Contractor News Source & Blog

Winning in a Recession: A Contractor’s Secret to Success

Hello fellow contractors! I was asked by to submit my testimonial explaining why my business continues to grow even in a slow economy.

So, here is the short version of the story: Like most, I struggled my first years in business. Then, a friend recommended a book titled “The Secret”. I read it and I applied it. That’s it! I know it is so simple it seems too good to be true. It is an idea so easy that most will dismiss it. All I know is that it worked for me and continues to work for me to this day as my business continues to grow. After applying “The Secret”, I began seeing the results almost immediately.

In the first year, my sales grew 450%! The book is an easy read. The book is all about “the power of attraction”. It doesn’t really give you a concrete action to take to achieve the results for which you are looking. What I recommend you do is wake up every morning believing and acting like you already have everything you ever wanted. That’s it! It is all there for the asking. Feel free to contact me if you have any questions.

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A Money Saving Strategy: Risk Retention Groups (RRGs)

Roofing contractors pay the highest contractor insurance premiums for both general liability and workers’ compensation. I found that the premiums I was paying were unaffordable when I first started my business.  That’s when one particular insurance broker, ONYX Financial & Insurance Services, helped me in a big way! ONYX told me about the option of Risk Retention Groups (RRGs). Instead of paying the $25,000 for an A rated carrier, I was able to get the insurance I needed for only $3,400! Remodel contractors can get a RRG policy for as little as $1200. My RRG policy met my needs for the first couple of years until I started running into a substantial number of bids requiring an A rated general liability insurance. Now I am paying the higher premiums in order to win those bids. But, my business has now grown to the point to where I can afford those insurance premiums. Thanks to my contractor insurance broker, I was able to get my business off the ground with the RRG policy.

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An alternative to workers’ comp: Professional Employer Organizations (PEOs)

When looking at options to save money on your workers’ comp, make sure you include a competitive quote from a Professional Employer Organization (PEO). PEOs have been around for years. You might have heard them referred to as “Employee Leasing” companies. PEOs are widely popular with many of your peers as they enjoy these benefits:

  • Reduced time in the office means more time in the field.
  • More time for family and the things you love to do.
  • Increased bottom-line profits and reduced workers’ comp premiums.
  • Continue to maintain complete control of your company.  Including hiring, firing, and managing.
  • Eliminate the expense of payroll processing, HR management, & risk management.
  • Greatly reduce the risk of human resource violations & future litigation.
  • Enjoy a co-employment relationship with a professional partner who has skin-in-the-game.
  • No annual contract: you can quit it at any time.
  • Keep your workers’ comp policy in case the PEO doesn’t work out for you.

Get your quick and easy PEO quote today. Even if your workers’ comp policy doesn’t expire for months, you can enjoy the benefits of using a PEO now.

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Referral Services: Are they a good return on investment?

Contractor Referral Services

Back in the days when the housing market was rocking, who was even worried about leads for more work? Back then, the problem wasn’t finding the jobs. The problem was finding qualified help. Now, the talent is out there and ready to go to work. But, the customers aren’t knocking at the door of most contractors. So, many of you have found yourselves investing time and money looking for solutions to bring in those qualified leads. What are your options? Direct mail? Website with Social Networking? Google ads? Email marketing? Yellow Pages? Local Chamber? Industry Associations? Robo-dialing? Client referrals? Paid referral services? Professional Networking? Networking with friends, family & church? Happy Hour networking? Newspaper advertising? Please use this article as a launching pad to share your experiences. Others would love to hear what has and has not worked for you!

Prior to writing this article, I interviewed four contractors about using paid referral services. The five contractors’ trades: HVAC, Residential General, Drywall, Residential Roofer, and Residential Kitchen & Bath Remodel. Each of them have fewer than 5 employees. Below is what I learned.

  • HVAC: Tried Service Magic for 3 months. Didn’t like it. Wasn’t working for them. Spending $9 – $12/lead, they were losing money. Went to Angie’s List where they now pay $69/month. They receive 65-70% of their work from Angie’s List.
    - Hutchinson Heating And Air
  • Residential General: Two years with Service Magic. Happy with them. They met his expectations and account for 40% of his work. Only challenge was in the beginning. When he set up his profile, he didn’t narrow it down his market settings enough and his leads weren’t qualified. After he fixed that, it has worked well. Plans to continue with them.
    - Allie M. Assad General Building Contractors
    • Drywaller: Two years with Service Magic. Has used in the past at $40/lead. Pays $9 – $20 with Service Magic. People want to hear back within 5-10 minutes. Each lead goes to 4-5 contractors. They meet his expectation and will continue to use them. 20-30% of his work comes from Service Magic. Initially had his profile too broad and was not getting leads that suited him.
      - David P Polk
    • Residential Roofing: Tried Service Magic long enough to burn through a few thousand dollars. Had a lot of problems with them. Paid $50/lead and most of the leads were not qualified. Many didn’t even want roofing. After working with them to send only qualified roofing leads, they still sent him unqualified leads. Has never used any other service.
      - Conejo Valley Roofing
    • Residential Kitchen & Bath: Prior to the downturn in the market and 25 years in business he was always busy with personal referrals. Been using Service Magic for 2 years. 1 1/2 years ago a Service Magic church bathroom remodel turned into a $300K church remodel job. Pays $50/lead. Writes a contract with 1 out of 5 or 6. Best chance of getting the job is if he is the first to call the customer. Large investment of time meeting with the prospect, doing a plan, and a bid. Many don’t even call back. Spends $400 – $500/month. Last month spent $1000. Can only shut off the leads for 2 weeks at a time. 90% of his work comes from Service Magic. Thinking about trying other services including:,, and
      - Goldstar Construction & Real Estate Services

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    Protect Your Personal Assets: Incorporate for under $200 in less than 2 weeks

    Whether you’re considering a new business idea or already act as a sole proprietorship or general partnership, you may wonder if incorporating your business is right for you. Discover why the benefits of incorporation can outweigh any downsides.

    The pros

    • Secure your assets, gain tax breaks. Corporation owners enjoy limited liability protection, and are typically not personally responsible for business debts. So creditors can’t pursue your home or car to pay business debts. Another plus: corporations often gain tax advantages, writing off such things as health insurance premiums, savings on self-employment taxes, and life insurance.
    • Grow your corporation for now and the future. Incorporating bolsters credibility, and may help you reach potential new customers and partners. And while you can’t live forever, your corporation can. Even if an owner dies or sells interest, the corporation still exists.
    • Easy transfer and faster funds. Corporation ownership can be easily transferable (with some restrictions on S corporations). Capital can be raised more easily through the sale of stock. Another advantage is that many banks prefer handling loans with incorporated borrowers.
    • Ready for retirement. Retirement funds and qualified plans, like a 401(k), can be easier to establish.

    The cons
    Corporations do have some potential disadvantages, including:

    • Double taxation. C corporations are subject to double taxation of corporate profits when income is distributed as dividends. This can be avoided by electing S corporation tax status with the IRS.
    • Ongoing fees. You must file articles of incorporation with the state, plus applicable fees. Many states impose ongoing fees, which are steeper for a corporation than for a sole proprietorship or general partnership.
    • More record keeping. Corporations must follow initial and annual record-keeping requirements, which sole proprietorships, general partnerships and limited liability companies (LLC) avoid.

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    Need a Fast & Easy Lending solution for a small loan? Loans available from $300 to $35,000

    Micro Loans
    Sometimes as little as $1000 will allow a contractor to buy his bond and start his liability insurance. But, during these economic times, $1000 can be hard to come by.  ACCION is a 501 (c) (3) non-profit organization that provides business loans to small business owners. ACCION serves business owners who are unable to qualify for traditional commercial loans for reasons including small loan size, lack of or past credit challenges, in business less than 2 years, language barriers or limited financial records.

    With loans ranging from $300 to $35,000, ACCION targets all types of small business owners ranging from home based daycare, to restaurants and construction companies.

    Once an ACCION client, the ACCION staff also facilitates an abundance of resources including training referrals to partner organizations, legal and marketing workshops, publicity opportunities on TV, radio and in print media, and one-on-one mentoring relationships.

    • Loan Program Services
    • Business loans ranging from $300 to $35,000, quick loans under $2,000
    • Free technical assistance
    • Credit reporting and referrals to counseling services
    • Access to a resource library
    • Publicity/networking opportunities
    • Financing within one-two weeks (within 48 hours for Quick Loans)
    • Life and disability insurance

    Interested? To Apply or Find Out More, please visit  If you are in San Diego County, go direct to: or call (619) 795-7250.

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    Is it a good idea to have 1099 employees?: 1099 vs W-2 vs subcontracting

    Is it better to employ workers as 1099 employees vs. W-2 employees? If you explore this option, please consider the following: First, even if you employ someone as a 1099 employee, you are still required to pay their workers compensation. The exception is only if they are a licensed contractor and have their own coverage and are exempt. Secondly, the IRS is particular as to who qualifies as an independent contractor. It’s important that you know the IRS rules. Third, even if you do employ someone as an independent contractor, you must still report them on your general liability policy as an employee unless they are a licensed contractor and have a subcontractor agreement with you.

    Please note many contractors are getting burned and actually being prosecuted criminally because they tried to disguise payroll under a 1099. Not only do they face the cost of litigation and prosecution from the workers’ comp carrier but also there are severe penalties for improperly classifying employees as independent contractors from the taxing authorities. The Employment Development Department is most aggressive on this part.

    Bottom line, before choosing to hire an independent contractor who is not a licensed contractor, it is best to consult with both your CPA and your attorney before making that decision.

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