All Forum Posts by: Aaron McGinnis

Welcome to contracting. You're meeting the learning curve of client management.

0 Hour mistake: Going against your gut and getting involved in a project that isn't at the phase where contractor involvement makes sense. This person was really just looking for someone they could tar baby into doing plans instead of hiring an architect.

First mistake: When the client agreed to a rough budget, take a retainer fee to continue to work on the project. Not a deposit - a retainer fee. I have a pretty solid rule that I will spend no more than 2 or 3 (or so) man hours on a lead prior to getting paid. EVERY TIME I break this rule, it ends up being a mistake.

2nd mistake: Delivering construction documents for no pay. Rookie mistake.

3rd mistake: Agreeing to do a full project in phases. It's too many exit ramps for the client and shows a lack of their commitment to you.

4th mistake: Bids need to be fairly detailed out anyway. I'm not saying enumerate how many studs you're using, but I am saying that you need a line for framing, a line for drywall, paint, etc. 

If a client is asking for component costs (lumber, nails, etc.)... walk. Asking for fixture costs is OK, asking for building component costs is not. That person will be a never-ending pain in your butt.

Part and parcel of our standard contract for work is a disclaimer saying that the owner shall leave no material or possessions on site that they would cry over if it gets lost, dusty, or damaged. 

We go to pretty extreme lengths to make sure that everyone on site is the honest sort with no criminal background, but... stuff happens. 

Also, jobs need to run lean. No materials on site before they need to be used. Off site warehouse for fixtures. Minimize the opportunity for human error. 

Tell the client to file a police report. Period. If the client declines, fire yourself off the job because things are going to go straight to crazy town. 

Consider stopping the job until the matter is resolved. 

I once had a customer accuse of us theft of the most absurd type. (Said we stole a beat up old sofa from a house we were gutting)... it was a prelude to the worst client experience ever. I fired myself off the job, and he then went through 5 more contractors to finish..m eventually denying payment to most of them and suing all of them. 

There is another caveat. While drywall mud is drying you need some way to dry it, especially during a wet winter. 

Bullet heaters work whole the crew is there, when they're not you should be using dehumidifiers. 

We do the same. We use a labor pool sourcing company when we need extra hands... pick things up and put them down type work. Never trust them with anything more complicated than a shovel.

Day laborers are cheap and poorly educated or trained managers see cheapness as a sole advantage.

Also day laborers are easy to put your hands on without prior planning. 

it is most certainly the furnace. 

Consider asking the gc to run bullet heaters. Tell him you will pay for the kerosene. That at least will ensure that the furnace isn't left running overnight when someone forgets to shut it off at the end of the work day. 

Good to hear that you're experienced in handling employees. I see way too many people who jump into hiring W2 employees without a good legal understanding!

I think your market is going to speak to you regarding pay rate. Around here, $50k/yr might get you someone who could handle repetitive 'builder box' new construction, but not someone who could handle one-offs and rehabs.

You hiring an employee or a partner?

Employees get paid salary or hourly. Period. Profit share is for partners. (Also, "Expected net profit" is a terrible idea as a pay scale. What if you don't get your expected net profit?)

Employee gets paid hourly if: The result of their labor is largely in the minute

Employee gets paid salary if: They are expected to have job-related epiphanies in the shower

If you want to offer some kind of bonus, then have a Christmas bonus or something. Or a job performance bonus tied to a very specific thing (IE: Some aspect of the job, under the employee's direct control, gets done in XYZ fashion... employee gets some kind of bonus)

Also, before hiring a full-time W2 you should think carefully about the tax and legal ramifications. If this is your first W2, I strongly recommend consulting an experienced accountant and maybe an HR person to make sure that you have all the legalities taken care of and you are paying all the right taxes. Payroll withholding is a pain in the ***, straight up... both in calculating it and paying it. Plus, the ramifications of getting it (even a little bit) wrong are considerable.

And, on a personal level, consider the implications of having to cut payroll weekly or biweekly. If you don't have some way to automate the system (or have someone to do it for you), you need to be physically available to make it happen. 

You should also check in your state laws regarding insurance. Here in GA, once you have 3 or more W2 employees you have to start carrying worker's comp insurance. If you are not at that level, but think you may someday be there, do yourself a favor and BUY WORKERS COMP NOW while it's cheap with your single employee... you'll get an experience rating and that will make a huge difference later on down the road.

I'd also recommend thinking very carefully about what this person is going to be doing, and how you want it done. Make sure that you're not hiring someone full-time to do something you don't understand how to do yourself. Remember: If you can't metric it, you can't manage it... and you should outsource it to someone who has to pay the price for their failure. 

Employees can be a blessing, or a curse. Hire slowly, fire quickly. Metric and systemize what you want the employee to do, don't expect them to write their job for you. Have a system and hand it to them to execute - pat on the head when it's done right, and if it's done wrong guide and mentor (and document failures) and then fire.

Interesting... in Atlanta, a residential permit will be several thousand dollars.