Running a Building Business

Discussion in 'Wealth Creation & Management' started by Bargain Hunter, Nov 12, 2014.

  1. Bargain Hunter

    Bargain Hunter Member

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    Just wanted some advice from people on the forum.

    My brother has been working for himself as a licensed builder for a few years. He is great at building stuff and does very high quality work and has quickly developed a reputation for excellence but isn't the best at running a business (chasing own debtors, book-keeping, marketing, pricing, etc).

    There were a few topics I wanted some advice on so I could then pass on the advice to him:

    -Best bookkeeping/accounting software to use for him to run his business as a builder.
    -He doesn;t yet have insurance as he doesn't meet all of the criteria for builders insurance. This makes it hard for him in some cases to win larger projects. Any advice on what insurance to get and how to go about doing it?
    -Best type of work (shop fitouts, small residential rennovations, housing constructions) and clients to specialize in.
    -How to manage debtors, i.e. best way to structure payments and how to chase down debts
    -Contracts and the legal side of things, what type of lawyer/conveyancer to use, how much to pay, etc.
    -How to calculate pricing and what sort of margins he should aim for

    I would love to hear advice from experienced builders, investors, property developers and business people.
     
  2. AngloSaxon

    AngloSaxon Active Member

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    I work with a lady whose brother is a master builder. They have a great partnership: They find the properties they want together, she organises the purchase, he uses his expertise to renovate, she sells it off and works out the tax minimisation on the capital gain. Reinvest.

    As not everyone has a sister like her who is a CPA, I'd recommend he cultivate a good relationship with a skilled accountant.
     
  3. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    I only have second hand knowledge of the building industry, but generally speaking:
    Something that isn't a pain in the arse to use, because not keeping the books properly is a great way to screw yourself and you probably won't know how bad things are until it's too late.

    Xero.com is becoming quite popular and there are plenty of apps offering additional support for it, like being able to take photos of receipts with your phone so you can enter the details later (or correct errors where OCR fills details in automatically). There's plenty of options out there, so take up the offer of the free trials and evaluate them. It's part of the job.

    I'd seriously recommend doing a two day introduction/crash course in bookkeeping, especially if it's with the software you think you want to use. It will pay itself back a hundredfold and could be the difference between doing well and filing for bankruptcy.

    Try to avoid this becoming an issue in the first place by stating/negotiating terms up front. Have clearly defined milestones in the project and get paid when each one of them is completed (you might even want to offer a small discount for early payments).

    Also, don't be an arsehole about getting paid. If a client is late, it's probably not because they're trying to insult you or the quality of your work. If they're a large company, they pay late as a matter of course. If they're a small company or an individual, they probably have their own cashflow issues. You can almost always talk your way through payment issues, just be polite but firm.

    Shop around. Find someone you can work with who charges a fair price for a good job (you don't need to find someone to have over for a barbeque on the weekend).

    Just on a general note, think about the old maxium "Price. Quality. Service. Pick any two." and don't be afraid of telling your potential clients how you're prepared to work. I know some people who only focus on two particular attributes and turn down business that doesn't suit their way of working and other people who don't mind being flexible.
     

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