In todays volatile economic climate, deciding the structure of your business is difficult at best. Knowing what customers to go after and why. What affect that will have on your cash flow versus your work force. And what caliber of employees you will need to complete the task. Ive notice 3 separate types of install companies emerging from the aftermath of the financial turndown.
The first are “ONE MAN SHOWS” these companies typically work for 1 or 3 companies and owner operators that do well at around $200k to $300k. These businesses are usually pretty efficient but have a have a really hard time growing because they are built around a framework that avoids payroll, income and sales tax. Making business loans problematic. On the bright side, well managed one man shows can produce a lot of cash that makes the banking aspect irrelevant in some cases.
The second are standard install companies, These companies typically have 5 to 10 installers, several laborers all run by one superintendant. These companies typically do $500k and up. Ive heard of these companies doing as much a $3 million in revenue. However they usually have a combination of installers that are employees and subcontractors that are “One Man Shows”. This seems too be an efficient way of doing business however a higher level of command and control is needed to pull it off. This means these companies would require an office staff and possibly a more robust management staff and sometimes include a sales team in order to feed the best. These companies pay the full line of taxes so profits are usually lower but the volume that these companies usually make up for it and then some.
The Third type of company is the Supply and Install company, These companies are typically Distributers before they are installers but in some rare cases an installation company can muster the capital and infrastructure needed to make the transformation. These companies are very complicated because they have all the problems of a supply business and a install business, however the fact that it is all under one roof sometimes makes fixing these problems a lot easier legistically speeding. These companies usually do from 1 million and up. The sky is the limit for these businesses because the material costs so much that its only limited to what you can sell. Companies take a percentage of the material and because they have first swing at the sale, they usually price and do the install as well. The money aspect of these businesses is only the beginning though. It is very hard to open and run a successful company like this because of the way the manufacturers do business. It is more politics than business, companies maneuver for years to get the right lines and products. These worth of these companies after all is said and done is that when or if the economy fluctuates or slows, these companies typically do much better because they are more profitable and can make a margin on both material and labor.