Contractor Cuts
Join the ProStruct360 team on the Contractor Cuts podcast as we delve into the ins and outs of building and sustaining a thriving contracting business. Gain valuable insights and actionable tips from our experts who have successfully grown their own contracting company from the ground up.
Our show is dedicated to helping contractors like you unlock the secrets to increased profitability, efficient organization, and seamless processes within your company. Whether you're a seasoned professional or just starting out, our episodes cover key topics essential for your business growth and long-term success.
Make the most of your time between job sites by tuning in to our podcast and learn firsthand how to navigate the challenges of the contracting industry. Get ready to transform your business with valuable information that can potentially change the trajectory of your success.
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Contractor Cuts
How to Start a Contracting Company: Growing to $500k Annual Revenue
Unlock the secrets to growing your contracting business as we explore essential steps for reaching your first $500K in revenue. We discuss the transition from handyman to contractor and how to build a solid foundation for long-term success.
• Transitioning from handyman services to a full contracting business
• Importance of understanding government regulations and licensing
• Developing a solid digital footprint for visibility
• Utilizing software for efficient operations management
• Overcoming impostor syndrome and building confidence
• Networking and building a reliable sub-contractor base
• Strategic customer acquisition through personal connections
If you want to hear about our foundational program to help you get started, go to ProStruct360.com.
Struggling to grow your contracting business? The Foundations Program is designed to help contractors break free from the chaos and build a business that runs smoothly. You’ll get a customized training program, 1-on-1 coaching, and access to a full paperwork database—including contracts and the Client Engagement Agreement. Join the Foundations Program today! 🚀
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Welcome to Contractor Cuts, where we cover the good, the bad and the ugly of growing a successful contracting company.
Speaker 1:Welcome back to Contractor Cuts. My name is Clark Turner and I'm Emery Pipkin. Thanks for joining us again this week. So sorry. We have been out for three or four weeks since the retreat we took a retreat, I think we did or four weeks since the retreat we took a retreat, I think we did one podcast since our winter retreat. We've taken a little bit of a break through the winter, but we are jumping back in for the 2025 season.
Speaker 1:This week. Emery is joining me. James will be back next week just shuffling people around but making sure that we get the right people in for the right topic. So today, emery and I are diving into how to start your contracting company. Now, this isn't just starting really. It's more of we're looking at companies from zero dollars to their first $500,000 of annual revenue, right. And so today, emery and I are covering how do we grow a company to 500K in revenue and then that's kind of a cutoff point to where beyond that, it's a different mode of operation, right. So today we're talking about that. We're going to be covering kind of the business side of it how to set your company up as well as kind of the what's the minimums we need to do and how do we kind of straddle the fence between swinging the hammer, being on site doing the work and getting out of the truck and actually managing projects and crews. So thanks for joining us today, emery.
Speaker 1:Yep, so let's get started. When a company is coming into the coaching program and they are in this initial phase, this zero to $500,000 of revenue phase to $500,000 of revenue phase, where we always get started is our growth path checklist and we do it with every company. But, most importantly, the first phase, the base launch of our growth path checklist, is going through a lot of these basics. So if you are new here or if you want to set up a call with me, we'll do that part of it for free for you, kind of the where are you at today, what do you need to do to get started? That sort of thing. But running into it, emery, what's kind of the basic government requirements, kind of the basic if I'm starting my company, I'm just getting started that we need to make sure we have checkboxes taken care of.
Speaker 2:Yeah, well, honestly, that that's a lot of the stuff that I'm wondering. So I mean, I don't have any experience running a contracting company. You know I'm the director of operations here at ProStruct Marketing's my background, but you know I did have a handyman company in college, yep. So I've got some fundamental understanding of kind of how that world works. And you know, if I was a guy, if I decided to, you know, leave college and pursue that sort of how would I set my company up to be able to grow into a contracting company?
Speaker 1:rather than just swinging a hammer. That's right.
Speaker 2:And so I think that's kind of the premise for this episode. Sure, and so you know, getting started with that, you're a handyman, people are getting you to do random jobs. You know you're making a hundred dollars there, thousand dollars there, whatever your projects are. Um, but eventually everybody wants to grow into something bigger than that. Start their own company, get crews, get employees and grow to whatever the size they want to be. Um, so I'm going to take the the stance of you know I'm, I'm a person looking to grow, start a contracting company and, that being said, you know what are sort of the first things I'm looking for? Government-wise, it's great.
Speaker 1:Regulations-wise, I think that'd be a great way to help understand some of this, too is if we're coaching your company up like you were going to start going from being a handyman on the side to actually running a full-scale general contracting company. I think that's a great way to frame it so it's easier to understand. That being said, I think what you just said is where a lot of guys start. Right, I was doing my job and on the side I've always been handy. I worked with my dad as a kid, whatever the story is, and I wanted to make some extra cash on the side. Maybe you got a nine to five, and nights and weekends you're painting houses or doing something on your neighbor's house, you know, and and you get to a spot where it's like, hey, I can make some money doing this right on a side job in college. Right, you were doing handyman work and if you didn't have such a big brain, you might've gone into that right. Like if you wouldn't have gone and gotten your master's and gone that route. A lot of people who are doing handyman stuff to make some cash in college end up well, I'm going to start doing more. I'm going to say yes to more. I'm going to start my own company, right, so let's, if we're taking that premise of you, your handyman company, from your college dorm room into. I graduated. Now I'm going to start my own thing.
Speaker 1:First thing we're doing is government minimum. What do we got to do to set up? Now, every state's going to be different. Right, you've got to file for your LLC, set up the company structure. It's very easy. You don't have to pay hundreds and thousands of dollars to do that. You can go online and set up your own LLC. Chat GPT and it'll guide you through how to do it in your state. Yeah, getting that set up. Then we're looking into licensing requirements Again, research stuff like this. Right, we're looking into your state. What are the minimum requirements? How do we get that? Do you got to go to school for it? Do you got to take classes and courses and pass tests for your licensing? What can you do without a license?
Speaker 1:Right, and starting to make a game plan of how am I going to actually make money doing this and what can I do and what do I need to do to do more Beyond that? Business licensing, contractor licensing you've got your local and state, county, city business licensing that most people have to do as well. And then we go into the other minimal stuff. You've got to have some sort of insurance. You need general liability in case you burn a house down, yeah, so what are we doing with that? How are we getting that in place? I like to say let's get that all set up and we get it rolling the first day that I'm on my first job site. That way, it's going to kind of self-fund itself, yeah, but kind of getting all of your basic paperwork stuff. There's a. There's a list of check the checkboxes that we've got that will walk you through if you need that. Yeah, so go beyond that.
Speaker 1:My first question to you if you were, if you were going from side gig to main gig, what does your digital footprint look like? Right, yeah, I'm asking. Like, if someone says, hey, I think Emory has a company, how do I find him? Yeah, and they go. They go look for you. Where are they finding you Right. I'm asking, like, if someone says, hey, I think Emery has a company, how do I find him? Yeah, and they go. They go look for you. Where are they finding you Right? And so that's that's kind of your world and expertise. Where, would you say, is the most important digital footprint that we got to have? If I'm just starting my company I'm, you know it's even if I don't have my first job yet what's the stuff I can do to start building that footprint, to make myself look like a legitimate company?
Speaker 2:Yeah, I mean, I think it starts with the basics. You know we've got a podcast we released I don't know about a year ago, where we recovered a lot of the marketing fundamentals. But if it was me starting out when I was in college and I had the handyman company, I did have a social media. I didn't have a Google my Business, which is probably the most important thing in terms of contracting companies, but I had a brand. I had social media, didn't have a website, mostly relied on contacts that I knew word of mouth. You know how most guys start.
Speaker 2:But if you're, if you're really looking to get into serious digital footprint, which everyone needs to have, because at the end of the day it's it's like a rolling snowball as soon as you start it and kick it down the hill, it's going to keep gaining traction and the earlier you do it, the better off you're going to be. Um. So you know, from my perspective, if I was coaching somebody to you know how to build their digital footprint, first thing they got to do is build the brand. Yeah, right, and a lot of handyman people, especially if, if you, if you think of yourself as a company, I mean I feel like there's two types of handyman. Right, there's a guy that you just have his phone number and he comes and does your work, works straight off word of mouth. And then there's, there's somebody, uh who, who's considered a handyman, but they're, they're building a business, they're trying to build a business and the people that are trying to build a business can still have a brand.
Speaker 2:They can still have social media, so it really just depends on where you're at, where you're starting from. You know, at the end of the day, your brand is probably the most important part of the foundation of this, because it kind of lays the framework for everything that you're going to do digitally right, you got to have a logo.
Speaker 2:You got to have colors. You got to have, you know, a couple of fonts that you that you use for the majority of your website. You know marketing whatever you're going to use. Building that stuff up seems like a secondary thing for a lot of people because they're just focused on jobs. But to get those jobs you got to look professional and you got to be professional.
Speaker 1:Well, and that's that's what I was going to say is I've seen a lot of guys that are the handyman that don't need a website when I'm fixing your deck because you have some rotted wood right Like, you don't need a website for that. But the only way you grow beyond one job at a time, a small job, you know the thousand dollar jobs at a time where I'm doing two to three jobs a week, for one day maybe you know, getting a couple of rooms that I'm painting, that those small things I don't need a website for. But when you're making the jump into contracting, where maybe you are still swinging the hammer, but I'm bringing a plumber and an electrician and I'm hiring out for flooring and countertops and cabinets and so I want to take on a full kitchen or I want to take on a full bathroom, as soon as you get the door open for one of those things, if you don't have the framework already in place of some sort of digital footprint, you're you're really limiting the customers that are willing to take a risk on you. Yeah Right, because it's like if, if I'm hiring Emory to come replace three rotted boards on my on my front deck, if he didn't know what he's doing. I'm going to be out a couple hundred bucks and I'll just have someone else do it or do it myself.
Speaker 1:Yeah, if I'm hiring Emory to come replace my kitchen, 30, 50, $80,000 spend on this guy. I'm going to check them out. I'm going to see other work he's done. I want to. If he doesn't even have a website, how legitimate can he be? Yeah, Right. So I think it's like get a basic website and you're talking about like branding and logos and stuff like that. Ai is so great right now.
Speaker 2:Yeah, it's not. You don't have to hire a design company to build your logo I mean there's so many resources out there. You just look up logo generator or you go into Canva or Adobe and you can find templates. I mean, like if you don't have any experience with building brands, it's not hard to do.
Speaker 1:It's not.
Speaker 2:They've made it super easy now with all the technology.
Speaker 1:Well, and we, you know there's made it super easy now with all the technology. Well, and we, you know there's there's kind of two different levels of website. That that we talked through also there's. You can get ai, you know, like when you sign on with go daddy. They've got their own website builder. Now you plug some information and it's going to be a very basic one pager. Or you can go to wix and build your own and it's kind of very user-friendly in terms of build a one-page website. That's great. Start there.
Speaker 1:You don't need to spend thousands of dollars on a website day one. But we kind of have a path of once you're doing $300,000, $400,000, $500,000 a year and you're trying to grow beyond that, let's pay some money on a decent website. Our marketing arm does websites for our guys and kind of builds the marketing digital footprint how to do all that stuff with them. You don't have to pay us to do that yet. Do it for free. Let's do some of the basics yourself. Once you get there, we replace it with a really awesome website that you might spend, you know, $4,800 on. I think is what our, our, our nice website is. There's a higher end one from there, depending on what you're looking to get done. But you can get that stuff done for free easily Some chat, gpt, some using some plugins and other AI logo builders Really simple, and if you need a little bit of guidance on it, let us know.
Speaker 1:We can help you get that stuff going. Yeah, so once you've got that, I've got a website. I've got my Google my Business, and Google my Business we always talk about it's simply if someone Googles your name and they're in the city that you're in or put your city by it, you're going to pull up on the Google maps and it's going to pull up on the side, and so it's not just your website but it's also all your contact information, a picture of your work, your website, all of that stuff. It's free. Yeah Right, why not get signed up for that?
Speaker 2:It's also the first contact most people see. Absolutely, if you're searching construction in my area or if you have a specific job that you're trying to get done and you search that, companies are going to pop up. That's right. It's always the Google my Business page that pops up first.
Speaker 1:And so Google my Business, a simple website, those two things alone. Even if you don't do social yet, even if you don't have a Facebook page or Instagram of the two, set up a Facebook page. It's super easy and that's another way for people to find you. But even doing those three things, you can do in an evening in front of your TV, with your laptop and a beer. Yeah, like it's not difficult.
Speaker 2:Yeah it's just about the amount of time you're willing to put into it.
Speaker 1:Yeah, yeah.
Speaker 2:Like it's not difficult. Yeah, it's just about the amount of time you're willing to put into it. Yeah, you know, like I said, a lot of people see it as frivolous and, you know, accessory to what needs to be done to grow a company. But at the end of the day, you know, I think I read a statistic that was like 80% of people find contractors from SEO, from search engines. Yep, you know, people nowadays are looking online for these projects, for people to do these jobs.
Speaker 1:So why not spend some free time to get free leads? Yeah Right, that's step one. Also, it's the legitimacy for the customer that might be the next size, bigger up project that you want to take on yeah Right, and so get yourself legitimate. And a lot of guys like well, I'll do that when I get there. You're not going to get there unless you have this stuff. Yeah Right, and so get it set up now. So when you get there, you're ready. Yeah.
Speaker 2:So when you do get that estimate, it's not like oh, this person wants to putting together a google drive or folder to send over to them, right, if you have it all available online?
Speaker 2:yes, you know they can find it themselves. Yeah, and they may not even ask the question because it's all online. You think you just see it? That's right. Um, same thing with facebook. And you know another thing about facebook too, if you're, if you're getting started, facebook has a great word of mouth opportunity that a lot of people don't take advantage of. Yeah, and that's Facebook groups. Yep, right, your local Facebook groups. You know neighborhood groups, anything that you can find, that's local, where people are, you know, talking about things in their neighborhood, or anything like that. People are always asking for contractor recommendations. Hey, I have X, y, z that needs to get done. Do you have anybody that you know you guys recommend? Yep, being in those groups provides you an opportunity to push yourself and to build that word of mouth.
Speaker 1:My wife was in is in a mom's, local mom's group for the city that we live in. Just kind of advice, you know I'm selling this, that sort of thing in this group. Advice, you know I'm selling this, that sort of thing in this group. And back when I was running, you know, when I was the general manager and in charge, I would, I would log in as her and I would go answer questions and refer people to us. Now they were pretty stringent on advertising. Like hey, if anyone needs this, they delete those posts and send a warning. But when people would say, hey, does anyone know a painter? Yeah, I'd, I'd go in there and just put a comment yeah, my husband does. Uh, his company does it. Here's a link to their Facebook page. Yeah, we would get so much business out of it, right, it's? It's you trust the people around you and the references. And if there's a if, if it's not just a straight ad but someone like, oh, her husband's doing this, it's a really good way to reach people for free. It's that guerrilla marketing for free. So, yeah, so okay.
Speaker 1:Getting back to you starting your company we've got the paperwork done. You've got all the regulations are completed. All of that stuff needed. You got your insurance in place. You're doing some side jobs. You built a website last night. You set up your Google my Business last night, got it all set and ready to go.
Speaker 1:Next thing I want you doing is to start figuring out your systems. Now we talk about systems and processes and we often lump them together. For me, I separate them out, as systems are things like your software. Prostruck 360 is a systematic way to bid jobs, send invoices, send work orders, keep your filing cabinet of information, all your photos from your phone dumping into there Like that's the system. Right, yeah, the process is how I do it, how I execute. We will get to building processes in your company. That's coming.
Speaker 1:But day one, get a software, get on our free version, get on the $89 a month version. Get into a software that allows you to build an estimate look professional. Send it to a customer, track it, follow up on it, send an invoice when they're ready to get going to get that deposit. Send the build out who's doing what work, what materials you're going to spend. Very simple way to do it and most guys are like well, I'll do it when I get there. Right now I'm using Yellowpad For $89 a month, you could be on our Lite version, doing all that for you and having like preset job templates, preset job line items.
Speaker 1:Have a way that you can consistently send estimates that look very professional very quickly from your phone, from your iPad, from your laptop, to where I can bust out an estimate in 20 minutes, as opposed to having to start fresh in QuickBooks every single time I start. Have some sort of a way that I can organize my jobs and send them out Again for for for per month. You are saving hours and hours and hours and making yourself above and beyond the next guy who's handwriting estimates or building estimates in excel, right? So let's have some sort of way that we're going to deliver estimates and send invoices and manage our money and be able to understand where things are, are happening on job sites and the other system is like bank accounts. How, how do I have I set up a bank account for your company?
Speaker 1:How are you going to receive payments? You know what is the, the when we're going into the processes, how are you going to explain to your customer how they're going to pay? Right? They need to know. There's a lot of questions. They have day one. They say so what's the payments? How do I do this? I'll pay you when you're done. What money do you need up front? All of those questions that you normally get. Let's write those down and answer those before we get started.
Speaker 1:So let's start building out those processes that you already know are going to have to happen, which is how my operations when I show up, when I leave, how money works, how materials work, all of those sort of things. And again, if you join ProStruck360, if you come into any one of our levels with us, you're going to get all of the stuff handed to you pre-done. But if you don't and you're trying to do it, you know, startup on your own, write this stuff out, just start taking notes on what people are asking you and building that out, right. So that's kind of the basic, some sort of a systemized way to organize what you're doing, to where it's not eight months later and you're like, okay, now I want to get serious, now I want to organize. Well, you got eight months of information where you don't have any financial information or data. You don't know what customers or what, you don't know what estimates are sitting out there. It's just a really good way for for next to nothing to get going.
Speaker 2:Yeah, and I think from my perspective it can definitely seem overwhelming, because, you know, when I was doing handyman stuff, somebody would text me saying, hey, I need someone to mount my TV, Okay cool, I bring my toolbox and I do it. Yeah, there's really no pre-planning, there's no estimate written out. Somebody says, hey, I need you to come hang these curtains. Or hey, I need you to come paint this room. Or you know, hey, I need you to come build this. You know structure for some party or whatever. You know, like stuff like that.
Speaker 2:There wasn't a lot of pre-planning involved. It wasn't a lot. The only organization was like, okay, you know where are my classes? Okay, Then, then I'll come at this time. You know there's not a ton of baseline organization that's required. Yeah, it's just. Hey, I can come at Friday at noon, Okay cool, Then you go do it, Right. And so I think when you're trying to transition into a more systemized, organized system, it can be overwhelming, because you're not used to having to have that much responsibility on your plate. You're used to just getting in your truck, taking your toolbox and getting the job done, leaving. And even with the payment system bank accounts, I took Venmo, I took cash.
Speaker 1:Pay me personally, I'll pay my personal.
Speaker 2:I never did any jobs that were big enough for somebody to send me an invoice and get paid on that. You know it just and then. So I guess when you're you're trying to move up into the GC world, there's a lot of question marks in terms of how do I create that organization that I never had to have previously.
Speaker 1:Well, and the hardest part of this and this is what it takes someone self-aware to do is to be like I don't need that organization if I'm just hanging on the TV, you don't. You don't If that's. All you're doing is that side hustle, you don't need software, you don't need all this. Like great, make a couple bucks, get Venmo, you're good to go. But the problem is everyone says I'll do it when I get there. You're not going to get there unless you do it. You got to do it. It's the chicken or the egg, right? What comes first? And when building and growing into the next level of a company, you've got to do the things that you don't need today to cover how you're going to grow into tomorrow, yeah Right. Like you can't run a $30,000 bathroom renovation the way that you run installing a TV, yeah Right. And so most guys reactively do the minimum when they get there, and by then it's too late and they're dropping the ball.
Speaker 2:And you also can't go from you know doing $100, $200 jobs to then go to a $5,000 kitchen remodel or, you know update or whatever they're trying to do, and expect that how you've been doing it in the past is going to work for them Exactly. Yeah, you know it. Just it like in my mind it just seems like if somebody had asked me back then to do a job like that, I would have been like I don't even know where to start with that. Yeah, you know I could probably watch some YouTube videos and figure out majority of the stuff, but at the end of the day, like it's probably not gonna be the most professional product because I don't have the systems and organization behind me to facilitate that. Yep, that's right.
Speaker 1:So what I would say if you're getting launching you know you graduated last week and now you're launching your company I would say, okay, let's look at your initial spends. You gotta have the insurance in place. You can put that in place and pay for it day one of a job when you get some cash and those usually are financed over 10 months and then you have two months for the audit and you start again next year. Next, I need you to pay for two pieces of software. I need you to get in ProStrux 360, either the 89 or the 199. The 199 level, or complete level, integrates with your QuickBooks and emails, so it's a full, complete software. I'd strongly suggest that. And then I'd also have the QuickBooks level Essentials level which is like 65 bucks a month. Something like that is plenty. We don't need the $100 or above ones. You can if you want more data, but you can always upgrade to those. So get on the basic Essentials QuickBooks, get your insurance, get ProStruck 360, and then you're also going to pay for a Google Workspace. So Google Workspace is going to be $20 a month, where it's going to be emeryatyourdomaincom. I don't want to see emerythehandymanatgmailcom, I want to see emeryatemeryconstructioncom, whatever the name of the company is. That's going to cost you $20 a month and it's going to have Google storage, or you can do it the Microsoft way. Either way, I want some sort of professionalism with that. We're not spending thousands and thousands of dollars a month. Let's just get the basics set up to where you can really grow from there.
Speaker 1:All right, so next you're doing these handyman jobs. How do we go from handyman to GC? This is the most difficult transition. We've talked about this plenty of times that it is hard to get out of the truck and into more management. How do? And one thing that I always start with talking about this with guys how to get them over to 500,000 plus is understanding what product are you selling? Right, most guys are selling handyman services. Right, you are selling an installation of a TV. I need a TV. I pay this guy. The TV goes up on the wall.
Speaker 1:Yeah, what we are transitioning to selling is a customer experience, and part of that experience is that I'm going to help you get this TV installed through my crews and my guys. Sometimes I do it myself, but that is understanding that my product is your experience, and if I can sell you a really good experience. You're going to tell people, you're going to use me again, and that's how we're going to organically grow this company without spending tens of thousands of dollars on ads a month. So first thing we're going to be doing is transitioning and understanding. How are we going to get bigger jobs and how are we going to have the decision of what I'm doing, what I'm going to be working on and then what I'm going to be subbing out to other labor Maybe it's my brother, cousin, friend, buddy of mine, another kid that goes to college with you? How are we going to manage them and what does that look like? Basics, though, with this is understanding your finances, right.
Speaker 1:Labor versus profit, right? I was talking about selling those two different products. When I'm getting paid for labor, that's selling the installation of that television. When I've got profit above and beyond, that's the money that I'm making for the management and the customer experience, all right. So let's take that a little bit further.
Speaker 1:When I'm doing a install of a TV, you're charging $200 to come and install a large flat screen.
Speaker 1:That's how much it costs you for your time, for your gas, for getting out there and doing it. I don't want you to price it at $200. I want you to price it at $375. You're going to make $175 for profit and then you're going to pay yourself $200 for the labor. So the labor that you're doing yourself is $200 going into your pocket and the $175 is profit that we're going to keep in the company. And that's how we start growing the company from where you're at today to general contracting, because that profit that 175, is what we grow bigger and bigger and that's what we start paying ourselves to manage this stuff from right. Yeah, so that's where I'm going to get paid to deliver that product or customer service, not the $200 for the install. That's the actual labor. And eventually we're going to be paying a buddy of yours 200 bucks to put that TV in and you're going to be managing it making 175. You make less than him, but you could do 20 TVs in a week because you've got 10 guys that are each doing two TVs.
Speaker 2:Yeah, I mean, I think one thing when I was in that situation was I didn't really know how to price. I priced based off who the client was.
Speaker 1:So if it was a friend.
Speaker 2:It was like all right, I got you, bro, 20 bucks, they'll do it for you. There was no. How much would my gas cost to get there? There was no. Do I need to buy another drill bit? I didn't factor any of that in there. It was do I know this person? Am I good friends with them? All right, I'll charge them this. Are they somebody I've never met before, but it's somebody that would be willing to pay more. Okay, then I'll ask for more. There was no consistency in pricing and I think a lot of times.
Speaker 2:people in the position that I was in too they feel like their skills aren't as valuable as they actually are. Yep, they tend to undersell their, their value of their work.
Speaker 1:And they're valuing their work at hours.
Speaker 2:Yeah, cause you think in your mind it's like oh, I'm hanging a TV, like I could do that. You know I can do that in my sleep. It's not hard, it's easy, you know what to do, it's muscle, this point, okay. So for you, in your time, it's worth $20 because that's what you value yourself as, versus in reality. You could maybe charge a hundred, 150, which would reflect your real value. Yeah, but you only really see yourself as whatever you perceive your value being. That's right.
Speaker 2:And especially if you don't do any competitor analysis or look at what other people are charging, what other companies are charging for the similar services, you're just making stuff up based off what you think your time is worth, yep. So I think, switching that mindset to having a math equation to where it's like OK, I need, I have this much overhead that I'm going to have to pay for every single month and that means I need to make this profit percentage on each job to cover that overhead and I need to do this many jobs. Breaking it down in a way where it's math, there's no subjection, there's no. How much value is my time worth? Okay, well, there's an equation for that. It's not just what you think about at the time.
Speaker 1:If you can't pay someone to do it for that price, you're never going to become a GC. So if you charge someone $20 to put a TV in, you can't pay someone $20 to go put that in for you yeah Right. And so you're undervaluing that. So with that being said, I mean you look at the value you're bringing, the going rate of it. But even a kitchen renovation, which is a great example, I'm increasing the value of that property by $100,000 by putting a brand new spanking kitchen in. Now they're paying me $80,000. I'm doing it for $50,000, but I've got $30,000 profit, but the value is $100,000 because that's the increase of value. Now it's hard to value that with a TV hang, yeah. But the way that you do it and kind of working backwards like you were saying, is all right. It's going to take me three hours. I've got to drive there, I've got to drive back. I might have missed something and damaged something, so I've got to fix that. So if I was paying my buddy to do it, I'll pay him $20 an hour. That's $60 to do that. Okay. Now I've got to put a markup for my services of making sure that this all happens. So I'm going to put another 60 bucks on it for me. So I'm going to charge 120 for this one handyman item, right, and working your numbers that way as opposed to I wouldn't say no if you gave me 60 bucks, right. And so yeah, I think it's. It's understanding the pricing model of what, what you're bringing and how to price things. And then also don't apologize for having markup and profit and don't discount that, because there is a value that you're bringing to that customer, all right. So understanding that labor cost versus the profit cost is the first thing. Now, as you're growing let's say you're getting into $20,000, $30,000 a month of revenue you know you're averaging $350,000 a year of revenue. You're doing most of the labor yourself already.
Speaker 1:What I want you to do is start looking, as you're growing, a little bit bigger from. Startup is starting to realize how to pay yourself. Now we'll do other podcasts about owner pay and how to separate it out, but what I want you to do is identify how much am I paying myself for labor and how much am I paying myself to manage this stuff? And I want you to set the absolute bare minimum that you have to take home Meaning if I'm eating rice and beans and I am not going to the movies and not, you know, I don't have Netflix, I don't have all the extras. Simple, my basics to live. What's that number? 5,000, 8,000, 4,000, 6,000, whatever that number is. That's what I'm going to aim for as my profit owner pay that I'm going to be paying myself Now. I might make more than that in the next couple months and that's what I'm going to call distributions and I'm going to dive deep into this in another podcast.
Speaker 1:But what we want to start doing is identifying what money you're taking out of the company. We're not using the pot system. We're not saying all right, I invoice a bunch of stuff, I paid out what I had to pay. This week I got 10K in the bank account. I'm going to pull five out to my pocket. That's not how we're doing it.
Speaker 1:If you're managing your company by looking at everything as what's the last dollar in my bank account, you're doing it wrong and this isn't gonna become a company. This is just a hobby for you. So we're gonna start looking at how pay happens and start understanding and figuring out kind of the base pay. And so if, let's say, you need to bring home $8,000 a month, so what does that mean, if we're making 35% profit, that's about a third. So I need to be invoicing eight times three. $24,000 a month. Right, that's what $8,000 a month. So I need. My goal now is I got to invoice $24,000 a month for me to break even on, profits being my only pay.
Speaker 1:Now, when you're doing 24,000 a month, you might be doing some handyman work yourself, might be making two to 3K there, and then I'm only gonna take home 5K and then I've got a little bit of extra cash in the company. Great, let's fudge the numbers that way. Let's steal some money from side hustling as a handyman, but let's try and start building our pay from the profits of the company and as soon as you can live off that, you're now a general contractor, you don't have to side hustle as a handyman also. So we're going to try to divide your time up like that where, emory, I want you to look at the labor as a side hustle and the management of this company as my full-time job, and I'm trying to build that full-time job pay to cover my absolute basics to where I don't have to side hustle anymore. All right, so that's kind of the basics.
Speaker 1:With that being said, if I'm side hustling as a handyman. I'm going to need to start finding some subs. I need to start finding some handyman that I'm going to hire some painters, some stuff. I'm not as good at right Getting started A lot of guys I'm like you're not good at sheet rock. Find a good sheet rock guy and do your own demo and handyman stuff. Yeah Right, start subbing out the stuff that you don't know how to do, uh, or that you're not as good at. That takes a little bit longer, cause you can find guys that are cheaper than you, who are better than you.
Speaker 2:Yeah, always questioned was like you know, how do you? How do you even get to the point where you find subs Like, let's say you're going from somewhere, like I was, you know you're, you're doing rudimentary handyman work, nothing too complicated, Um. But then you let's say somebody says, hey, can you remodel my bathroom? Yep, All right, when do you start? Let's say you don't know how to do tile, yeah, you know. Maybe you don't really have a plumber. That you know. You know where do you go from there. If you get a job that you don't necessarily know how to do everything, how do you navigate that situation?
Speaker 1:So on that, if you're a handyman and you land a bathroom and I'm sure YouTube University can help you figure out tile and plumbing, but I don't want to break that off, right, I'm not going to go is Facebook. There's so many contractor groups in your area. I'm talking with guys I've made friends. If you've been doing this for a little while, you've got a buddy at Sherwin-Williams or the paint store that you know. You've got the guy at Home Depot that you know. I'm asking those guys I'm knocking on doors or windows at Quick Trip. If I see a van pull up with a bunch of ladders on top, you know I'm getting their card to see if they want to do some painting work for me, right, and so I am hunting those on that.
Speaker 1:I'm not going to call big plumber right, the plum doctor, one of those big plumber, to come do it, cause they're going to be absolutely expensive. They're going to be homeowner pricing, not subcontractor pricing. But you got to find the right balance. I've got to find the right guy and and it's kind of a snowball If I find a great plumber, he's going to know two electricians, right, if I find a great electrician, he's going to he's going to know a framer, and so asking around and making it your full-time job to start building your bullpen of guys that you can call on when you need them to come in as a reliever. That's the hard part, but that's the hustle. You just got to start doing it and a lot of times guys want to do the minimum and it's like you got to do the maximum.
Speaker 1:When it comes to subs, you got to find 10 really good subs, or really good contacts, to end up finding two really good subs. Yeah, right, and so it's hunting those down, so starting to build it up it down. So starting to build it up. It's going to be one at a time, a little here. Hey, it's going to be job centric, right, I've got a couple of paint jobs. I'm going to find a paint crew. I landed a bathroom. I got to go find a plumber. But asking around, going to networking events, meeting other guys, that way, there's plenty out there. Facebook, again, is a great spot. There's plenty of groups there that you can get connected to the best electrician, best plumber, that sort of thing, all right. Finally, let's close this out, talking about finding customers.
Speaker 1:Yeah, that's the most important part, that's the most important part, and sometimes the hardest part of this, when I'm laying out customers, I view it as three rings of customers. My first ring, my central, smallest ring of customers, is my contact network. It's my family, my friends, the people I go to church with, my high school buddies that all know me, that I see twice a year. All of those contacts really look at your Facebook friends group. Everyone that you're friends with on Facebook are probably that first ring. I'm trying to reach out to those people. I'm letting them know I'm starting this company.
Speaker 1:I can do this, this and this. I'd love to show you what I can do. I'd love to you know that sort of thing. And this part of the game is where you make or break. It is hustling. It is joining the Chamber of Commerce, joining different networking groups uh, where you're meeting in person. You know, if you don't, if you can't find a networking group, call a realtor. They, every single realtor I know, is in some sort of a networking group and they're all, they're all looking for a contractor to join the group.
Speaker 2:Yeah.
Speaker 1:Join a couple of those groups, show up to them, get your name out. You will start getting jobs from that. Um, you with realtors calling through realtors getting with them. It is a hustle to find more people, but trying to first that first small circle is everyone that you know should know that you've started this company. Everyone on Facebook, in your groups, in your text group Maybe you go to church and you're in a Bible study.
Speaker 1:Ask those people, hey, just so you know I'm starting this. Maybe you go to church and you're in a Bible study. Ask those people hey, just so you know I'm starting this. I'd love to do this If you know anybody. We're asking for references from everybody and we're asking more than once. I'm asking once every few weeks. I'm setting up lunches with investors, right? Guys that I know that are in real estate hey, can I take you out to lunch and pick your brain? Maybe other larger GCs? There's a lot of large GCs that don't want to touch the small stuff, right, like our construction company, we're not doing jobs under five grand, probably not under 10 grand. So if it comes by, I need to pass that to someone. Right, come have lunch with me. Maybe it's you. So it is a. I want you to meet with two to three people a week as your full-time job and start getting your name out there to the, to that small group.
Speaker 1:Next ring, outside of those, are the friends of friends. So I I met with the church group. I told them all my buddies about it. Getting to their friends and their neighbors is that next ring. And so how do I get to those people? How do I offer those services? That's where we get into referrals. That's how we say hey, listen, if anyone gives me a referral, I'll buy you tickets to go see the Braves game. Right, like I'm gonna start giving some bonuses out to my friends if they can hook me up to make them think who can I give him a reference to? I'm trying to get that secondary circle outside of the people I know. But the people that I know, who, who they know, that's the next next ring.
Speaker 1:The third ring are strangers. Right, that's? That's the people finding you on Google. That is the people that drove by and saw your sign in the front yard of a house you're working on. Um, that is. That is the harder really. The, the. The second ring too.
Speaker 1:When I'm saying friends of friends, that's also the neighbors of the jobs I'm working on. Those are one click away from me, uh type references that I'm looking for. So I'm I'm trying to talk with people in the neighborhood. While we're working, I'm parking on the street and when people are walking their dogs, I'm engaging them in conversation. I'm telling them about what? Hey, if you guys need any painting, let me know. Yeah, actually come over and give us an estimate.
Speaker 1:I've landed so many jobs just by being friendly and neighborly. And I'm not outgoing, I'm an introvert, but I know when I was standing on job sites, every single person that I can have a one 10-second conversation with is a potential client and a potential money, and potential money to pay for my mortgage, right. So I'm, I'm finding each of those rings. The first close ring that should be done day one. The second ring, friends of friends. I'm asking for references. Hey, do you know anybody? Hey, that's. And really falling up and taking care of those people. And then the third ring is is very, a lot more difficult, because it might be running ads and doing other things, but it's the outside strangers that are finding you. So we're going to focus on those first two rings. We're going to focus on everybody you know and then from there we're going to be asking friends of friends, trying to get that next ring. That being said, that was a lot of information. We've been talking over half an hour, so that was a lot.
Speaker 1:Let's pause here. This is kind of getting you to the $500,000 mark. That means you're averaging $40,000, $42,000 a month on. I'm invoicing at 33% profit and let's say that I'm losing some money. I got some overhead, so I'm taking home eight to 10 maybe on that money. That's a good spot to be in Without swinging a hammer. I'm making eight to 10K a month on half a million a year. That's a really good spot to be in. So that's where we're going, cause that is a spot to rest in before we start ramping up to make a little bit more, to get us from 500 to 800 and start looking at that. First hire right, bringing in our project manager.
Speaker 2:So one one thing I wanted to talk about before we go. Uh, you know, when we're talking about getting to the spot from ground zero, I could see a lot of people including myself, if I had to do this having some sort of imposter syndrome, almost to where you. You've been doing the work yourself all this time. You're doing small jobs Now. You, you have the desire, you have the want to get those bigger jobs, but maybe there's something inside of your brain holding you back in terms of am I ready for this? Am I good enough for this? You know it. Can I take this step up? Can I do this? Um, you know. So how would you suggest talking to people to sort of quell that, that sort of imposter syndrome? Yeah, it's, it's. I forget who said.
Speaker 1:I read in some book somewhere Sort of imposter syndrome. Yeah, I forget who said I read in some book somewhere. It's not fake it till you make it. It's be the person that you want to. It's I want to be a general contractor, so I'm going to project being that and I am that. That's what I am. I know how to do this stuff. It's having that self-confidence to A and B. I can figure it out. I don't know plumbing You're right. I don't know tile You're right. But I can figure that stuff out. Or I can make a connection with a plumber, get his quote and mark it up, right, and so it's. It's.
Speaker 1:It is the fake it till you make it in terms of I, you just project who you want to be and then step into that role and feel like you're faking it, but everybody else around you believes it and you're going to start believing it soon yourself, right, and so it's one of those things that you just got to have the self-confidence of. If I'm going to start this company, I can do this and you know you could. You've got enough knowledge to go out and be a GC yourself. You've been a handyman, you've done the work, you've been in this industry. So if you wanted to go do that tomorrow, you could, and you just got to make other people believe it too. I think that's one of the big things.
Speaker 1:I've got some coaching clients that I have talked to of like I don't think you believe you're a contractor and so other people don't believe it. You're not selling yourself. You're not someone who goes to a customer and builds confidence in yourself, because I don't think you're confident in yourself and that shows through. So I need you to be dumb and just pretend and think that you are over, be overconfident and be like you know what I can do, that I'm not gonna be cocky about it, but I can handle that.
Speaker 1:I'm smart, I can figure that out, I can do it. So I'm gonna go try to do it and then my job is to convince everyone else that I can and then, once they believe me and sign the contract, I'm going to show them that I can. I'm going to work my butt off that maybe a normal guy that's been doing this for five years can spend eight hours of prep for a job. I'm going to spend 16. I'm going to outwork them. I'm going to outwork everybody around me to be the person that I want to be and that I'm projecting to be, but it just takes a matter of a leap of faith and self-confidence in yourself, because I think that's where guys miss it of like, I don't know, I don't know how to do that, I'm just a handyman. Yeah Well, nobody does until they start doing it.
Speaker 2:Yeah, yeah, I mean, that makes a lot of sense too, and I think I think, apart from the work just like the job, you know, execution itself, there's all the hats you have to wear. Yeah, you know you have to be a marketer, you have to be a customer service person, you have to. You know every single thing that you have to do. You have to be your accountant, you have to be your office manager. There's so many different things that maybe you were really confident in yourself and the job execution, but you're not confident in invoicing and keeping up your books and you're not. You're not confident in your organization, or you're not confident in your sub network, or how to you know? There's so many different aspects of contracting that people have to sort of do you know it's not just the job execution. If it was just the job execution, there'd be a lot more contractors in the world.
Speaker 1:Well, that's where the honestly like and this isn't. This is self-promoting, but that's where ProStruck360 comes in. I mean, that's one of my favorite things as a coach to do with my clients is I sit down with a contractor and be like hey, listen, here's like the eight hats that you're wearing. Give me one to ten on how confident and how good you are at them and we start going through them. If you're a real good sales guy, I'm not spending much time as a coach helping you figure out selling Right as a coach, helping you figure out sale selling right. But if you are terrible with numbers, let's put some strategies in place to really help you control, learn and own your numbers and how to do quick books and let me train you on some of that stuff. So every single customer customer, every single contractor that I work with in in terms of coaching, it's built differently of how, of how their coaching process works. It's built around them because, you're right, no one is a 10 out of 10 in every category. So we need to identify you're good at this, you're good at this, you're terrible at this, you're okay with this and the stuff that you're not good at or okay with, you just got to work twice as hard. Most guys work twice as less, right? They're like I don't know numbers, so I'm just going to ignore QuickBooks.
Speaker 1:You got to double down on it, right? Like, if you're not good at numbers, double down and learn it. Get on Google, figure out, I'm sorry, get on YouTube, figure out how to do it. There's so many resources out there to learn. You just got to work harder. That's part of the coaching model that I love is I can hold a mirror up and be like hey, buddy, you're not good at, like, what's going on. We've talked about this four times and you're still not doing it. Obviously there's an issue here. Let's let's talk about your self-confidence there, right? So, yeah, I think I think that's a great point. I think it's a being self-aware that I'm not good at certain things. How am I going to solve those issues? Yeah, right, and if you can pinpoint that, you're most of the way there.
Speaker 2:And it's also one of those things where you don't know what you don't know right.
Speaker 1:Yeah, exactly, if you don't know.
Speaker 2:you have to be really good at QuickBooks and organization. Then you're going to ignore it and you don't know there's a problem until there's a problem. Yeah.
Speaker 1:And you got to know about it and start solving those, one at a time, to make you a well-rounded company where the company is a better product than you were yourself, right? So I think I think that's the goal as you're growing, growing to 500 K, all right, thanks for joining us this week, emery.
Speaker 1:Thanks for sitting in with us on this one Great, great conversation If you guys want help with some of this stuff. If you're a startup company, honestly we don't really coach many guys, especially the coaching levels. We don't do under 500K of revenue anyways. Our goal is longevity with you and your company. So I don't mind spending 30 minutes an hour with you to help you kind of get started to where maybe we work together in the future.
Speaker 1:My goal is to help you grow and if you're starting to grow and have a good foundation with us, we can help you get there. We've got a foundations program even that's kind of the starter level to help you get going to where it's a big launch in the beginning and then it's kind of every other month check in to where it's a lot less expensive than coaching but it helps you really get there, to where the goal is to start coaching next year or when you get to a financially stable spot, to where we can really team up and double down with your growth. So if you want to hear about that, go to ProStruck360.com and wherever you're listening to the podcast, it's in the description so you can go there there, check us out, go to the contact us and send me a note. If you go to our contact us, I will call you back or email you back personally myself. I promise you that.
Speaker 1:So reach out. Love to have a chat with you, whether it's now or in the future. You want to work with us? Go ahead and call. Let's have a conversation about it now. Alright, see you all week. See you.
