Construction: Hurdles of the Industry
By: Robert Gutierrez
Contractors: Starting Your business is not an easy endeavor.
SBA: Small Business Advocacy, for 2012 Shows that over 80% of construction firms, compared to 281,165 total firms are non-employee firms.
Going into business typically means you have to invested a substantial amount of capital, as much as you try to be frugal with your investment; it is never cheap to make your dream a reality. With construction, there are a couple of more variable that don’t apply to a common business application, since starting a job can have added costs once commencement of job; it is never the same situation even with a lot of experience under your belt. You can budget for any unforeseen, but when you have to bend the knee in order to win the bid, it can make so that the honest ROI you had to keep investing in your business becomes stringent. Being in business can easy become overwhelming, when you start to factor all the other variables attached to starting business for yourself.
With no real exposure to what your abilities are, and not tenure to demonstrate customer satisfaction, most contractors have to get into a price battle with the next contractor and thus the contractor has to find ways that make the project at hand viable. This is very typical for a contractor at every level, since the construction industry like every industry has its ups and lows. Even with a substantial amount of capital, contractors soon can find themselves handicapped, there is this rule in the industry that is great for the customer and bad for the hard-working contractor: the 10% down rule. This is great for the customer, as it brings them the peace of mind that they need. But, when you have for the contractor this makes it an uphill battle when he has to finance 90% of the project until completion.
Is this why there are 216,569 contractors that are non-employee? This may be some of the hurdles they may experience hindering their goals. Another hurdle is marketing, a very hefty expense that has a low return on investment. Marketing is so important to any business, the safest marketing is from word of mouth, it is the cheapest and best advertisement. It means that someone loved your work, and was willing to recommend you. The downside to this marketing strategy is it gives you such a low footprint, and it doesn’t happen that much; it is very rare when you find a group of people ready to do a remodel to their home of the same category. The market to such a large footprint and to get the most exposure, you have to outsource either to a large marketing company that has the tools or to do business with a big box store. Either way, it means that you have to spend a large amount of money, both have their risks, big box store works with various contractors and so you are in rotation, with a marketing firm they focus on outbound customers so you have to hit something and hope it sticks. There is a lot of turbulence for contractors who want to keep their business afloat.
HomeTech Publishing sited The Harvard Joint Center, “Remodeling has a fatality rate of 40-50% per year and 90% in 5 years”.
Becoming a successful contractor can definitely be an uphill battle, the stigma that surround the industry doesn’t help, BBB for 2016 has construction as the 2 most complained about industry. As a homeowner, you want to know that whomever you are doing business with, is going to be reliable, and is going to do honest work. The biggest investment: your home is going to be at stake. Let’s face it, we are not talking about spending chump change, so we are trying to get the best bang for our buck; Value. Making sure you have the best information is hard, since the best rule of thumb is getting three estimates, and all that does is makes contractors battle for your business by cutting their prices, hens cutting corners somewhere along the line to be profitable. What do you need to know about your project, about the contractors’ history?
Checking their CSLB license is a great start. On the CSLB.GOV website you have access to all of the contractors’ information. Under their profile you will find how long they have been in business, personnel, disputes and other important information that will help you determine the right candidate. Depending on your design needs you also want to get some knowledge on product before someone comes over to your home to give you information, that way you can have some questions about the difference, and find out of the person in front of you is a professional.
At Value Windows and doors, we pride ourselves in customer service and the customer experience. We will walk you through every step of the way, guiding your through the various lines we offer, depending on your family needs we can make a professional suggestion. The wonderful part, is that you make the final choice based on the current municipal codes and various design options that fits your beautiful home. Another way we make your project simpler, the different financing options we offer, and special incentives for our customers; we truly want you to enjoy our experience with price friendly product that is beautiful and energy efficient.
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