Monthly Archives: February 2020

Planning to Move Out of State? Here’s How It Affects Your Contracting Business

Construction has always been a highly regional industry. Even if you work for a national or international company with satellite offices in multiple states, you’re still focused on the building needs of the community close to home. This can really complicate things if you’re working on a certification but you’re not planning to remain in the state. Here are a few things you should do, if you’re working toward becoming a licensed contractor in California but you don’t intend to stay here to build your career.

  1. Research State Regulations
    Although there are international and federal regulations on the way you build things and the types of work you can do with a license, most rules you will have to follow are set at the state level. This means that if you move to a different state, you can expect that you will need to follow different guidelines. Well in advance of your move, you should invest the time to research the common guidelines you can expect for your particular field and the kind of services you plan to provide. This will help you avoid confusion or problems after you move and start working to set up your business.
  1. Learn About Licensing Requirements
    Every state has its own licensing requirements. Some states only require a license for certain types of services, while others may have much higher expectations. The last thing that you want is to get in trouble because you didn’t have a license when you needed one. Look into the licensing requirements for the state that you plan to go to and make sure that you understand each step. With the experience that you gained in California, you may be able to bypass some of those requirements. But there’s a good chance that you will need to take a different exam and submit an application with different requirements than what you can expect here in California.
  1. Look at Limitations for Reciprocity Agreements
    Reciprocity agreements for contractor licensing can be a wonderful benefit when they exist. For example, the state of California has reciprocal licensing agreements with:
  • Arizona
  • Louisiana
  • Nevada
  • Utah

This means that you may have a much shorter path to securing a license in these states. Make sure that you know all the details. Consider contacting the California State Licensing Board or the licensing authority for the state in which you plan to move. This will help you confirm that you understand your responsibilities and the best way to use this benefit.

  1. Talk to People Who Have Moved
    With a state the size of California, it’s not difficult to find people who have moved from California to another state in the country. If you have the opportunity, talk to people in your field who moved from California to the state you plan to go to. It might be worth checking out a construction conference in that area to meet people and network. This will help you get a better sense for what the workload is like to establish a business in that state, as well as what you can expect to find in your field as a whole.
  1. Consider Regional Supply and Service Differences
    A lot of your focus may be on how you can meet the requirements needed to provide services in your chosen state. It’s also worth finding out about regional differences in supply chains and services. For example, you may find that inland states take longer to get supplies that require international shipments, especially those made by boat. You might also discover that the demand for your services is significantly different in another region than it is in California. This might be a benefit for you, if there are more people who need skilled workers in your field in that state. But it might also change the way that you offer services, so it’s good to have a plan in advance.

California is a great place to live, but it’s also a good place to get your construction education for a career somewhere else. To find out how you can become a licensed contractor, visit CSLS today!

AB 5: How the Law Affects the Construction Industry, and How It May Change

California’s AB 5 has only been active for less than two months, and the effects are spreading across multiple industries. Although construction has been relying on independent contractors for decades, the long reach of the law may make things more difficult for professionals working in the industry. A lot of people are also fighting to change the law, through amendments or an eventual repeal. Here’s an update on how this legislation is affecting construction, and how that might apply to your contracting business.

Meeting the ABC Test
The construction industry in California used to rely on other requirements to establish whether or not someone could be legally classified as an independent contractor. The ABC test implemented by AB 5 creates a new set of standards. Specifically:

  • Independent contractors must have free control over their own businesses, including the work that they might regularly do for another company.
  • They must also be established as a contractor or business owner in a formal way.
  • They must offer services that are different from that company‘s business model, and be able to sell those services to others.

If you are an independent contractor, it may not be very difficult to meet these requirements. But it depends heavily on the work that you do.

Exceptions for Subcontractors
The use of subcontractors is a major part of the way that AB 5 can affect the construction industry. Subcontracting is a very standard practice, where it would be less common in industries like retail, transportation or hospitality. If you regularly hire subcontractors, you can usually avoid worrying about this law if you make all of your actions related to subcontractors above board. You need to:

  • Make the contracts clear
  • Put expectations in writing
  • Distinguish your services from theirs

There are some fields in construction where this may prove to be a problem. For example, contractors who rely on subcontractors to provide daily services, or who request additional things on top of the work indicated in the contract, may need to separate these things. It’s normal to develop a working relationship that borders on friendship with your regular subcontractors. But you’ll need to make sure that it has a formal basis.

Worker Misclassification as a National Issue
While business owners in a lot of industries are worried about what AB 5 may mean for them, it’s important to keep in mind the spirit of the law as well as the details. The premise is that the state wanted to prevent businesses from treating people like employees without giving them access to benefits and other services like workers compensation or unemployment. This also changes tax liability that makes it harder to fund government systems.

Most independent contractors in construction shouldn’t have a problem proving that they’re not employees. But how it applies to you depends mostly on the way that you run your business. If you hire a lot of subcontractors, you’ll want to make sure that they can meet the subcontractor exception. If you are typically working as a subcontractor, it may be worth investigating how your typical work environment may apply to this law.

The Future of AB 5
It’s hard to tell what will happen with this law in the future. Since it became active in 2020, many lobbying groups in various industries have sought legislative support to amend it or scrap it altogether. At the same time, other states like New Jersey have considered similar legislation to fight worker misclassification. While the broad effects of AB 5 have made some states wary of enacting their own solutions to the problem, there’s also a possibility that it could become federal law, as well. As a contracting business owner, it will be your responsibility to make sure that you continue to meet these requirements in the work you choose to take, as well as what you offer.

Becoming an independent contractor offers you a lot of freedom to create your own career, as long as you can follow the current laws regulating it. To find the perfect career path for you, visit CSLS today!

Is an Electric Vehicle the Right Choice for Your Contracting Business?

Gas prices in California range from moderate to terrible. What you pay is so dependent on a variety of factors that it may be difficult to set those expenses from one year to the next. Electric or hybrid cars have been an option for years, but many business owners worry that they won’t have the versatility offered by a gas-powered machine. The industry is changing a lot each year, so it’s important to keep tabs on what’s coming. Here are a few ways you can determine if an electric vehicle would be a good choice for your contracting business.

You Have a Limited Region for Services
Years ago, electric cars had a very limited range. Now, there are several electric vehicles that can last for 200-300 miles between charges. The major difference for planning out the daily use of your contracting business is the access to energy sources. If you find that you regularly need to drive 100 to 200 miles or more to a job site, you would need to locate a nearby charging station or consider a different vehicle.

You Can Install or Find Charging Stations
One of the major concerns about electric vehicles is the ability to charge it. You can’t simply go home and plug it into the wall. This means that you will need to either install a charging station at home or your place of business, or find charging stations in the area. Charging stations are becoming more common. And while the cost to charge may be competitive or even cheaper than what you would pay for gas, you can’t fill up the battery in five minutes. If you have the ability to spend about $1,000 on a charging station, you’re more likely to be able to manage this limitation.

Your Vehicle Limitations Are Lower
A lot of people have preferences for a specific make and model of vehicle that they like. Being committed to buying cars through one or two specific manufacturers may dramatically limit the options you have for electric vehicles. This is changing over time, and what is available now may be a small portion of what will be available five years from now. But if you are less worried about who is making the vehicle that you buy, you’ll have greater choice. This is also true for contractors who don’t necessarily need to work out of their vehicles, using them more for commuting to and from the job site.

You’re Willing to Take a Chance on New Products
The thing about new technology is that it can be relatively unpredictable. The idea of buying an electric vehicle the year that it comes out for the first time takes some courage. You have to be willing to deal with some minor design flaws and other issues that come up before manufacturers have a chance to test out the product on a much larger scale. But if you’re an early adopter of technology in general, this may not be a problem. Getting a head start on new technology may help you save money or make your job easier. If you know that you are often excited about the next big thing, then buying a brand-new model may present a reasonable investment.

Your Vehicle Maintenance Obligations Are Too High
Spending money on vehicle maintenance is part of the job description for a lot of contracting business owners. When it comes to electric vehicles, costs could be lower in most cases. Electric cars do not need things like oil changes, which can add up to hundreds of dollars a year. You may have a harder time finding a mechanic who has lots of experience servicing electric vehicles, but the difference in equipment may also lead to fewer repair needs. If you find that your vehicles are constantly in the shop for one reason or another, buying electric might be a way to circumvent at least some of it.

Buying a new vehicle for your business takes some serious research. If you are a good candidate, electric vehicles could help you cut costs and save your profits. To find out more about building your contracting business career, contact CSLS today!

Working While Distracted: How Your Contracting Business Can Set Meaningful Device Use Policies During the Workday

You’re calling the team around to talk about a particular concern, and you realize that a couple of people are consistently missing. Device use on the construction site can be a practical and timesaving decision, particularly for all the apps designed to improve safety or efficiency. But it’s easy to forget what a distraction smartphones and tablets can be while people are trying to work, as well. Here are several factors to consider as you put together a policy for smartphone use while employees are working.

Identify Existing Problems
Since there is such variety in the day-to-day workings of a contracting business, you’ll want to start by identifying the problems that you have. It’s worth investigating what you might expect if you have a larger workforce or if you start offering different services, but it may make more sense to begin with what you see right now. For example, many people use smartphones to listen to music or podcasts while they’re working. They may also use them to text while operating equipment. Watch the way you and your employees use them throughout the day, so that you can address the most pressing issues first.

Look at Benefits to Workflow
Smartphones create problems, but they also solve them. The worker who is busy on their phone while on a break can also communicate with you or other employees using the same device. Many apps designed to improve your construction workflow are meant to work on smartphones because these tools are fairly ubiquitous. Make a list of every way you use a smartphone during the work day for business-related tasks. You’ll need to make sure that they can still get done if you change how much access your business allows for it.

Consider Future Risks
Ultimately, you’ll need to figure out what are your biggest risks from permitting smartphone use at the jobsite, now and in the future. Employees who are wearing noise-canceling headphones with music playing may not be as aware of their surroundings, or might not be able to hear warnings from others. This is what OSHA claims is one of the biggest safety risks related to smartphone use. But other activities that require smartphones may also be a problem. Devices and apps can cut down on the time you spend working on projects, but they’re only worth it if they can remain a helpful tool and not a dangerous distraction.

Avoid Reactive Decisions
In the wake of a near-miss, it’s tempting to set a strict no-smartphone policy that leaves little room for ambiguity. And for some jobsites, this may simply be a requirement. After all, if you’ve got a team of people running heavy equipment all day long, it would be awful if one of them was regularly looking away from the mark to answer text messages. But it’s important to make your policy decisions from a position of clear-headedness and reason. If you used to have a permissive policy and now you allow nothing at all, you may inadvertently encourage people to try to sneak around you. In short, you’ll need to get your employees’ buy-in for a policy change to work.

Set Realistic Goals
Any hardline policy for employee safety needs to be serious. But it also must be something that you can carry out consistently. For example, if you say that you’ll collect and secure everyone’s smartphones when they arrive and keep them until the end of the work day, you’ll need to be able to enforce that policy every single day. If you decide that you’ll give people access on breaks, you’ll be in charge of getting them back once that break is over. Talk to your workers and get their input about what they need and how you can find a safe compromise. You’ll be much more likely to get their compliance as a result.

Monitoring smartphone use on the jobsite is just one more thing you’ll need to be able to do as an owner of a contracting business. For more tips about developing your contracting career, contact CSLS today!

Breadth or Depth: Reasons Your Contracting Business Should Consider Generalizing or Specializing

Is it better to be a master of none or a master of one? This is a question that skilled tradespeople have been trying to answer since the Middle Ages. In truth, it’s not possible for most contracting businesses to be so general they literally do any job. Most contractors will specialize to some degree, but the level of specialization can affect how you work (and how much work you can get). Here are a few reasons to consider going in either direction.

Who Gets the Best Jobs in Your Area?
If you’re already running a business, what you do with it is going to depend a lot on where the money is. On the other hand, if you haven’t started yet, it’s even better to research how people work in your field in your region. Perhaps the best jobs, the highest pay and the greatest reliability go to the people with the deepest reservoir of knowledge and experience. But it could also be true that the most reliable route in your field requires flexibility to take different jobs as they come. Your research will help you determine which path is best.

Are You Struggling to Find Consistent Work?
The big worry about going into a niche specialty is that you’ll narrow your business out of success. After all, if you can’t take the jobs that exist but you’ve got tons of experience in a style of work that no one needs, you won’t be able to earn enough income to pay the bills. And although this is a question you certainly should be asking yourself in the early years of your career, you may need to consider it again every few years. An inability to find consistent work in your field, regardless of your own personal ability and marketing structure, is a sign that you may want to diversify your services.

Can You Meet the Needs of Your Field?
On the other hand, some business owners realize that there is plenty of work in their area, but not for them. Being able to meet the needs of your area and the specific requirements of your field is a balancing act. The last thing you need is to be yet another business that lacks the skills, experience or equipment to perform the jobs that so many clients want. If you see a need in your area that isn’t getting met by yours or other businesses, this may be your time to specialize. That extra investment into your skillset could make your services indispensable.

Do You Understand Industry Standards for the Field?
Build a few years of experience in a particular field, and you’ll get to know the industry standards inside and out. If you start to think about expanding, you need to make sure that you can still meet those requirements. Failing to do so can have bigger consequences than not trying. For example, if you’re accustomed to taking contracts in the private sector, you’ll be used to a fairly different workflow than if you shift to bidding on public sector jobs. Being able to bounce back and forth requires quite a bit of specialist knowledge, especially about contracts and liability.

What Are the Risks and Rewards of Expanding Your Services?
Of course, delving into new services always requires an investment. And as a business owner, you must pay attention to the return you get from specializing or generalizing. In many cases, offering a unique set of options or expanding into a different field requires getting another license. Specializing may call for additional education that might take months or even years, depending on what you hope to do. You must also keep opportunity costs in mind. If you’re going to focus your efforts on one thing, you want it to have a higher chance of success or bigger rewards than the alternatives.

Deciding if you’re going to be a generalist or a specialist is a question you’ll ask yourself every time your business needs a change, especially at the beginning. When you’re ready to begin your construction career, visit CSLS today!

Do You Really Need a Bachelor’s Degree to Have a Good Career? Why Trade Programs May Be a Better Path

If you’re a member of Generation X, a millennial or Gen Z, you’ve probably had the importance of getting a good college education lectured at you since you were learning to walk. When getting a bachelor’s degree is no longer a guarantee of securing any job, much less a great career, it may be time to look at other options. Although college is still a good choice for a variety of reasons, recent studies show that the bachelor’s may not be the gold standard as it once was. If you’re thinking about college, here’s a few reasons that getting your associate’s degree might be the better long-term choice.

Lower Student Loans
When the average college graduate leaves a California school with about $35,000 in debt, it’s time to consider the return on your investment. It’s true that graduates with a four-year degree tend to earn more than someone who only finished high school, but there’s a wide world of opportunities between the two. By getting an associate’s degree, you not only shorten the time to graduation. You also give yourself the chance to get the work done at a community college with a good trade program, which can dramatically cut down on the total costs for your education. Shrinking your loan potential to half or a quarter of what it could be makes it easier for you to find your place in the industry, wherever that may be.

Flexibility to Add Certificate Programs
Any degree is an investment. It’s just that a bachelor’s takes more of an investment for a longer period of time. If you’re trying to work while studying, like many Californians, you need to maximize the benefits you get from the program. Lots of two-year colleges offer certificate programs along with an associate’s that you may be able to work on at the same time. And if you’re not committing for several years into the future, it may be easier for you to do just that.

More Time for Apprenticeships or Other Career Development Options
In this industry, you need time to develop your craft. You can get some of it inside the classroom, but that won’t be enough. In order to even take the contractor licensing exam, you usually need years of experience working for another licensed contractor in your field. This is true even if you get a bachelor’s degree. With a two-year degree, you’ve got more time to devote to finding the right fit, whether that means applying for and participating in apprenticeships or other options for career development. And since apprenticeships are an even more effective way to start on a great career path in the industry, this gives you a better chance of getting the job you want.

Similar Income and Growth Opportunities
Although education is a worthy pursuit in its own right, there are many reasons that you might want to consider what you’re getting from the work you put in. Higher income and greater choices for careers draw most people to college, especially the ones who finish their programs. But recent research indicates that an associate’s degree might be just as effective for long-term income growth as a bachelor’s, especially in industries like construction. Many construction jobs have flexible entry requirements. This often means that an associate’s can set you apart almost as readily as a bachelor’s, especially if you have certificates or other experience to bring to the table.

Foundation to Continue Education Later
If you decide that you ultimately want to pursue higher-ranking positions like a construction manager or executive of a larger company, you may need to add to your education. But getting your associate’s and starting your career from there isn’t going to stop you from taking other programs at a later date. In fact, by giving yourself the opportunity to apply your knowledge at first, you may make pursuing a bachelor’s or even a master’s more effective later on.

Is Lung Disease Making a Comeback in Construction? How You Can Protect Yourself.

Black Lung Disease feels like a reminder of a completely different time. And yet, lung disease caused by the repeated inhalation of a toxic substance is making a comeback in California and other states. The push for engineered stone countertops in residential and commercial construction is creating a problem that many people thought had largely been eradicated. The cutting of silica for countertops, as well as silica dust left on the jobsite, has led to several cases of silicosis. This is a permanent and serious health condition. Here’s what you need to know, and how you can protect yourself and your employees.

What Is Silicosis?
If you haven’t worked with silica personally, you’re probably at least familiar with the packets used in shelf-stable food items to help keep them fresh. Silica is a common mineral that makes up a lot of things you see all the time, like quartz, sand or even glass. When ground down to a powder, silica is surprisingly easy to inhale. But once you get it into your system, it’s practically impossible to get it out. It only takes a few weeks to start showing symptoms of silicosis, or you might not notice it for years. Common signs include:

  • regular cough
  • chest pain
  • fever
  • breathing difficulties

Since these are common symptoms of a variety of conditions, it’s sometimes hard to diagnose. Once you’ve got it, it’s a chronic lung disease you’ll have to manage for the rest of your life. Silicosis can make the side effects of smoking worse, and is associated with a higher risk of lung cancer. It can even be fatal, especially with high exposure.

Why Is Lung Disease Becoming a Problem in Construction?
Silicosis has been a concern in the mining industry for more than a century. People who are mining granite or quartz get a high level of exposure to it, which increases the likelihood that they will inhale it. It’s becoming a bigger problem in construction, due to the increased popularity of engineered stone countertops. Silica is the primary component of these countertops. At this point, experts are reporting at least 18 cases in four states including California. Although that may not seem like much, it’s possible that there are many more out there that haven’t been diagnosed yet. The seriousness of the condition indicates that people at risk should take steps to prevent it.

Which Fields Are At Risk?
People who manufacture glass or stone countertops are the ones most likely to deal with silica dust. However, anyone who works in adjacent fields or in areas where others are working with silica may also be at risk. This means that if you’re working in electrical in a new house where another contractor is cutting a quartz countertop, you could be inhaling the dust. You’re at risk, even if you’re coming in after they are done.

How Can Contracting Businesses Protect Themselves?
Proper procedures can make the difference between health and a higher risk of cancer or other long-term health problems. If you’re working with or near silica, the Occupational Safety and Health Administration recommends several prevention steps, including:

  • avoiding eating or drinking near silica dust
  • use different materials for blasting
  • washing properly after working with silica
  • relying on water or wet products for cleaning instead of compressed air

In addition, employers may want to educate themselves and their employees about the common signs and symptoms of silicosis. A faster diagnosis can help avoid the problem getting worse.

Working in construction was always a little bit risky, but there are modern trends that can make it worse. Knowing about the rise in silicosis cases in California can help you identify ways that you can run your business safely and effectively. To learn more about the best practices for a variety of construction fields and prepare to take your licensing exam, contact CSLS today!

Tracking Equipment Maintenance for Your Contracting Business

It seems like every time you start a project, something else breaks. Equipment is expensive, and whether you rent or buy, you still need to ensure that everything you have is ready for use. Equipment maintenance takes time and doesn’t bring in the big bucks, but there are plenty of good reasons to make it happen. Here are a few tips to understand why regular maintenance is important, and how you can set a reasonable schedule to track it.

Make Maintenance a Priority
When you get into the busy season, it can be difficult to imagine having spare time for equipment maintenance. You may be running almost nonstop from dawn until dusk, and you need those tools and machines sometimes on a daily basis. Paradoxically, this is why upkeep is so important. If you can’t think of giving a day toward maintenance, you definitely can’t afford to lose the machine for a week or more. If you’re running on tight margins, paying out for repairs will cut into your bottom line much more than scheduled upkeep. When you make it a priority in the first place, you can avoid the bigger issues that cut into your project timelines.

Document Your Equipment Upkeep Needs
You probably keep some kind of inventory for supplies. Your equipment needs the same level of attention. Tracking the state of your assets is a good business practice, no matter what industry you’re in. If you don’t have a lot of equipment, you might wonder what is the point of documenting the fact that you have a drill. The benefit of documentation is that you know what you have, and you can make a plan to maintain it from there. Write down:

  • all of the equipment you own for your business, including administrative tools
  • when you bought it
  • how long it should last with good care
  • frequency of upkeep
  • the last time you maintained it

This will give you a single point of reference for planning.

Research Maintenance for Rented Equipment
With such a robust market for equipment rentals, you may not have much owned equipment at all. You still have to keep track of it. Rented equipment can save you a lot of money, but only if the tools are in good shape. When you research rentals, follow up with the company to find out when the tool or machine was last maintained. If you’re keeping the equipment for a longer duration, find out if upkeep is part of the service, or if you’re on the hook to do it before you return it. If a company can’t show you how often they attend to their inventory, look elsewhere.

Balance Work and Downtime
It can be tempting to do it all at once, but you need to find a balance. Try to schedule major maintenance, upgrades or repairs for the slow season, usually winter. Otherwise, book a small amount of time each month to inspect your equipment. If you have to send something away for maintenance, mark it as unavailable in your inventory. It’s not a bad idea to build some redundancy in the system, particularly for smaller items. If you have a bunch of hand tools that run on batteries, make sure you have enough batteries to go around.  

Make Equipment Maintenance Efficient
Since asset management applies to almost any business, there are a ton of tracking programs available. If you have an app or software for your inventory, it may have classifications to help you manage your equipment as well. Many systems also let you track how you use tools. You can set up a system that uses barcodes that your employees can scan every time they pick up a piece of equipment. This will help you track which tools are getting used more often, which may indicate a need for inspection more frequently. It can also make it easier to identify when a piece of equipment is having problems, because people aren’t using it as often as they should.

Equipment maintenance is important for your business success, even if it feels like something you can put off. Making it a priority helps you finish projects and avoid expensive repairs. To start building your career in construction, contact CSLS today!

Can Your Client Afford the Project? Here’s How Your Contracting Business Can Find Out

When you put in a bid for a project, you generally expect to prove that you can actually do the work. But since you have so much riding on every project you do, you should probably be doing the same thing for your clients. Every contractor has a horror story about a client that seemed legit and then bailed on the bill at the end. If you don’t want this to happen to you, there are a few things you can do to follow up on a client’s ability to pay. Here are some things to ask for, and ways to request them without alienating prospective customers.

Set a Pay Interval You Can Manage
It’s really tempting to let clients pay you whenever it suits them. If you do this long enough, you might go out of business. Companies that have a lot of overhead may teach you that it never suits them to pay you in a timely manner. Instead of catering entirely to their preferences, find out the regional billing standards for your industry. Depending on the project, you might charge the full price upon completion, or bill with 30, 60 or 90 days to pay. Don’t let this aspect of business administration slip through the cracks. You don’t want to discover that they had the money when you did the project, but spent it by the time you billed them.

Know When You Can Ask for Financial Verification
There’s basically two times that you can ask for proof that a client has funds sufficient for the project: at the beginning, and if something happens during the construction process. The latter can create a sticky situation, so it’s better to find out about this before you start ordering materials and scheduling hours. This is also a good opportunity to ask about timelines. If the property owner’s ability to pay is contingent upon them securing a grant or other public funds, make sure they got it and will have the money ready before you start.

Get Evidence From the Start
Beyond feeling comfortable that the client will be able to meet their end of the deal, the kind of evidence you collect depends how far you intend to take it if the client doesn’t. Usually, you can ask for verification of ability to pay in the form of a loan, offer of credit or a bank statement showing sufficient funds. If the client fails to do on your initial request, it’s probably best not to do any more work until they can provide evidence. If you bill for portions of the project in stages, send invoices on time and track when they are paid. In the event that you have to pursue someone to get the rest of your money, these records will be necessary.

Avoid Project Scope Creep
Of course, there are instances when everything checked out at the beginning, until the project exploded in scope. This underscores the need to give a clear estimate before signing any contracts to provide service. If the client changes their mind about something and requests a change, clarify those changes in writing and have everyone sign a new contract. This helps avoid confusion at the end, especially if the alterations mean the total is higher.

Choose a Reliable General Contractor
At times, part of your work might involve subcontracting to another general contractor. As a general rule, the general contractor for the project is the one who has both the right and the responsibility to verify a client’s ability to pay. And typically, you’re going to wait to get paid until they do. As a result, you’ll do better to work with general contractors who have experience and the savvy to know how to follow up with clients for this information. That way, you’re less likely to be left on the hook for your expenses if the project fails.

Keeping the income flowing through your contracting business is the way you succeed. That takes clients who can pay for the services they request. For more information about starting a successful business in construction, visit CSLS today!

How Do Home Sales Affect Your Contracting Business?

Starting a career in new home construction can be easy or difficult, depending on the timing. But even if you stay out of this part of the industry, the sale of homes (and property in general) can affect the kind of business you get and how much people are willing to pay. This guide identifies the construction fields that are often affected by the strength of the housing market, as well as a few tips to keep your business’s demand steady.

Interest Rates and Construction
In order to see how the housing market can affect construction, it’s important to understand how the economy influences both. When housing prices rise largely unchecked, as they did in the middle 2000s, the Federal Reserve may raise interest rates. This makes it harder for buyers to qualify for loans, and those who can won’t be able to buy as much. That slows the market, which can cause home values to plateau or even drop. This isn’t necessarily a bad thing if it happens in small increments, unlike the huge housing crisis of 2008. As a business owner, you should keep an eye on the strength of your target market. If prices are running high or starting to drop, you need to plan for a slowdown in business.

Indoor Renovations
When it’s a seller’s market, homeowners have a lot of potential buyers for any given property. This means that they are more likely to request renovations as a way to secure a higher offer, not to get someone in the door in the first place. People don’t feel so bad paying $20,000 or $30,000 for an upgrade to the kitchen if they think it will get them $50,000 when they sell a few months later. You can make this a reasonable transaction for you by verifying that your clients have the means to pay before you start the job. This way, when you come to collect payment at various stages of the project, you’re more likely to get it.

Landscaping and Exterior Renovations
Like kitchen and bathroom renovations, roofing is a field commonly affected by changes in home sales. Since this tends to be one of the most expensive home improvement projects, especially using materials like metal, homeowners tend to save it until they absolutely must get it done. You just want to make sure that they’re ready to pay when they ask you to take it on. If you’re in a luxury market like outdoor pools or exotic landscaping, it might also be worth picking up a few lower-end specialties. When values fall and homeowners have to pay cash, they often make less-expensive choices.

New Construction
Have you ever driven by a new development with a handful of half-finished houses just sitting there? There were quite a few of these about 10-15 years ago. When the housing market corrects, it can be harder for everyone to get funding, not just homebuyers. Developers faced with the prospect of no buyers may not want to invest another dime into completion.

If you’re subcontracting for a developer, it’s worth investigating how well they know the local market and how new home sales are doing generally. If the whole thing fails after construction begins, do you still get paid? The last thing you want is to sign onto a project with a bunch of buyers that fail to get loan approval, or do work that stops halfway through from lack of funding.

Commercial Developments
All of this can spill into commercial developments, as well. A development or revitalization of a city usually involves creation or renovation of shopping, dining and entertainment outlets. If people aren’t buying homes in a newly-developed area, there will be less demand for commercial spaces in the same region. Keep track of the market in any given area, and as you would for a residential developer, make sure the person hiring you for commercial construction is likely to pay.

A strong housing market can be a great time to work in construction. Knowing what to do when it isn’t helps you stay on the path during every season. To find the licensing program that meets your career goals, visit CSLS today!