facets of their business. They use competition to improve their skills and help develop products and services that consumers value highly.
In this era of specialization, the use of subcontractors has become very common. While there are many benefits to hiring a specialist to complete a portion of a property development project, caution is necessary. If the subcontractor is unqualified, the problems obviously offset the benefits. When hiring several subcontractors, the general contractor must have the ability to coordinate the work of these various individuals. In most projects, establishing a proper sequence of work is critical to success. The general contractor who hires the subcontractors must understand the responsibilities of each sub and how each fits into the overall construction sequence. For example, it is no use to schedule the asphalt contractor to install the driveway if the excavating contractor has not completed the rough grading.
Of foremost importance is hiring a subcontractor who is extremely reliable and able to meet the schedule established for the project. Because timing is usually crucial to a successful project, subcontractors must be able to complete their work in a timely manner. And because the best subcontractors are usually in great demand, a general contractor cannot risk losing the services of one sub because of the inefficiency of another. In addition, subcontractors must be able to meet the quality standards of the project set by the client, architect, and general contractor. While high-quality work is always expected of subcontractors, high-end projects with large budgets demand more skill and detail than low-budget projects. Subcontractors must understand what is expected of them and set their schedules accordingly.
An often-overlooked detail in hiring a subcontractor is insurance. When hiring a sub, the general contractor should be sure that the sub has proper insurance. While general liability insurance is very important, especially to protect against a lawsuit, carrying workers’ compensation insurance is critical. Insurance companies usually audit their clients each year; during the audit, they verify that all subcontractors carry workers’ compensation insurance. If they do not, then the general contractor will be charged an amount as if the subcontractors were employees of the company. It is not unusual for a general contractor to add 5 to 15 percent of the subcontractor’s fee to the client’s cost of the project, so an unexpected charge for workers’ compensation insurance would nearly erase the profit generated by the subcontractor’s work.
Well, here we are at the final chapter, nearly ready to say goodbye. But instead of reaching an end, we hope this book will lead to a new beginning for you. While starting and running your own contracting business presents innumerable challenges and obstacles, the potential rewards, both personal and financial, far outweigh them. This chapter puts it all together, highlighting key points presented in the previous chapters.
Often the daily life of a contractor is chaotic and messy. Schedules are disrupted by weather and absent employees. Projects are delayed because supplies are not available as promised. Clients call with change orders and seemingly inane concerns. Vendors call asking when payment will be made for merchandise. An employee thinks that his paycheck is incorrect. The computer crashes. A truck has a flat tire. Two work crews need the same piece of equipment. And your children are home from school because they have the flu, and your spouse has to tend to an ailing parent.
While many people would cower in fear or become completely unglued with crises, ending up reclining on a psychiatrist’s couch, successful contractors and entrepreneurs thrive on activity, variety, and challenge. They are able to step back from daily chaos and view the big picture, understand where it is all leading, and forge ahead with the business of their business.
While successful contractors do not panic during challenging times, there are reasons why small-business owners