self employed welders

[Bob Kraemer]

Just because you have a contract or purchase order doesn't mean squat especially in small claims court. You can go to small claims court & get a judgment against somebody, but they don't do anything to help you collect your money. Except if you are before Judge Judy .

[JTMcC]

Just because you have a contract or purchase order doesn't mean squat especially in small claims court. You can go to small claims court & get a judgment against somebody, but they don't do anything to help you collect your money. Except if you are before Judge Judy .

A contract means "everything". That's why billion dollar construction jobs involve very detailed contract documents, in court a contract means that both parties have agreed to written specific terms.A contract means you get paid.

Having a well written contract almost guarantees you will not end up in court, a very small percentage of contract disputes do. To a judge, a contract makes it very cut and dried who failed to perform as promised, and everyone knows it.

We are talking about amounts and matters that would never be determined in small claims court.

Since you have so little use for contracts I'm guessing when you had your house built, or when you bought your last car you just made a verbal commitment and the bank was happy with that arrangment?

Contracts allow you to lien a job, attack bonds, prevent the contractor from recieving final payment without final releases from all subs/suppliers, there are many tools available to collect, small claims court is not the destination of construction contract disputes in my opinion. But again, when you have a solid set of terms, on paper and signed by all parties (and it can be as simple as one of my quote proposals) dissagreements almost never have to go to the extreem, at least in the relativly smaller numbers I deal in.


JTMcC

[acx780]

Wow, I had no idea. This whole contract thing is really a suprise to me. I guess it's true that just cause you can weld does not mean you can run a business. My welding is a hobby/business. I worked hard earlier in my life to make it that way. I spent a working life time doing business and I'm still doing it. These are some of what I call the tenants of business. The first is to always be sure everyone knows who will do what and the what is defined clearly. If there are materials to be purchased, my time and my profit margins are clearly included in my bid. The payment terms are clearly spelled out and change order routines are specified. I like to buy materials for jobs because I make money on it. Like JTMcC said this is a money making venture and the more you can honestly make the better off everyone is. I never did Project Management on the welding side but I was in plenty of meetings with those guys. When the job needed change orders they often were discussed in progress meetings that I was at. The archetect and engineer would always insist they did'nt make a mistake, sometimes it really was'nt them (tongue in cheek). More than once I have heard a GC say, "ok, this sounds like a fix, how much with materials, labor and your profit". The GC knew there would need to be change orders and the bidders like me count on change orders to make a little extra. If you work without a contract (even verbal in Md is good enough) then you pretty much deserve what you get. Kinda like working without a harness on high steel. You can do it but sooner or later the wind or whatever might knock you down. These days I spend more time offering advice and experience to younger contractors. I just keep reminding them that the reason we do business is to make money and if we can do that and do it well everyone will stay happy.

[shoprat]

thanks so much for all the good info,i really appreciate it.what i was hope to be able to do was to start something on the side and keep the day job for awhile and find my market,i enjoy all welding processes but was going to try to focus on the tig alum. stainless stuff because i dont have a comercial shop so i thought i could pick up the smaller repair/fab work and but it would really be nice to be mobile too(i like being out and about sometimes)this time i was planning on getting some tig work so i could start replacing every thing i sold,so i am a little gun-shy but i think its the right thing for me to do so if i have to buy it up front i will thanks again for the help and the encourgement

[FusionKing]

You bet ...this was a great thread... thanks to everyone for all the great business practice/lessons learned info!!

[Portable Welder]

I have to agree with JTM.
If your out doing $ 150.00 jobs, working for home owners then yes I get my money when I'm done, but its hard to make it working in that world.
I trust people all the time and its very rare that I get taken.
I understand what Coal is saying that getting stuck with a $ 5,000.00 bad debt would be very devastating. unfortunately you you are holding yourself back if say FedEx were to call you to do a job and you needed money up front for material or had to be paid when the job is done. Just as JTM said they would through out your quote and go to someone big enouph to finance say a $10,000.00 job.
If you want to play ball with the big guys you have to play by thier rules or you dont get to play at all.
If you were doing say a $ 200,000.00 project they may give you 3 draws off a job but no money up front.
My advise is to treat each company or customer different and use your gut feeling on how you handle your business deals with them and in time you will find out what works for you.
I will say that I run my business just as JTM does, but when I was starting out I ran it like coal, on the safe side and as I got more money in the bank I was able to take on bigger jobs and made more money.
Just as JTM said about marking up materials I pay say .53lb for tube and sell it for about .75 cents a lb depending on the quantity the customer is buying from me.

[Portable Welder]

Oh and the other part of the post, if your starting out you have to be a steady eddy, Keep your day job and work nights and weekends to gain customers.
I myself started out this way and what I did for customers was I drove to all the industrial parks within a 30 mile radias and I mean all.
I was in my welding rig, clean shaven, no cigarets, clean work clothes and a smile on my face.
I had a 1000 business cards and knocked on every door and when I hit every business I went back to the beginning and started all over again and at the end of every day I always found some one who needed something fixed and had money at the end of the day.
I diddnt start at lunch time either I was knocking by 8:00 am and didn't stop untill 5:00, however I usually found work and didn't have to knock untill 5:00.
This method does'nt work for everyone because it can be discouraging at times and you have to be a real go getter.
I ended up having people like miller beer call me a year after I gave them a card, but they called and I still have some of those customers since 1989

[Darmik]

Just because you have a contract or purchase order doesn't mean squat especially in small claims court. You can go to small claims court & get a judgment against somebody, but they don't do anything to help you collect your money. Except if you are before Judge Judy .

bin there done that it took two times for me to learn that lesson
or lugwig and vinnie are waiting just out side the court house

[acx780]

I have never had a judge find against me and as far as collecting money we have always gotten paid. Sometimes it takes a little additional effort and sometimes you can start it right when the judge finds in your favor. As soon as they find in your favor tell the judge you dont think the guy will pay. Sometimes, never happened to me, they will tell the guy to pay up or face contempt. What I do first is have a real contract. A few hours spent on an attorney to have them write up a boilerplate contract (one you change the names on) can save thousands in the future. It makes you look a lot more professional too. Then, I make sure the customer knows the work is complete and we expect payment per the contract. If there is a problem I expect to hear about it then. When the payment does not arrive when it is supposed to I make a phone call and ask where it is. I note when and who I talked to. I follow that up with a nice but firm letter. I wait a week and do it again. If I dont get a responce I make it clear that the next move is to contact the credit agencies. If there is a legit reason for non-payment you'll find out and then it's up to you. I know it seems harsh but they have your money and some never intended to pay you in the first place. I used to have a problem doing this till I relized that if the roles were reversed they would do it to me in a heart beat. I never had to file with the credit people but I could have.

[chris2626]

man the more i read about rig welding and contracts the more you guys are scaring me haha The more I think I'd rather may work for someone else

[DDA52]

Small Claims court is a joke at best. Yes, you can get a judgement in your favor, but good luck getting any results from it. The professonal deadbeats know it has no teeth and will use that regularly. I had a contractor customer of mine take a home builder to court. After winning numerous judgments against the guy in SC court, totalling almost 40 grand, he still has yet to see a dime almost 5 years later. The builder in question is still doing the same thing to people and still loosing in court...but not paying a dime. He had contracts, etc and filed leins and all that bull...but the houses still sold and changed hands. Leins are another joke. Banks and other people in the know can bond out a lein in a few hours time and get on with it. The lein is still there and unsatisfied. Worse, it is all legal. At least it is here.

Tx has a law that protects service companies. Instead of leins, I file criminal charges for Criminal Theft of Services.....works like a champ. I file with the DA and am referred to the sheriff quickly for investigation. It is usually at that point I am paid. When they find out they are looking at hard time, usu 8-15 years in prison instead of a slap on the hand, they cough up the money post haste.

I still get contracts signed and do all the paper work. BUT, experience has taught me not to rely on it. Trust your gut. If you have a bad feeling about the guy or company...WALK AWAY!! You may be wrong, but I would rather loose work on a hunch than have my hunch proven right and end up in court/debt/or worse for years. I wish I could get away with marking my materials up like some do, but my market won't allow it. Too cut throat right now. On my concrete end, there are a few guys that will do a complete slab labor and materials, for the cost of my materials. No idea how they can do it, but it is being done. Ruined the market. Might be why I am not doing much on that end...ain't worth it. I knew something was up when the builders started asking for sf prices that were the same as what we were charging about 10 years ago.

If you go out on your own, diversity will keep you well fed longer than a single venture....if you can do it. I wear many hats...sometimes too many. It has served me well since I started doing it. When one market falls off, the others I am in will take up the slack. I have never had all of them drop off at once. When I got in trouble was when I was relying on one single market. When the one drops off, you are left in the cold...........just a thought.

[calweld]

If you're getting burned by customers, you are doing work for the wrong type of people. You would be better off doing a little research everytime somebody new calls, and being more discriminating on who you work for, and making a markup on all resold items, rather than giving the material away for everybody.

Last year, I sold not only steel, stainless steel, and aluminum, but also hydraulics (pumps, motors, cylinders, hoses), power transmission products (drives, belts, sheaves, sprockets, chains), wood , truck and equipment parts, tires and wheels, nuts and bolts, the list goes on. My "profit" (margin or markup) on all these total for the year was well into five figures, a not insignificant amount of money I would have never seen if I was giving it away.

You have to remember, also, you're setting a precedent. If you're letting material out with no markup, customers will expect that in the future, you can't all of a sudden start marking stuff up 30%, customer pays $100 for something this month, next month the same thing is $130???? Uh-uh, nobody likes surprises, consistency is important, when they call you they like to know what to expect.

[DDA52]

You have to remember, also, you're setting a precedent. If you're letting material out with no markup, customers will expect that in the future, you can't all of a sudden start marking stuff up 30%, customer pays $100 for something this month, next month the same thing is $130???? Uh-uh, nobody likes surprises, consistency is important, when they call you they like to know what to expect.

We live in different worlds. I have lost good sized jobs over as little 60 bucks. By good sized, I mean $3-6000 range. The market here will not bear any markup beyond a buck or two. You can mark it up all you want, you just won't be doing ANY work. Sad, but that is how it is.

My regulars customers are starting to get used to paying higher prices now. I am bumping a few up even higher incrementally. I can mark up the labor on them easier than the materials. They know the costs and will scream loudly if I exceed what they believe they should be paying. Good thing I wear earplugs.

[calweld]

We live in different worlds.

It's possible, but I know even around here there's a certain type of clientele that will try to nickel and dime you to death . . . I either know who they are, or I can recognize them as soon as they start talking, usually my competition gets the pleasure of serving them

[DDA52]

Nickle and diming is SOP around here. That may be why I rarely work for builders. They want everything for nothing and then charge huge markups themselves. Different economy and different mentality. If you don't roll with it, you do not work..it is that simple here. That isn't to say we don't make any money. You can do it, it just isn't handed to you. You do have to work for it and at it. I am selective as to who I work for. I know a lot of the bad ones and avoid them like the plague. I am also griped at a lot for being too expensive. I am cheap by Kali stds I'm bettin'.