Commerical electrical contractor

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willyj

Member
A hard lesson for others to avoid.
We started out in the early 80's working for a mojor north east retail chain, first just changing ballasts in a few of thier stores.
After a year we were contacted by thier own construction manager and asked to be thier construction electricial contractor which we readily agreed to.
It started out small doing one complete store renovation every 10 months or so. ALl work was done on a guess estimate basis and payment was on a 90 - 120 day level.
Eventually the renovations got to be 4 to 6 stores a year with amounts of over $300,000 owed us.
Banks were willing to loan money on projected income so we stayed fluent until the checks started comming in slower and the amounts on the checks less.
To make a long story short the retailer filed for bankrupcy owing us $324,000.
Our mistake was we never had any formal contract, we relied on the banks money to bring us through until the money came in and we relied on them for 90% of our work.
We have since regrouped and are doing very well but it wat a tough lesson to learn.
If you don't have enough business knoledge to expand get it don't rely on field experience for it.
As you see it can be very costly.
 

macmikeman

Senior Member
Re: Commerical electrical contractor

My thanks go out to guy's like you who share the pitfalls they have been through so that maybe somebody else doesn't step into the same pile. The other thing here I can gather from your post is do not put all your eggs in one basket. I did that early on and almost ended up in the same situation when that G.C. that I worked for 100% of the time suddenly cancelled his insurance policies and contractors licence.
 

charlie tuna

Senior Member
Location
Florida
Re: Commerical electrical contractor

i fully agree with mikeman,
and it takes some guts to admit your mistakes in business and i too thank you for sharing this information. one rule i always stuck by was "don't ever allow someone or any method to control your business operation"! union-supplier-general contractor-customer-banker-accountant-attorney----- if i allowed my accountant to run my business, it would be in a nosedive within three months!!! and if he let me run his accounting firm it too would be in trouble within weeks!!! it is very important to continually make efforts to prevent placing all your eggs in one basket! and to stay up with technology to remain one step ahead of your competition and future competition! you got started changing ballasts --- the original customer's contractor probibly didn't want to fool around with ballasts. and ity cost him an account!!!
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
Re: Commerical electrical contractor

It seems to me the biggest mistake you amde was letting your customer pay you so slow. One thing an accountant will do is force you to realize that you do need to be paid on time. If you agree to 60 days, then you should get real worried if the checks don't show up in that time frame. An accoutant will take that kind of thing real seriously.

On the other hand, you have to run your business, not the accountant. Think of him as a financial doctor. Use him for what he knows, and keep him out of the rest of your business.

Your story is not that unusual. BUT - the first sign of business that is in trouble is almost always when he starts paying slower and slower. Make sure you get paid. Don't worry about anyone else, and don't accept any BS excuses.

[ March 31, 2005, 10:36 AM: Message edited by: petersonra ]
 

hardworkingstiff

Senior Member
Location
Wilmington, NC
Re: Commerical electrical contractor

I don't know about the rest of you, but I start calling (frequently!) after 25 days. If it gets to 50 days I drop the "lein" word in a friendly way, like "I'm running out of time allowed for me to file a lein, I just don't want it to get to that point, so I'm just trying to find out what desk the invoice may be covered up on".

If you do the work, you should be paid! Personally, I don't want to work for someone that can't afford to pay me.
 
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