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Subject: Re: Insurance and buisness advice: GC + furniture


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Message Thread:

Insurance and buisness advice: GC + furniture

Willis B

I'm in a debacle that is costing me a lot of time and headache. My work ranges from finish carpentry to cabinetry, custom furniture and small production woodworking, plus a few decks and fences now and then! Getting a contractor's license has forced me operate two LLC's, one is a licensed/insured GC, the other is insured as a furniture maker. The two companies are only separate on paper. They use the same tools and work out of one shop, and I'm usually working alone.It's a lot of extra bookkeeping and is in some ways keeping me from growing. I can't figure the proper way to promote myself without angering the insurance company -- I was almost denied renewal of the contractor's policy because they found pictures of furniture on my website!
Does anybody here have advice on how to proceed as a single company that can do both kinds of work? Is there some class of business that could cover both activities, or perhaps a way to structure a relationship between the two so that the difference in liability is less of an issue? I'm open to creating a new entity to accomplish this. Thanks!

5/6/22       #2: Insurance and buisness advice: GC + ...

I don't know how you keep all those balls in the air at one time! If growth is what you are after, I suggest you start hiring. No way can you be out building a deck and taking phone calls about furniture. I have no idea where you live or what the state laws are. Why can't you have two businesses with different names and hire the legal paperwork done by a part time accountant? I suppose you could call yourself a handyman with all those projects under one roof.

5/6/22       #3: Insurance and buisness advice: GC + ...
Pat Gilbert

A division of labor is the main reason for the modern standard of living, IOW pick a niche

5/6/22       #4: Insurance and buisness advice: GC + ...
Mark B

While I agree with the sentiment of Pat and Rich that its pretty brutal to be profitable doing everything you say your doing,... ultimately thats your call as to how hard you want to beat yourself against the rocks.

A good insurer should be able to get you into multiple classifications under one policy. There is nothing saying a GC cant build a table but the nuances of the liability classifications can seem to stump even those in the liability industry.

You may try calling a few different agents and see if you can land on an agent that will do the work of narrowing down those classifications. The problem you face with a shot-gun approach to work is there are miles of nuances in the classifications with regards to field work, heights, scope, and then in the furniture world you have kids, anything stepping/climbing (step stools, bunk bed ladders), on and on. My guess will be for them to cover their own a$$es in regards to your broad net they will just hammer you regardless but it would still be easier (maybe not cheaper) to get it all under one umbrella.

But as the others said, building a deck one minute and a piece of furniture the next may be a good tap on the shoulder to really evaluate how much money your actually making. Shifting gears is far from cheap.

5/6/22       #5: Insurance and buisness advice: GC + ...
Willis B

Yes it is quite "brutal" doing so many different things, but I'm relatively new to the business and can't afford to turn down jobs. Considering the costs of that approach it could be short sighted, but I think its also giving me the chance to find my niche in the market.
The main benefit in having a single business is having a single set of books, i.e. a single Profit and Loss statement. Thus having a better understanding of my actual profit across all the types of work I do. That's the main goal, in addition to cutting redundant admin costs.

5/6/22       #6: Insurance and buisness advice: GC + ...
Mark B

Its a place many of us have been in (maybe not so many will admit it) being fearful of turning down work. Even beyond that may be a touch of enjoyment in variety and not puking out kitchen cabinets all day every day of your life. The mind-numbingness of sanding your three-millionth cabinet door or building your billionth sink base is a relatively nauseating concept unless your in the office and the minions are on the floor churning out the drudgery.

It good your questioning it early. Hard part is expecting your "niche" to find you as opposed to finding it. Deck and fence building other than in wild scenarios is never going to be a niche. Cross those off your list. They are there if your not going to make your mortgage payment but thats about it and by the time you shift gears from a cab job to a fence job I'd say your in the red before youve started.

Keep on your path of refining and whittle your offering down to whatever can cover your financial needs and somewhat keep you invested in the endeavor. Major warning though, most in this world.. if you wind up doing something your not overly happy about,.. things go south. If your the type that profit is all that matters,.. get on the pintrest and figure out how to make it cheaper than china.

5/7/22       #8: Insurance and buisness advice: GC + ...
David R Sochar Member

Website: http://acornwoodworks.com

“Can't afford to turn down work” is the operative statement. The longer anyone does this work, the more likely they are to specialize. The narrow their focus, not broaden. Find a niche and exploit it. You cannot be all to al customers.

5/7/22       #9: Insurance and buisness advice: GC + ...

"Thus having a better understanding of my actual profit across all the types of work I do"
I don't understand the need for multiple books, nor the difficulty of understanding profit. Your profit should be figured into the estimate, and by underestimating something else, it should be easy to see how much profit you earned. Profit, labor, and materials are all line items. You either hit the mark or you didn't. Easy math. As a GC, I assume the insurance feels you have the liability of work from other subs? How can that not be a separate category in the same accounting format? Does just you working on-site really make you a general contractor?

5/9/22       #10: Insurance and buisness advice: GC + ...
Willis B

Sure its easy to see if each project is profitable, but there are plenty of overhead expenses which vary month to month that are are not easy to keep track of. It leads to a skewed perspective in which one company has more income, less overhead, while the other company has the reverse.
Each company has it's own bank accounts, thus separate books. Combining books endangers the "limited" part of LLC because somewhere down the line the two companies start to look like one company if all the money is in the same pot.
I'm a general contractor because I do work that requires a contractors license. And in order to have a license, I need contractors insurance. I could get a "specialty license" which would limit my liability exposure, but I'm not sure that would really solve my problem.

As for specialization, I'm all for it! I'm in the process of rebranding my public image in order to attract the types of work I really want to do. Meanwhile i still need to make ends meet. Solving this two-company conundrum well help towards that end. So in any case... I'm waiting for a quote from a new insurance agent to see what he thinks.

5/9/22       #11: Insurance and buisness advice: GC + ...

Explain to me how overhead changes from month to month. Rent changes? Insurance changes? Those are the major overhead items. Utilities, material, mileage, labor, are all calculated into your hourly rate, they are not overhead.

5/9/22       #12: Insurance and buisness advice: GC + ...

Maybe this will help you; Overhead refers to all non-labor expenses required to operate your business. These expenses are either fixed or variable:

Fixed expenses. No matter what your sales volume is, fixed costs must be met every month. Fixed expenses include rent or mortgage payments, depreciation on fixed assets (such as cars and office equipment), salaries and associated payroll costs, liability and other insurance, utilities, membership dues and subscriptions (which can sometimes be affected by sales volume), and legal and accounting costs. These expenses don't change, regardless of whether a company's revenue goes up or down.

6/8/22       #13: Insurance and buisness advice: GC + ...

That's also my problem dude, I don't understand why we need to have a separate book wherein we can apply it as one.


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