What does it take to be a successful Electrical Contractor?
When owning and running a successful Electrical Contracting Company you learn to wear many hats. Being a great electrician does not prepare you for owning your own company. You will need to learn many new skills. There are so many things that go on behind the doors of an Electrical Shop that you never see as an electrician in the field.
One lesson that you learn quickly is winning jobs doesn’t equal making profit. Another lesson that you will learn is working hard does not necessarily equal making a profit either.
You can work yourself to death and still go broke.
Once you win a project then you must install the project for less than you bid. Now you must get paid and make enough not only to cover cost but cover overhead as well. What’s against you doesn’t stop there. Rain or weather delays, poor general superintendent, even other trades not staying on schedule all can eat away at estimated profits. Personal issues with your own employees is something that is never addressed as well. Let your Superintendent find out that his wife is leaving him for another man and watch your job fall apart. With so many things that can go wrong when owning an Electrical Contracting Company why would anyone want to take these challenges on? Electrical Contracting can be a rewarding career. The key is you need to run your company and not let your company run you!
Get Paid For Your Work
Sometimes getting paid is harder than installing the job.
01. Make sure you check out who you are working for.
02. Don’t just sign the contract, learn to read it and flag wording that places you at a disadvantage.
03. Take the time to learn how to execute a proper change order.
04. Never do extra work until a price has been agreed on by the right person.
Always keep in mind that you want customers who deliver a solid ROI, instead of those who give you headaches. To save you this aggravation, learn how to spot these customers before agreeing on a project. For instance, you can ask some of your fellow contractors if they’ve had any experience with this customer in the past.
Hire The Right People
Another key trait of successful Electrical Contractors is they hire quality people. Some people refuse to hire people that are smarter than them. This is one stumbling block that causes many from becoming successful. Hiring cheap employees produces cheap results. Hire people that you can trust with good work ethics and it will pay off.
This is your long-term answer to any micromanagement problems that you may have. By hiring people who are smarter and more talented than you are, you can trust them to handle any assignment on their own without your supervision. This gives you more time to focus on growing your contractor business. Plus, you’ll learn a whole bunch from them along the way. You wouldn’t go to a dentist that didn’t know more about performing dentistry than you would you?
Managing Material Prices
You may not be large enough to hire a purchasing agent but managing material prices is another place that can seriously hurt you. Copper and Raceways can change quickly. It is very important that you keep your Electrical Estimating Software database’s pricing current.
01. When possible purchase conductors in advance. Work a deal with your supply house to purchase blanket orders of copper for a given price for a given time frame.
02. By doing this you at least know what you will be paying and not loose money before you ever start the project.
03. You can also agree on a price for Devices, Boxes, etc. for a specific price based on a year contract.
04. We see many electrical contracting companies send their employees to the supply house each day to purchase what they need for that day. This is more common than you would think. You should be in complete control of material. Your employees should show up on the job and work. First this is an enormous waste of time and money but secondly your field guys don’t know how you took off the job or what materials you used. You should be in control of the material and having what is needed on site and ready to go. This goes for equipment as well such as lifts etc. The closer you can make the work place being only about showing up and working the more production you will get out of your employees.
Distractions of not having the right material on site when needed, not having lifts when needed, not having the latest drawings, or the necessary tools, creates distractions and cost money. These are things that need to be controlled from the Office, Project Manager, or Purchasing Agent.
Go After The Right Jobs
Going after the wrong job is another down fall of new Electrical Contractors. Getting a job is not nearly as important as getting the right job.
01. Bidding on over competitive projects.
02. Bidding on jobs out of your expertise.
03. Bidding on work that will deplete your entire work force.
These are just a few ways that you might win the job but wish you hadn’t.
It is important to learn your niche and your sweet spot. This takes time to figure out but you will discover that your company does better at this type and size of project. Being bigger isn’t always the best. With that being said you always need to keep your eye on new things and new ways of doing things. The electrical contracting business is always changing and you must change with it.
You must keep your finger on the pulse. Does your business have a particular specialization or cater to a niche market? Then definitely capitalize on what makes your business different from the others in town. It could simply be your ability to provide services specifically for design-build work or being great a value engineering. Offering great ideas to cut cost without cutting quality.
Step Back And Review
Take a comprehensive assessment of your company. This includes asking questions like;
- Is your business financially stable?
- Are you getting repeat business?
- Do you have customer referrals?
- How do people rate your business and customers service?
- What is your employee turnover rate?
Acquire A Line Of Credit
If you’re like many small-scale electrical contractors, you probably don’t have financial pull to support your expansion. Cash-flow struggles due to delayed payments from customers are actually common. This means that it’s your responsibility to find various ways of accessing lines of credit, obtaining loans and securing overdraft protection.
Remember: If you want to attract funding, you need to keep detailed and organized records and do your research on the best type of loan for your business based on your current needs.
Network With Others
Industry associations, such as the Associated General Contractors, aren’t just great for networking. They can also help you develop essential business skills, ranging from how much to charge for clients to how to write a contract. They also recommend which products you should use for each type job and where to find employees and new projects. Look To People That Have Achieved Your Goals.
The best thing about a mentor is that he or she can guide you in solving problems. The mentor can teach you how to manage your money and customers, and introduce you to vendors or investors. The reason: The mentor has “been there” already. Sometimes this person can be a family member or retired contractor; other times it may be someone you have to hire.
Have the right tools for the job
No matter what size your business is, being prepared is what can make or break you. For contractors, however, it’s the little things that can determine whether you’re going to survive or not. You will survive or fail based on your ability to estimate. Best Bid can teach you how to estimate or estimate better.
It all starts with the estimate. We have focused the above information on what you must do after you win the project but none of that matters if you don’t have any projects to manage. Let Best Bid show you how to win projects.
Small changes can create dramatic results Well intension business owners are being jeopardized by bad advice and bad support.
Let us help you with solid advice about estimating.
At Best Bid we offer not only the best electrical estimating software but we also offer a friendship.
We can help you and we will be there when you need us. We have been helping people like you for over 30 years.
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