One of the most important decisions you will have to make as you begin your journey into the contracting industry is whether you are going to be a General Contractor or a Subcontractor.
I, personally, advise being a Subcontractor, although, I was a General Contractor for over 25 years.
The biggest disadvantage of being a general contractor is that you have to provide bonding for commercial or government projects. Basically, the bonding company will end up dictating how many projects that you can pursue at any given time.
You also have to provide periodic financial statements; our bonding company required reviewed and audited reports which are fairly expensive.
One of the biggest issues I had against being a General Contractor is that at times I felt that we were running a daycare facility. If there were any problems or issues on a project the general contractor ends up being the one to resolve the issues. It was amazing that so many professionals acted like kids at times.
We often thought about changing the name of our contracting company to “Merry Moppets Construction!”
The current state of our economy is definitely friendlier to subcontractors! Although there are plenty of issues that subcontractors also face.
The thing to remember is that any business has its good points and bad points.
The thing that makes a difference is how you approach and address those issues!
As a subcontractor you have to develop yourself a real game plan. Establish real goals. Determine what market you intend to pursue.
Do you intend to go after commercial projects or smaller non-commercial?
If you are a minority owned business there are many sources that are available to help you get off the ground. As weird as it might sound you actually have a definite advantage for starting your business.
Most of the government funded projects require a certain percentage of minority owned subcontractors to participate in their projects.
You need to understand that a minority owned business has a wide definition today. Minority owned businesses now include minority ethnic groups, women owned businesses, veteran owned businesses, and service disabled veterans and some businesses located in what is called a HUB-Zone. I’ll explain in later articles.
If you are serious about starting a business and have the skills you should seriously consider taking the leap, however, you need to remember that not everybody is cut out to be a business owner.
Do some serious thinking and soul searching before moving forward. Even though there are a lot of resources available to help you; the odds are against your success. Approximately 7 out of every 10 businesses that begin will end in failure.
Only you can insure your success!