Your Own Business - setting up and keeping going
SUB-CONTRACTING
You may decide to provide a service which encompasses a variety of different trades. Building or renovation is a classic example. Although you have all the skills to complete the entire job yourself, you are just one person and the client can't wait that long. So, you sub-contract a plumber, an electrician, a carpenter and a tiler. The rest you plan on doing on your own - before, in-between and after. The job, it would seem, will progress in stages with you as manager keeping the wheels turning - easy. Not always, unfortunately. The plumber can put in the pipes, but he can't connect the sink until the carpenter has built the cupboards; and he's on another job which won't be finished until next week! The tiler prefers to do his part in one go and not have to keep coming back for a bit here and a bit there, so he'll be along once the plumber and the carpenter have done... and after the electrician, of course, who is off sick with the flu! No matter how dedicated you are yourself, your sub-contractors will consider their own lives first. The elements you have to juggle will never fit perfectly and you should allow for this. Bear in mind also that your organisational expertise is worth far more than you would pay yourself as a sub-contractor. If you aren't charging your client for this, you are not only selling yourself short, but are creating a reputation for being a cheap soft-touch.
COSTING AND ESTIMATES
The bottom line is the final profit, and it has to be better than the wage you'd earn working for someone else. Keep all of the above in mind, plus cater for delays in the supply of materials and the possible increase in overheads, including repairs and replacement of special tools and equipment. You will also need to factor in a contingency, a percentage charged to cover unforeseen eventualities. Hopefully your client will pay up as soon as the job is finished, but there's always a possibility that they may not, so you'd be advised to levy progress payments to cover expenses incurred along the way that may have to come out of your pocket before the project is finished. Consider all of this when you quote for a job right from the word go, and resist under-cutting. This could lose you a few contracts in the beginning, but with the ones you do get, you won't be working for less than nothing. As your own Boss, you are a business person, not a charity dip!
MANUFACTURING: CUSTOM-MADE
You may have a plan to supply a custom-made product to the specific requirements of the client. Obviously an on-going business needs more than a one-off to survive. The usual idea is to create a market from the original which is of sufficient quality to attract future customers by reputation alone. This kind of specialised trade can command higher prices than the norm and, if the sums are done correctly, higher profits. But let's get back to the prototype, the one that's going to get you known. Whether a surf board or a wedding dress, the rules are the same - time and excellence are money in; expenses down to the last strip of fibreglass or lace are money out - to start with, your money. What happens if the customer fails to collect the finished product? A surf board you might be able to sell to someone else, although it would be doubtful that you could recoup the true value; but a wedding dress...? Of course, it might not be that bride and groom have had a flaming row and decided to call it off; maybe she's just put on a few pounds and needs a last-minute alteration. That still means extra work for you, quite possibly a rush job. Did you figure on that? Did you allow for the possibility in the quote? The custom-made client should be prepared to pay up front; the one who's doing the job should insist on it!
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