Not a contractor

I have mentioned, several times, that I never became a contractor. This came up again in a reply to a recent post.

A contractor is bound by rules that limit the amount the maker can ask on any given project. In most states, this is capped at around ten percent.

I have never done a custom job without getting at least half the total cost in advance. As a manufacturer, I am allowed to do this. As a contractor, I would need to finance the entire job out of my own pocket.

This has always been unacceptable to me. I am not a banker or a lending institution. If someone needs to borrow money to pay for a project, it should be the customer, not the maker.

With the costs of materials, labor and the overhead of running a commercial shop being what they are, I cannot possibly finance someone’s kitchen remodel, nor do I want to.

There are certainly some advantages to being a contractor but, for me, the drawbacks outweigh them easily.

D.D.

COMMENTS

  1. Scott Slater wrote:

    I would like to clear up a few things with what you said. Most of what I am saying applies to California as it is where you and I conduct business.

    Since this is the Business about Woodworking it should reflect what a contractor is and what they can charge. I am a licensed contractor in California – specialty. I am bonded and have insurance.

    - A contractor is not bound by a 10% figure in private work, this is what a general contractor charges over what his sub contractors do. It is profit and overhead and many of the contractors I work for charge between 10-20%. They are free to charge what the market will allow.

    - If you are working as as subcontractor or working with the client directly you can charge whatever you want for your project, much how you charge as a non-contractor.

    - Hiring a contractor protects both you and the client, as you have the right to put a lien on property for non payment of contractual items. The homeowner is bonded and has protection against a contractor that does not fulfill the contract. It is much better for both parties and in California is necessary for jobs that are over a certain amount ($500) and necessary for any fixed price contracts as you would not have the right to enter into a contract without being a contractor.

    - You are only allowed to collect 10% or $1000 whichever is less to start a job. But as soon as materials are ordered you can get that amount. It is only so that you do not take 50% and never start the job. I typically will get 30-50% when I start the job, but not when the contract is signed. I am not financing jobs. I do not finance my jobs, but I always get paid since I have a legal contract.

    - I have insurance to protect the homeowner in case of accident, plus workman’s comp for my employees. This protects both me and the homeowner in case of an accident.

    - I was required to take a test and prove 4 years experience to get my license.

    - Since I work with general contractors on 90% of my work I must have a license and liability insurance to work for them.

    It is not prudent to suggest otherwise, you need to be a licensed contractor to perform the work that you are doing. If you do a kitchen project without a license you are breaking the law. Take a look at the CSLB and how many unlicensed contractors get fined. It is not a drawback but a necessary requirement for the building trades.

    Since you are writing a column on woodworking business please respect the laws that are made to protect both contractors and homeowners. You presented false statements and are showing ignorance of the law and business environment. As a professional I must conduct business legally and honestly and have never found drawbacks due to licensing. I consider it reckless to fly under the radar.

  2. Griz wrote:

    I have been a contractor in PA for years. I would not consider starting a job without at least 50% down. The exception is a government job that I am sure payment will be in a timely manor. I make sure the job is not so large that it will be a burden financially or make sure there are payments made at predetermined completions.

  3. Weldon Johnston wrote:

    We as contractors where I work are limited to the amount we can require for deposit.
    We acknowledge this with the customer and do make allowances sometimes. One way we can deal with this as a contractor is to do progressive billing where an initial deposit gets the job on the books, the second deposit starts production and then depending on the job timing, billings based on production on floor and deliveries to the job site.
    We happen to be in a market that is less competitive for what we do so we usually just insist on the larger deposit even though it isn’t something we can require, we can walk away from projects that the customer is unwilling to work with us on. We do not finance other peoples homes, especially when some of the homes we work on cost more than our 15 man shop!
    I do understand that these laws protect customers from unscrupulous contractors, but progressive deposits/billings keeps it closer to even.

POST A NEW COMMENT




The content of this field is kept private and will not be shown publicly.

Comments *



* Required fields
Read our Comments Policy