Your Advice Needed: Help a Reader in Trouble

I received this email the other day and thought some of my readers might have a few suggestions for this young man:

I was recently (1 1/2 months ago) laid off from my company.  This job had been my first "real" job since college.  When I started, I had a TV and a 12 year old truck to my name.  Well, just over 2 years later I have a $1k/month mortgage and my wife's teaching salary barely covers our benefits, 2 car payments, electricity and groceries.  We had only saved $5k.  I know, I know.

I have kept my chin up and have applied to every company I can find.  (Homebuilding industry and commercial construction)  The interviews have been great experience, they have all gone well, but no one is hiring with the current market situation.

I guess my question to you is what advice do you have for someone potentially going from a mid 50k salary to whatever they can make as a handyman?  I know we may have to sell the house, maybe a car...but at what point do I let go of hope and get real?

I have always dreamed of eventually starting a remodeling/homebuilding business of my own.  Many people are telling me now is the time, but anyone close that has something at stake just wants me to get a job.  I wouldn't know where to begin business wise either.

Any tips on starting business?

I responded to him with my thoughts, but wanted you all to have a shot at it as well. What would you suggest he do?

Comments

[Laura]

I don't think starting a business out of desperation and inability to find a job is the best way to start. But, it does give you a bit of power back if employers are not hiring, so maybe split your efforts between finding a job and building a business on the side.

Try tapping into networking resources that are sometimes overlooked. What about your high school and college's alumni associations? There are often lots of people wanting to help out. See if you can find a fellow alum in your industry and meet with them to get their advice. If they're impressed with you, maybe they can help you out.

Could you expand the area in which you look for a job? Maybe be willing to increase your commute distance by 15-30 minutes and see if that creates opportunities at companies you had overlooked?

Are your skills transferable to any similar industry that you haven't considered?

Do you have any hobbies you could turn into cash in the meantime?

Can you hold a yard sale? Take clothes you don't wear anymore to a consignment shop and get some cash back for them? I would also definitely consider selling one car for some cash, you can always buy another used vehicle when you have a steady salary again. If you're not currently employed, maybe you could drop off and pick up your wife from her job and use the car to get to and from interviews while she's at work.

Lastly, please don't beat yourself up about "only" having saved $5000 in 2 years. For an entry level job straight out of college, I think that's pretty respectable actually.

[rdub]

First of all, don't EVER give up! Something will come your way.

The only thing that I can offer above what Laura offered above is if you want to break into the business for yourself, start marketing yourself now (while looking for work). Talk to friends, ex-coworkers, friends of friends, etc. to see if they have any building projects that you could do. One of the best types of advertising is word of mouth so if you do a good job for them, they will let others know. You may have to start small and build your way up to full fledged home building and commercial construction, but there is no limit to what you can do if you set your mind to it. In your spare time, study up on what it takes to run a successful construction business. I am not familiar with it that much but I have had to deal with commercial builders before and I know that knoweldege of contracts, subcontracts, and project management are all extremely important (besides the obvious).

I would first try to get a parttime job just to supplement my wife's income to make things a little more manageable. In my spare time, I would continue to apply (maybe expanding your area like Laura mentioned) to construction companies. Then if there is some spare time above and beyond that, read up on starting a business. There are thousands of resources both on the web and in the library about it. Talk to some of the people who have started businesses and see if you can get some free advice. It's out there. It just depends on how bad you want to get it. Good Luck! I will keep my fingers crossed for you.

[Tim]

Well the first thing you should do is to file for unemployment. that will help pay the bills for now. don't be too proud to file and claim unemployment. if you don't, you will lose out on your benefit that you paid through your tax money, and someone who isn't deserving of it will get it.

second, my brother started a business as a general contractor. the business was going well, but he just wasn't good at the finance portion of it. if you were in the industry already, then you should talk to some folks you already know. do you know someone who has his own business already? my brother did, and when his company went bellyup b/c he was bad at finances, he ended up working for his friend. i told him to learn from him and then once you have something saved then branch out on your own. at least you will get an inside line on the self-business portion and gain a reputation.

third, one of the reasons my brother was bad at finances, was b/c he was too trusting of people he did work for. some renigged and wouldn't pay and he didn't set himself up contractually to recoup the money. he also let insurance and licenses laps, which you never want to do if you are in the business that requires a license.

fourth, he didn't really have a plan. i should probably have listed this first, since you should have a plan, rough idea of expenses, and requirements for the industry. stick to your business model and don't bite off more than you can chew. my brother was drawn by all the work available that he bit off more than he could chew, not to mention that he didn't really have a business model. if he did, it would have been to keep things small.

fifth, hire trustworthy people and get rid of the bad ones.. my brother again is too nice and was too forgiving of people he hired that he shouldn't have kept on. he also kept paying them when there wasn't work. not a good business practice. if you are good at finances, doing yourself will be good; however, in the remodeling/home construction business, you will find yourself doing lots of work and no time to manage the legal, contractual, and financial side of the business. you need someone who can focus and manage that well so you just have to oversee it if you are going to be the one pouding the nails. once you've established yourself, then you can hire more people and focus more on management of the business. my brother was trying to do it all and like i said, let his contractor license slip which wasn't helpful. he had to pay a fine as well as stop work until license was renewed.

sixth, you have nothing to lose at this point since you aren't quitting a job to start this business. have a plan and go for it if it is what you want to do. at least the quitting the job portion has already been made up for you. you might check out what your current market is like for home/remodeling business. my brother moved to florida to do all the reconstruction work that was and is still available because of the hurricane. in reality, working for his friend and being an area manager is much more suited for my brother than owning the business. so that is something you will have to ask yourself whether you are someone who is suited for being an owner or an employee.

[Drew W]

My only piece of business start-up advice would be to start slow. I think the Handy-man is a great way to start for weekends and days off -- and when you're not working. And encourage (if not beg :) ) all of your clients to spread the word about you. And when you get a phone call, call back. Show up when you say your going to, and offer a price that allows for a fair profit. Keep the business income in a separate checking account set up for your business and its expenses, and when you take money out, remember to set some (20-25%) aside for taxes. Good luck! You're not afraid of work and you have a desire. These traits are what breed success.

As far as finances, you may need to downscale the cars for a year or so. Even if you're upside down once you sell them, you'd still be in less debt if you owed 2000 for a car than $15000. For now, you just want something reliable that gets you and your wife back and forth safely -- like your 12 year old truck. Keep the house. That would be the last thing that needs to go. Unless, of course the mortgage is out of your league (> 25% of your income). Stop the retirement savings for now, and see if you can get other services cheaper... cut the cable, scale down the cell phone, etc.

Good luck!

[Rob D.]

knock on local retailer (mom and pop owned) stores. Almost all of them have something that needs fixing. Give them great service at a fair price when you get a gig and the word will start spreading.

You have something of value to offer. Don't be shy - ask your friends if they have any projects for you as you think about starting your own business(for a fee of course). When I was younger my Pop was all thumbs and my neighbor was always over building or fixing something. When money was tight, he would barter his expertise (doing taxes) in exchange for putting in a new front door, etc.... everyone wins.

You'd be surprised at how many people (your friends) may want to put in recessed lighting, or put new doors on every room or add built in bookshelves in their basement, re-do their bathroom tile.... - but are afraid to trust anyone they don't know with their hard earned money. Start in your inner circle and then ask for recommendations when the job is done.

You're on your way!

[db]

Best of luck! I been laid off myself and it's a hard time.

My first bit of advice is go ahead and file for unemployment. Just do it -- it will keep a little coming in anyway.

My second bit of advice is to follow everybody else's great advice so far -- PLUS go to the library and check out the book Guerrila Marketing. If you are going to make a go of the business at this time you will need to be agressive in getting your name out there -- get agressive and go cheaply. Do spring for some basic business cards at Office Depot though.

My third bit of advice is keep looking for a regular job too. Only abandon that when you are clearly going to be ok in your own business.

My final bit of advice (which may conflict with unemployment, watch the threshold), is to do the Dave Ramsey thing and get any job you can -- start delivering those pizzas! Something that can bring in even a little money.

You are going to be working hard. You and your family is also going to need to make every dollar sqeak.

I got through my lay off doing odd jobs and selling a bunch of my books on amazon.com, plus unemployment, savings and the generous subsidizing of my food pantry by my parents (I also had to ask them for help with a couple of car payments, which was awful).

db
www.debtblitzkrieg.com

[Rick]

Go to www.48days.com for some information on how to look for a job. At the same time look at the information on how to start a business.

[Nancy]

Financial stress, and laid-off-work stress is pretty high up there on the scale. It can be easy for our minds to start heading into 'it's a disaster!' thinking. And then, we can get extreme in our solutions, coming up with all kinds of crazy-__ ideas. (NOT to suggest your business idea is in that category!) Considering selling your home as a possibility seems to me somewhat of extreme thinking. Odds are huge you won't get to that point, so that's one worry worth striking from the list. Devote your thoughts/energies elsewhere.

Regarding the business idea, the one thing is: when you do it, you want to maximize the probability of its success. Is now that time for you? Or would you optimize the likelihood of longterm success when you weren't in a 'bootstrap your way up' situation? Could deferring this for a year or two, and getting some solid financing and planning in place ultimately take you further? On the other hand, I totally get that it would seem pretty compelling to jump in, now.

Best wishes, in either case.

[mbhunter]

It takes a lot of guts to ask for help or advice, especially when it's a humbling/embarrassing situation like this. You've certainly come to a good place for it.

For my two cents, I think construction jobs will be harder to come by because I feel the real-estate _building_ frenzy is on the way out. Being a handyman may be all right as people hang on to their houses longer and don't flip them every 6 months.

You know houses. What kinds of work would you be well qualified for in a _souring_ real estate market? You can spot good construction when you see it. Could you find deals this way? Could you charge a fee to help others find deals?

If you want the "comfort" of steady income but the freedom of running your own business, and you want to continue being a handyman, you can probably work together a package with people that would give you a lot of little regular paychecks. How about a $149/year "maintenance package" that gives the customer up to five hours of your labor? Beyond that it's $40/hour. But your rate without the package is $50/hour.

Or start up a DIY class -- $199 per person for X persons, and you hold each "class" in one of the participants' homes where you start fixing something in their house that needs fixing. Go to the next person's house, rinse, and repeat. If it's a two-hour class, you just made $100/hour.

Your mileage may vary. Best wishes!

[Nikos]

NANCY: DIY CLASS IS BRILLIANT! I'D WANT TO DO THAT! I MEAN, TAKE THE CLASS!

[FMF]

All --

Thanks for the advice. I think you've really helped this young man!

[maxconfus]

First things first, read the millionaire next door. It is your best starting point to financial recovery. I think this is a bad time for construction. The contraction of the sub-prime mortgage industry will force many layoffs in construction. My advice to you is to look for a job in sales; cars, real estate, medical equipment, or other. Or go back to school for an accounting degree. Also, don't give up and especially make the "right changes" like getting rid of unneeded expenses; cable tv, internet, dry-cleaning, car payments, or whatever.

[internet-income-business-opportunity.blogspot.com]

This man's financial situation is similar to that of many middle class income earners these days who are also finding it a very difficult task to make both ends meet.

My suggestions to him are:

(1) Keep his day job, but at the same time start a home business

(2) When the home business start making a steady income, he may quit his day job and then begin his re-modeling business

(3) He can do both the home business and re-modeling business.

The incomes he generates from them when added to that of his wife, should improve his financial situation dramatically.