For years I have lectured on the different contractor business structures and how you can make money at each stage, but how businesses are less profitable between these plateaus. These steps are a natural transition and follow the sales growth of the company, but failure to maximize your profit at one level before going to the next level can create devastating stress.
Professional Tradesperson: This contractor still works in the field, charges high prices and gets most work by referral. This contractor model will have $200,000-$300,000 in sales. The owner works as foreman, has one or two other employees, and does a few estimates at night or on the weekend. Because these owners are on each and every job, they do not need a lot of systems or recordkeeping. They also don’t need a lot of advertising, as they don’t have to sell very many jobs to keep busy. They typically do good work, so referrals are strong. If you like to work with your hands, don’t like to manage or are a control freak, this model might work for you.