How Do I Pay Myself as the Owner of a Contracting Business?

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Today Tom answers a question we get almost every day. How should you pay yourself as the owner of a contracting business?
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Tom Reber is an entrepreneur, business coach, podcaster, leader of The Contractor Fight, creator of Contractor Fight TV and HGTV host. Tom's content has helped hundreds of thousands of home improvement contractors improve their lives and businesses.
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Опубликовано:

11 июл 2024

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Комментарии : 86

@coreyward6937 Год назад

Hey Tom thank you man! I found you yesterday and have probably listens to over 20 hours of you already ! Thank god for the guys like you ! Man you are appreciated

@mcruz4467 2 года назад

Tom this is awesome! I just made an Excel spreadsheet on your calculation method to suit my needs!

@darwinvilla1577 2 года назад

As an ESL I need to talk so convinced and confident like you my friend… Thanks for sharing your experience.

@JoeGerossie 2 года назад

You are the much needed punch in the face I needed! A lot of good info on this channel

@contractorfighttv 2 года назад

Glad it was helpful Joe!

@betterboss 3 месяца назад

Good stuff Tom!!

@RobbinKring 5 месяцев назад

Hey I just wanted to make a comment, I watch your videos all the time, and if anybody's coming up with excuses why they can't achieve 100,000 or take over a market ....then that's their limit I don't believe in limits I don't believe there's anything I can't achieve! Hell..., I've already put them vision in my mind to have a franchise and be all across the states in every state. Thank you so much for the videos they have helped me keep my mind focused

@blonk333 2 года назад

I wished I would of seen this earlier. Good stuff.

@Sjbarcenasconstruction Год назад

God… so much to learn for a new contractor like myself, thanks a lot for all this info Tom…. Seriously THANKS

@joshua0459 5 месяцев назад

I’ll be becoming a new contractor soon, what has been the most important things you’ve learned in the past year ? (Good or bad)

@stevemill8959 Год назад

Tom I f’ing love you thankyou

@bryanwelton1442 2 года назад

Thanks tom been getting closer to 100k with your help!

@contractorfighttv 2 года назад

Nice work Bryan! That's great to hear.

@larrymitchell692 Год назад

This great content thanks guys

@contractorfighttv Год назад

Thanks for watching Larry!

@moshepinhas3849 Год назад

Loved the video and much appreciated for that valuable information. How this calculation will work with Subcontractors? Thank you!

@avelinodalmeida351 2 года назад

Thank you Sir .

@contractorfighttv 2 года назад

Most welcome Avelino

@sonlitesonlite576 2 года назад

I charge by square footage flat hr rates salery rates all together when I do a project proposal break down all material’s For line items also Linear footage. If there isn’t enough footage to bid on fall or amount then I do a flat rate put it all $ amounts together and that’s my price. But I am getting the concept of asking for $1,000 to $500 up front instead of wasting my time. It is a lot of work to personalize a proposal. But I find my better clients have always went with me cause of the details.

@TheRealMrRitch 2 года назад

Thanks bro!

@contractorfighttv 2 года назад

Any time Raleigh

@Viltrakisdesignbuild 2 года назад

I’ve watched a ton of your videos and done several of the number crunching sheets,but for whatever reason this time it kind of clicked that the more employees you have the less you have to charge to meet profit goals. The burden of profit and overhead is shared by the higher billable man hours… funny how simple concepts can become more significant in new light. Thanks again Tom. Now to be able to train my guys to produce billable hours without sharpening my pencil!!

@contractorfighttv 2 года назад

Joey, we hear this all the time. Sometimes you just have to be ready to hear it. Glad to help!

@ogreg2437 Год назад

I’m really confused on the 1700 billable man hours he used in his example for what to charge for labor. Is that 1700 annually for 1 person?

@ishansiewdath9735 2 года назад

Thanks a million

@contractorfighttv 2 года назад

You're welcome Ishan

@freelow3266 2 года назад

God bless you

@JoseAguilar-by5et 2 года назад

Awesome

@truthseeker1532 2 года назад

Wow. I just realized I’ve been running a non-profit organization for the last 10 years, making barely enough to pay the help (me) 🤯

@contractorfighttv 2 года назад

Time for a change!

@MNJLLC 2 года назад

You deserve better buddy do it for you and your family

@willhull7842 2 года назад

Me too! But if I asked for what I have worked out I would be told to get f#$ked.

@MV-wb2cz Год назад

@@willhull7842 I hear ya on that one. This is why the good contractors move to the big city and the small towns have shit contractors

@robleblanc1571 Год назад

Me myself is in the process of starting my own concrete small business I’ve been doing it for 13 years and know the ins and outs of it luckily I already have a name for myself and am well known in my area

@liers99 2 года назад

Started using a similar formula this year. Working on end of year numbers to see how I did. Like in your first example I am a 1 man show. What’s killing me is production. I simply can’t turn the jobs out fast enough. I’ve got some serious mental blocks on hiring people. In your second example it just hit me that having multiple people producing spreads out the cost of overhead so the man hour is cheaper. Even though total cost for the day is more, production should go up allowing more jobs to be completed in less time. In effect this could also reduce the cost of the job to the customer while still providing my margins. So my next battle is to get through the head trash of hiring and people management.

@restorationconcrete 2 года назад

OMG You hit the nail on the head for me. I'm a one man company who hires subs and managing new business is challenging. I don't want to hire people either so I feel your pain. My main issue is trying to find a tool to manage customers.

@MV-wb2cz Год назад

@@restorationconcrete I am also a "one man show" started a business this past year and agree with turn around and customer managing. I also find that customers like to add on scope to the end of the work (they pay of course) but it seems to keep dragging the job out and hard to commit to a start date on another customer, etc.

@settlescapesllc7863 6 месяцев назад

Same here one man show doing stone masonry

@alphonsodashiell6790 2 года назад

Thank you for this. Holy shit. It's a rap now.

@iancarr4095 2 года назад

I need a demo on two owners. My business isn’t a sole proprietorship. I’m co owner with my partner and if I aim for 100k a year he needs to as well. Plus our 1 employee.

@CoyoteVideo1 2 года назад

Good job

@contractorfighttv 2 года назад

Thanks

@rays2cents506 Год назад

To make that much, I need to charge over $110 an hour. Assuming I can get enough business to work 40 billable hours. Which it's not so bad since I was aiming to charge 100 an hour. However, the challenge I'm having is actually getting leads and building clientele.

@jonathangelnett2616 2 года назад

Thanks a 100k! 😉

@contractorfighttv 2 года назад

haha Thank you too!

@kusdez8529 2 года назад

question what's good markup after this calculation. if im calculating profit and overhead and labor this way. I watched vid and you said 2x but will that be too much?

@epenaloza52 Год назад

New contractor here just got my license this past Friday (April 30) any advice you guys are willing to share..

@bryanmitchell750 Год назад

Does having a business partner are we trying to pay ourselves 50k each? Or double the formula for us both to be at 100k???

@sonlitesonlite576 2 года назад

Where do you get the 1,700 billing hrs from? For a year amount of guys

@jeremyturner6173 Год назад

Whats the best app to secure jobs

@handymannick7399 2 года назад

✅

@jensenda21 2 года назад

Is this formula the same with operator running heavy equipment? How should I factor in for the machines themselves hourly or include them as overhead?

@contractorfighttv 2 года назад

Thanks for watching. Figure out the day rate the machine costs you and double it and then add your labor. 👊🏻

@sonlitesonlite576 2 года назад

What is 1.4? A % tage $per sq ft?

@SacredPerception 7 месяцев назад

At that $160 price point do you double it to $320 for the 50%?

@josephdingman9924 2 года назад

Tom, when you get this number of what to charge for labor, do you x2 this number?

@strokerace4765 2 года назад

Heck no

@_nightowl263 6 месяцев назад

What if it's a partnership? 50k each?

@michaelpreston7384 Год назад

How do I get a copy of labor hours work sheet similar work sheets

@contractorfighttv Год назад

All resourced are available on our site: thecontractorfight.com/worksheets/

@kriscatlett6405 2 года назад

Isn’t “double-dipping” a bad practice?

@contractorfighttv 2 года назад

No. It’s still an expense of the business… Pay yourself in the field just like you would pay someone doing that job in the field… And pay yourself owner salary. When you get out of the field your costs are correct.

@strokerace4765 2 года назад

Pay myself $15 an hour

@nofortunateson2357 6 месяцев назад

You lost me at the "excuses" rant. There are a million and one *reasons* (not "excuses") to not pay yourself $100k. Area is a reason. Not an "excuse". One can move, sure. But if they don't, it's for their own reasons. My mom had your mindset and she nearly tanked us the 1st year because she paid herself and invested nothing back into the business. If it wasn't for me being the sensible person, there would be no business. Her authority over the books was revoked and I attained majority partnership to keep this exact shit from happening. NOW we make 6 figures. We had to work and sacrifice for that after at least 2 years of putting a LOT back into the business to build it.

@willhull7842 2 года назад

I wish I could charge this around here. There is literally people that will come in at $50ph... I worked it out and apparently I should charge $192ph. I wouldn't win a job.

@contractorfighttv 2 года назад

It’s doable. Learn to sell. Join our Contractor Sales Pros FB Group.

@MV-wb2cz Год назад

Nobody should give an hourly rate as a price and I am learning this as I go as well. Shot myself in the foot have been working for the same customer for a year now at an hourly rate because i was just starting out and it's low but enough for me to keep going and wanting to finish the job etc. I also have a fulltime job and doing this on the side (have hopes to do it full time and quit my other job). I am learning how long things take for me to complete as well so it's a win for me. If you call any contractor in your area and ask them to price a bathroom they will give you a final price without a breakdown. In my area, it will almost always be a round number too, like 10k or something. Those types of jobs factor in materials as well and that is where I think you can be more competitive and on par with others in your industry. Again, I am still learning here but I feel like whenever somebody asks for an hourly rate, they are cheap to begin with and looking to pinch as many pennies as possible. Remember, you have the skill that somebody wants and they will pay you what you are worth, you have to have that mindset, and I admit, I am lacking this mindset but am working toward bettering myself in this area. Time management is not my forte, i have a hard time figuring out how long it'll take to complete the job especially when someone else is working with me. Can't figure out a formula quite yet on that.

@oneillbuilt 8 месяцев назад

Everyone adds 40% for payroll costs? (workers comp, tax, etc.) Started this year, and all my payroll costs come out to 22%

@contractorfighttv 8 месяцев назад

I say to add 40 u til you figure out your real number. 40 is safe.

@patrickoneill6297 8 месяцев назад

@@contractorfighttvthank you Tom!

@ChicagoEpoxyCoatings Год назад

I have a quick question. In your opinion do you think it is better to pay my "Sub Contractors" hourly or a daily rate? I put sub contractors in quotations because I had my 4 guys all get LLC's & I pay them as sub contractors even though they really only work with me every week. I'd love to hear your opinion on this

@contractorfighttv Год назад

Go ahead and submit this question to help@thecontractorfight.com with the subject "Q&A" and we'll answer it in an upcoming livestream in our FB group.

@austynjohnson6502 Год назад

That’s very shit of you because you’re not responsible for their workers comp taxes etc some shady scab thing to do

@ChicagoEpoxyCoatings Год назад

@@austynjohnson6502 Negative you peon, they all want to grow after they get their experience to become their own businesses owners. They periodically come on estimates with me, learn to prepare proposals and they think/work like business owners. I’m building my guys to get their own bosses and not to be my cheap labor.