The myth of the paper contrarctor.

Paper Contractor: A person who makes a construction contract with the customer and hires subcontractors to perform the complete scope of work.

 

Can it be done? Yes, but not by you.

Sorry to break the news.

 

First lets start with the difference between a construction manager and a paper contractor.

In my mind a construction manager is not-at-risk. Much like a consultant they offer service and advice. However they do not sign contracts with the subcontractors directly. They merely manage the construction process through a fixed fee. This is a great way to make money because when an unexpected job expense occurs they simply tell the owner to write a check so they can hire someone to come fix it. If you sincerely want to avoid an actual work then this is the way to go.

A paper contractor on the other hand signs a contract and attempts to make a difference in the “arbitrage” between the subcontractors price and his own. I’m not saying the paper contractor isn’t charging management fees, what I’m saying is that a paper contractor is signing the subcontractor agreements. If something goes wrong they are 100% responsible. They are buying the labor/materials and reselling it. They are an integral part of the supply chain.

 

Why paper contracting is harder than it seems.

-Your bids will be less competitive. You as a paper contractor are paying retail prices for your work and then charging a variety of management fees, paperwork fees, insurance fees and profit on top of that. This is completely understandable but unless you have multi-million dollar projects lined up you may hit a snag. If your like most new contractors you will be starting on smaller projects. This means its easier for the customer to hire vendors and attempt the project themselves. The customer can also hire a project manager who is not-at-risk for much less to manage the project.

-Your bids will be too competitive ( I see this all the time). Even worse you make a mistake bidding and underbid a section of the work. Now you are facing the potential to make zero money on the job. What will you do? Like most beginning contractors you will go out and solve the problem yourself. Now you are no longer a paper contractor. Many, many times I have been called out by paper contractors who have attempted a job and are now working late into the night installing materials to save their profit margins. I applaud there effort and commitment to the customers project but if they think this is the last time they will ever make that mistake they are only kidding themselves.

-Subcontractors are slow and unreliable. When you sign a contract with a customer they will likely have few thoughts as to how you got this done. They are trusting you to handle the situation and your reputation is on the line. So what will you do when a pipe springs a leak in the late afternoon and your plumber won’t pick up the phone as the customers office start to fill with water? Or what will you do when your subcontractor suddenly can’t make it on the job for an extra week? Sure it’s easy to say that you have insurance to handle these issues. I doubt your customer will appreciate that response when their trying to run their business or business on their front lawn!

-Most paper contractors aren’t completely qualified. If your doing million dollar projects steadily you can afford to hire some general labor and carpenter or two at minimum. So you are not a paper contractor. If you are doing small jobs and are attempting to relying on subcontractors completely then its probably because you don’t understand the work enough yourself. Personally I know that I can outperform almost anybody a subcontractor send to my job. Subcontractors are merely a convenience. When a paper contractor is attempting to win a job against myself they can only do so by offering a lower price for their own services. The customer will ultimately realize that they know less than me and they will ultimately spend more to complete the project because they rely solely on vendors. This two pronged factor will push their earnings down. Really the only offset to these factors that I’m aware of is to be a designer and be valued for artistic ideas rather than project performance.

 

This is not meant as a means of discouraging you but rather a friendly warning to be prepared. You’ll be trading in that car for a truck sooner than you think.

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Triple Your Income From Construction with continued education

Many people who are browsing this website already know the advantages and disadvantages of being self employed.

More Money vs More Responsibility

 

But how many people really evaluate how they arrived at their current position?

Most people get into construction by accident. They fall ass backward into a job because they need money at the moment. Only realizing after a while that they can make good money if they put in some effort. Many of these people will learn a single job and go off to build a career around that one thing.

Think about that for a second. Someone spends 2-3 years learning a trade and then parlays that knowledge into a lifetime career.

Imagine what they could have done if they continued their education!!

 

So why don’t people continue with their education?

They are too busy with family, too busy with work or too busy tinkering on their fishing boat. Every excuse boils down to the fact that they have enough money to live on currently and they don’t want to take even 20 minutes out of their day for the headaches of learning something new.

Also they don’t want to loose the guaranteed income of now for possible income of the future.

However this strategy is doomed to fail. I have witnessed time and time again small contractors with great career momentum who find a few good customers and then just put the business on autopilot. They are not learning, not seeking new opportunities and instead are relying on what they know at the moment. But I’ve been around to see this scenario play out many times. Business conditions change and all of a sudden the formula that used to work is no longer working. But it’s only when they hit the ground stumbling that they realize how un-competitive they have become! So they start slashing prices and trying to play catch up.

 

 

How important is continuing education?

Most contractors take a small amount of knowledge and squeeze a lifetime of income from that. Imagine if they knew double or triple what they know? They could become very wealthy.

Think about myself…the website writer for example. I can, and do, make lots of money from my regular job as a contractor.  But I’m taking time off during my day to study something new which is computer programming and web design. Because as my career has evolved my goal of making hundreds of thousands a year has turned into a goal of making millions a year. So this year my income suffers. But 5 years down the road I have no doubt that my sacrifice now will pay off ten fold.

Many of the people who browse this website are already subcontractors. I know because their emails resemble something like this; arnieselectrical@gmail.com or marylou@ccctileandstone.com. But they are ready to expand to that next level and start managing or performing other trades.

The more you know the more options you will have and the more people will respect you and therefore be willing to pay you.

 

 

Whats the best way to continue your education?

Consistency. Learning something new every single day.

Never ever think you can sit back and relax or not learn something new. If you are on this site you are probably working for another company or you have started contracting as a handyman or illegally and now you need to become legitimate. So there is a very real roadblock that is forcing you to take action.

But what will be your driving force when you get into your comfort zone 12 months down the road? Even worse will you have the opportunity to pause and learn something new when you are working every minute of everyday to make payments on all the new stuff you are buying?

Creating a system to insure continued progress

  1. You need to create a list of education goals. Its not something you have to look at every day but its something you need to adjust at least once a month.
  2. You need to make progress every single day. Even if its only 10 minutes a day. But preferably 2 hours would be ideal.
  3. Create goals such as reading a book a certain or leaning a new subject.
  4. Mast your current job skills but also branch out into new things. You may be a contractor but business, finance, marketing economics and other topics all affect you!
  5. Find motivation. Who do you admire? Are you emulating their strategies? What would you do with the money? Who is counting on you? Would your success prove someone wrong?

 

 

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Personal Expert Service

Soco Constructrion Offers Personal Expert Service. Here is a review of all the services offered through Soco construction.

 

 General Construction, Project Management & Consulting

If Apple had hired me to build their new headquarters, they would not be 2 billion dollars over budget
http://www.digitaltrends.com/mobile/apple-spaceship-campus-contractor-fired/
Everyday large, talented and sophisticated organizations make gross miscalculations when approaching construction projects. Don’t let it happen it to you. You worked too hard for your money!

Project management is about understanding a collection ideas.

The design, engineering process and construct-ability.

Legal requirements, code requirements, municipality interactions.

Cost estimating, scheduling negotiating and risk.

 

But more than understanding its about executing!

You wouldn’t hire a mechanical engineer to drive the race car they just designed in a high speed race would you? Then why would you consider letting a design professional make critical decisions about “driving” activities on the job-site…???

Soco construction can provide your with effective project management and general construction services from start to finish.

 

But don’t think that Soco Construction is just another “paper contractor”

A paper contractor is someone who has no tools and no on-site presence. Everything they do is paperwork based. Soco construction is far from a paper contractor.

In fact large national construction companies hire Soco as a subcontractor to do some or all of the work for them!

Maybe your a general contractor needing extra support on a large job or a job that’s out of reach.

Maybe your a facilities manager or small business owner looking to contract directly with a reliable professional.

Either way you will be covered! Soco construction has the tools and know how to handle most types of work in house. Soco Construction may use subcontractors as required but it is not dependent on them for skilled labor or technical expertise.

 

 

 

 

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License Test Study Guide

These two study guides are for sale in the products section!

These study guides could be in your email inbox in as little as 5 minutes!

study guide sales page

YES! TAKE ME TO THE PRODUCTS PAGE NOW

(There is a free 3 page sample download of each test on the products page!)

 

These Study guides are the fast & easy solution

Other study guides are over 300 pages. But you need to study FAST!

This study guide condenses the IMPORTANT INFORMATION into just 51 pages!

This study guide is designed for people who have enough experience  to know the difference between a shovel and a hammer. It only contains the information needed to pass the test.

 

The other options just plain suck!

I made this website because I couldn’t find an affordable easy study guide when I was studying for my license test.

I kept finding outdated  study guides or classes being peddled for $500.00 or more.

The test isn’t that hard if you simply brush up on some basics. When I took the test I created a study guide for myself and passed the first time I took the test.

When I passed my test I was glad I kept my $500.00 and didn’t have to sit in a room full of annoying strangers for two days.

 

If you think you can afford to pass up this study guide think again…here’s why…

A good friend of mine working at the same company also planned on taking the license test with me. We both had big plans about how we could run our own businesses! He bought one of those 300 page study guides and guess how many pages he read?? He didn’t make it through the first two chapters. So he never got around to finishing the book and he never got around to taking the license test. Hes still working for someone else… years later…

 

Most importantly remember this!

The study guide I’m selling here is small enough to read in a single day! Read it three or four times and if there is anything you don’t understand due to brevity use the internet to do some extended research! Going into business for yourself is a new and daunting challenge. My test is a shortcut to your success! 

 

Download this license test today and you could be ready to take your test in as little as 2 or 3 days!!

YES! TAKE ME TO THE PRODUCTS PAGE NOW

(There is a free 3 page sample download of each test on the products page!)

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Commercial property trends in Los Angeles

Here is a very inspiring video from Allen Matkins relating to Los Angeles Real Estate Markets. They have also released some data relating to California construction. I think there are some opportunities and some risks currently in the Los Angeles market.

The short term opportunities are the downtown revitalization for property owners in this area. I have walked the streets and the change in appearance is palpable, (although I can still read the words “hourly rates” on some of the older hotels. But hey, they are making steps in the right direction. It’s a great opportunity for owners agents such as designers, contractors and real estate pro’s.

The long term I’m not completely sold on, and of course I have to offer some contention for the sake of balance. Los Angeles has a few tough issues. If I were holding real estate or serving customers in Los Angeles county exclusively I would be proactive in diversifying my reliance on the area for a few reasons. Los Angeles is tied with Detroit for population migration according to bloomberg. But there are large inflows of immigrants as EM economies have pushed hot money investments in local real estate. As we have seen previously with Japan, a foreign deflationary situation can reverse this trend sometimes very quickly. The unemployment rate is going down but its not low by any means. There is also the rising cost of pensions and city expenses billions are unfunded and are guaranteed by taxpayers. The cities international status and geography in relation to trade is a very big plus so for the time being everything is looking very rosy.

I think Los Angeles is in a period of recovery but the voting base continues to push less qualified candidates(In my humble opinion) into office and this trend will likely continue. I would consider diversifying my project between another nearby county to help reduce exposure to bad politics and the associated taxes that inevitably follow.

 

 

 

Construction Safety Meeting

In California the law requires a safety or tailgate meeting every 10 working days. There are two important things to do at these meeting.

1) Bring up a particular topic

Here is a list of topics and general information 

2) Get a signature from everyone explaining that they understand the topic discusssed

The easiest way to do this is to have the meeting right before you hand out out the checks. Here is a form you can download to collect signatures

The important part is to bring up a topic and allow workers the chance to bring up their own issues. By having them sign this document it will reduce your liability by creating an environment where people can bring up safety issues which shows safety initiative and legal compliance.

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How to Ask for a Raise

You want more money and less work.

Your company wants more work for less money.

It’s an important step in anyone’s career to ask for a raise and to get a solid answer from their employer. Let me take you inside the mind of your employer so you can get an upper hand at asking for a raise. This post has two parts A) Should you ask for a raise and B) How to ask for a raise.Your employer is already thinking about your position at their company. Trust me, as the person writing this article I think about my employees pay constantly and each person falls into three distinct categories for their ability to negotiate a raise.
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How to Write a Good Construction Contract

contruction contractI rarely see good contracts. Most people just make some stuff up without really thinking about what they are doing but as you grow you will find it necessary to create a contract template that would take a beating from the talented and “useful” legal minds currently knocking clueless contractors into the poor house. Check out the products page for a fully legal contract template. This article does not constitute legal advice. Consult an attorney for more information regarding contract law.

1. Basics

A contract is an agreement between two people. It should always be in written form to avoid confusion. 

A contract can be changed when all parties agree through a contract addendum, amendment or in a construction contract a change order.

Signing a contract is called execution

A contract must be balanced, fair and drafted with the intention of not misleading either party.

It must name both parties along with their performance. Performance means what they agree to do within the contract.

A contract must meet all legal requirements of the jurisdiction in which it is subject.

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Email marketing for Contractors

contractor marketing list

Most contractors don’t build a significant marketing database but they should.  Email marketing is a key strategy in keeping your business relevant in the minds of customers.

The obvious first step is creating a spreadsheet with customer emails. This takes consistent effort to retain this information. I always add customer emails to the contract themselves so the information doesn’t go missing after a few months.

How

Emailing your customers should be done annually or semiannually. I don’t recommend snail mail or any other form of mail because most people will trash it right away. But after they see your email they will do what everyone does with email. Leave it sitting their inbox as they go back to their lives. But fortunately when they remember they need a contractor they can quickly search their inbox for you recent email.

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