|
Ø
The number of years in
business and its sales track record
Ø
Age of the operating machinery
Ø
The location
Ø
Lease terms
Ø
Type of neighborhood and the
competition
Ø
How desperate the seller is
Ø
How desperate the buyer is
Ø
Availability of the manpower
in the area
Mostly the seller doesn’t inform you of many
hidden expenses incurred to operate the business. Most common expenses you
should find out should be as follows:
Ø
Cost of goods, 27-33% of gross
sales
Ø
Payroll, 17-20% of gross sales
Ø
Payroll taxes, 10-11%, this
includes 7.65% of the employer’s matching social security and Medicare
taxes, 2.7% state employment tax and 0.8% of federal unemployment tax
Ø
Repairs
Ø
Office supplies
Ø
Credit card charges
Ø
Rent
Ø
Property taxes: these are to
be paid to the landlord as well as to the city, county and school district
for your personal property like machinery, inventory etc.
Ø
Insurance
Ø
Payment for leased equipment,
if any
Ø
Utilities such as, water,
telephone, electric, garbage pickup etc.
Ø
Advertising and Royalty
payments to be paid to the franchiser
You must calculate all the sales and
expenses based on a 12-month period to get a realistic value of the
business. Smart sellers always try to sell the business in the peak months
and give figures of the highest month(s). You need to check the sales
receipts for the complete year and must deduct sales taxes to get the actual
gross sales. If the seller doesn’t have the whole year’s receipts, ask for
the receipts of all year’s purchases of the goods. The seller has to keep
such receipts for IRS returns. Calculate the gross sales from cost of goods
depending on what kind of business you are going in. Moreover ask for sales
tax records for the year, which can give you the gross sales. The percentage
of cost of goods can vary from business to business. Few examples are given
below:
Ø
Food business, 27-33%
Ø
Convenient store, 70-75%
Ø
Income from Gas at Gas
stations, 3c-12c/per gallon pumped
Ø
Travel agency, 90-93%
Ø
Dry cleaning and Laundromats,
25-50%
Ø
Gift shops and other
merchandising stores, 50-65%
Once you have a sound analysis of the
business, the expected profits will be within a plus or minus 10% variation,
based on some unforeseen expenses like failure of a/c system or major
appliance, extreme weather or sudden new competition.
Generally sellers don’t tell you why they
want to sell their business. They usually sell, if there is a new
competition coming in the neighborhood. If so, drive by and go to the
planning department of the city hall and find out what kind of new
businesses are emerging in the area in the near future. This will give you
an idea whether you should buy the business or look for other options.
The key factor of your decision is based on
what will be your net profit at the end of year, after paying all your
personal and corporate taxes. If you are close to 70% of your existing
earnings, you should take a chance but if your profit is less than 70% of
your current home take pay, look for some better business. Just don’t buy
yourself a job!
Once you have decided to purchase the
business, make sure you get the title of the business checked out. Get a
good sales agreement drafted by an experienced attorney to ensure to
safeguard your interest. You must include a restriction of opening similar
business within 5-10 miles radius by the seller to avoid future competition.
If you have lots of other assets, you must form a new corporation to
safeguard your other savings, in case of failure of the new business due to
unforeseen reasons. If you don’t have assets except home, two cars and
personal belongings you should go for sole proprietorship to avoid extra
corporate taxes and extra paper work. If you are opening a new corporation,
apply for chapter “S” corporation within first month of the tax year. This
will give you all the benefits of a corporation as well as keep your
personal liability to a minimum.
Once your ‘DBA’ (doing business as) is in
place and your corporation is registered, and your agreement is signed, you
should get all the utilities (telephone, water, electric, garbage pick up)
changed in your name. Make sure the past bills are paid including unpaid
taxes and lien on the property you are buying, before making the final
payments. Keep some money in escrow account for such expenses. Once the
seller gets the payment, it becomes hard to collect the unpaid bills from
the seller. This might end up in court and your attention to operate the
business is diverted to fight your legal battles. So be safe and don’t be
sorry, if you want to get a profitable business.
Before you are buying a small business you
must take care of your personal problems. Take a vacation; visit your
relatives, get your households in order; get your car fixed, etc. Your
initial success in buying the business will depend on your concentration on
operating the business, as first year you have to operate the business as
well as learn the trade secrets of the business. If unattended, your
employees will run down your business. Put your whole heart to the business.
Be there every day, seven days of the week, even if you are not supposed to
work. Just your coming to business will have a positive impact on your
employees and your business. Your few minutes stop may solve a few minor
problems, which will save you from greater losses. As stated earlier, you
must live within 10-15 minutes of driving distance from your business. This
will keep your employees on alert and you can handle minor problems yourself
rather than they call specialist for every tiny matter.
Here are a few common things that will
affect your business:
Ø
Out of change
Ø
Out of register tape
Ø
Cash register not working
Ø
Out of basic ingredient of
your product
Ø
AC, heater, walk-in cooler or
freezer gets inoperative
Ø
Customer area being dirty
You can take the following measures to
reduce above problems but still your living close to the business will
reduce your stress level and business losses and you will enjoy your life a
little more.
Ø
Keep extra change coins and
bills in a separate box where employees can buy the change. For bigger
businesses buy a change machine like Tidal II which can carry change for
week’s operation of your business.
Ø
Keep a back up register, in
case the main register breaks down. Keep extra ribbons, cash register tape
or computer paper, garbage bags, cups, lids, etc.
Ø
Order extra inventory and
office supplies
Ø
Make a checklist of
temperature readings for your appliances. Educate your employees to call you
or your service company in case of inoperative machines. Keep a good air
conditioning and refrigeration service man, an electrician and a handy man
on your call list to ensure prompt service in case of emergency. Don’t call
different mechanics, as it will cost you more in the long run.
Control of the following items is very
essential for a successful business.
INVENTORY CONTROL
Keep good records of sales and purchases and
calculate your cost of goods every month.
PAYROLL CONTROL
Based on your hourly sales deploy minimum of manpower
to get optimum result. Keep a time clock to log in and out; check the time
cards with your schedule before paying the paychecks. On your random visit,
check employees’ time cards. Get an alarm system connected to your beeper
system to let you know when your store opens and when it closes. This will
keep you aware whether or not your employees open your store on time. And if
you are within 10-15 minutes driving distance, you can operate your business
with no interruption. If yours is a fairly big-size business, where you can
afford a manager, make sure to give a list of duties to be performed. Make a
quick reference daily checklist for things to do every day. Be aware of
state and federal child labor laws, minimum wages and overtime laws. If your
company’s gross sales are more than half a million, you are liable to pay
time and half for every hour after 40 hours per week. If you own two
businesses of similar nature and your total gross sales is more than half a
million you are still liable for overtime compensation under common control
law. Consult the department of labor for getting copies of the latest laws
in this regard.
EMPLOYEE THEFT AND CONTROL
Offer some discounts to employees on their
personal purchases. If the register comes short or over, on a constant
basis, put a trap on them. Leave an extra $20 or take $20 bill from their
shift. If they show the same shortage or overage then you might have other
problems. Check your employees randomly; it will save you a lot of money.
Check over rings, voids, no sales and refunds, to see whether those are
genuine mistakes. Get a home Video Monitoring system where as you can watch
your business on regular basis. Let your employees know about this system so
that they don’t goof around.
FINANCIAL CONTROL
You must be in charge of the money. Check
your daily sales, and investigate refunds, over rings, discounts, voids and
employee purchases. Make sure you deposit money on a daily basis for safety;
don’t go to the bank at a set time. Change your schedule every day. Don’t be
obvious that you are carrying money, as you could be a target of robbery.
Balance your checkbook on a weekly basis and issue checks for your bills
every week or every 10 days. This way you will never be late in any payments
and you will have control over your finances. Make yearly profile of your
profits and losses; set goals for the future to be more successful. The key
is to set up your priorities in spending and watching your assets whether
they are growing or reducing. If your assets are reduced to 50% of your
original value you must get out of the business and work for some one else.
MAINTENANCE CONTROL
Preventive maintenance of the equipment
should be done once a week, like cleaning coils of refrigeration equipment,
changing AC filters, cleaning appliances particularly the ones used for food
and other consumable goods.
If you are the owner as well as the manager,
then you have a dual function: to operate and manage the business. Most of
the items to be done are already stated above; however, as an owner you need
to know additional items too.
EMPLOYEE HIRING AND FIRING
You need to keep extra blank application
available at your businesses to enable you to hire someone without losing
time. One of the biggest problems owners of small business incur is finding
good manpower; during good times when unemployment is down, there are more
jobs and fewer employees. Smart employers pay a little extra wages to keep
good employees. Interview employees thoroughly and ask various questions to
know their habits to enable you to decide if they would be good for your
business. A Few questions you should ask are as under.
Ask an employee his/her name, address,
social security number, driver’s license number and previous employment
history. Especially ask why he/she quit the last job. Ask about their
school record, medical history (what medications are being used). Ask if
they have claimed unemployment claim or disability claims in the past. Ask
who they like in their family; if you find that they have problems with
their parents, be very careful, as you will have discipline problems with
them. Go to local schools and ask them if they can provide co-op workers
from school who prove to be better employees as their job performance is
counted in to their grades.
If you want to fire someone, don’t do it
abruptly. Document their shortcomings, late arrivals, money shortages,
thefts, etc. Give them written warnings and then you can fire them. This way
they can’t claim unemployment, which will affect your unemployment tax. If
you have personality problems then you can schedule them on the time when
they can’t work. And once they don’t show up for work you can document it
and after three days, fire them. This way you can skip the unemployment. You
have to be very careful in getting rid of your old employees because if your
tax rate goes up then you have to pay the penalty on the wages of every
employee of your company until your experience rate is reduced. Therefore it
is advised for the multi business owners to have separate accounts for each
company and if the rate goes higher on one company you can always hire the
employees on other accounts having lesser unemployment tax rate. This
practice is possible but you have to document the process very carefully.
Most important of all: don’t hire relatives and acquaintances unless you
know their ability to do better than other employees. My experience tells me
not to hire anyone you know to have a better control.
Miscellenous: Inventory control has already
been discussed; however, you must check on a daily basis whether you are
getting out of any major ingredient of your business. This way you will not
lose any customer.
The area that is visible to the customer
must be kept clean at all times. You should check rest rooms for toilet
paper, soap and other necessities. Check your toilets and faucets for
leakage. A small leakage can cost you higher water bill at the end of the
month. Make sure all-unnecessary lights and machinery are turned off at the
end of the day to reduce your electric bill. Get a basic telephone line with
Caller Id and call waiting only until you have a need for long distance
lines. For your official use, use telephone cards but don’t have a long
distance company. Put a note on your phone “only for business, limit
personal calls”. Install a video surveillance system with 24-hour recording
in particular for high cash business. This system comes equipped with a key
where employees can’t shut the equipment and you could review their
performance as well as cash handling at your convenience. Recently a new
system has been launched in the market by which you can sit at home and
monitor your business. This is a very beneficial tool to manage your
business, as employees won’t know when they are being monitored.
Accounting, Taxes & Documentation:
Managing paper work of a small business is
very simple if you are fairly good with numbers and are organized in keeping
your paper work. Accountants generally charge in between $200 to $300 for a
small business, to do basic paper work. You can add that money to your
profit if you are organized and keep a schedule to complete your paper work.
I have designed a schedule that can be efficient for most of the small to
medium size businesses. Firstly, make slots for the following:
Daily sales reports
Ø
Purchases
Ø
Employee time cards
Ø
Checks issued
Ø
Bills to be paid
Ø
Bills already paid
Ø
Maintain cash books showing
cash in and out.
Ø
Do your store inventory of
goods on 4th or 5th of the month.
Ø
Calculate your monthly sales,
monthly purchases and payroll.
Ø
Balance your checkbooks to see
how much is your account ending balance once a month.
Ø
(Generally banks send the
statements by 3rd or 4th of the month.)
Ø
Issue checks on three days of
the month: 5th, 15th, 25th.
Ø
On the 5th of a month, pay the
rent, advertising, royalty, employee tax with holdings, and all other bills,
which are due by 15th of the month.
Ø
On the 15th, pay
the sales tax returns and all other bills due till 20th of the
month.
Ø
On the 25th, pay
the remaining bills, which are due before 5th of the next month.
Ø
You should pay other bills
like health permit, sign permit, sales tax permit, tobacco and beer /wine
/liquor licenses, alarm permit as received.
Ø
Every quarter fill IRS returns
form 941 for employees withholding which are due on April 30th,
July 31st, October 31st, and January 31st,
for preceding quarter. However tax deposits are made on a monthly basis.
Similarly, state unemployment tax returns are also due on the same days as
IRS 941 forms.
Ø
Always file your returns a few
days before the due date. This will reduce chances of your audit to a
minimum, as agents have more returns to look at when it is close to the due
dates. If you pay early more auditors are free and they can check your
returns with microscopic eyes and find small mistakes, which can trigger a
major audit. This in turn will cause you mental anguish, loss of a few days
of your time and penalties if your mistake is not explainable.
Following is the list of common returns to
be filled:
Ø
State franchise tax return (if
you are operating a corporation) is due on or before May 15th.
Ø
IRS forms 941 quarterly
employee withholding taxes is due on April 30th, July 31st,
October 31st and January 31st.
Ø
Quarterly State Unemployment
Tax return is due on April 30th, July 31st, October 31st
and January 31st.
Ø
IRS form, 940, annual federal
unemployment tax return is due on January 31st.
Ø
State sales tax returns every
month generally is due by 20th of the month but may vary from
state to state.
Ø
IRS form 1120, return for
corporation income taxes is due on or before 15th March every
year.
Ø
IRS form 1040, and other
related forms for personal taxes is due on or before 15th April
every year.
My recommendation is to hire a certified
public accountant to calculate your final corporate and personal returns.
This will reduce chances of your return being audited by IRS auditors. Also
it will help you to take some tax credits, which you may not know. In my
view it is a wise investment to pay a few hundred dollars to get your return
rubber-stamped from a certified CPA.
Property taxes are also a very important
subject. Appraisal districts generally mail forms with appraised value of
your property, business, equipment and inventory by 15th of
February. You need to evaluate the appraised value and fill out these forms
and send a written protest before the deadline. Once they receive your
protest, the district has to call you for an interview, where you have to
prove by documents and comparative study of similar properties in your area,
to get the appraised value reduced. If you are a medium-size businessman
(above $ 250,000 property owner), hire a property tax consultant if you
think your property has been valued too high. Most of the retired appraisal
district officials open firms to help you to get value reductions due to
their personal relations in the offices. My experience to fight the value
with appraisal boards is very poor, where a few political appointees favor
their fellow buddies but reject your claims if you don’t know them.
Therefore, if your property value is pretty close to the market value don’t
fight it.
Property taxes are due on or before 31st
January each year. If you balance you budget right, there is no need to put
the money in escrow. Use the money for other expenses and pay the property
taxes on or before 25th January. Don’t delay the payment, as you
will have to pay extreme penalties and loss of property if you don’t pay
taxes for a few years.
Once I asked a multi storeowner: “How is the
business?” His response was: “if I pay my bills in time, I am in good
business.” American society is based on honest collection of taxes and if
you pay your dues you will have no trouble with any agency. If you pay your
taxes on time, no one will bother you and you can spend more time to operate
and expand your business. However, if you do one thing wrong, it is going to
haunt you forever. Keep copies of everything mainly your tax returns. File
all documents pertaining to your property in separate folders, and by head
of accounts and by month, quarter and year. Keep 7 years’ records as you
could be audited for last seven years.
Before giving details of your sales and
expenses you must check each head of account acceptable to IRS, as how much
you could claim as your expenses. Generally if you claim more than IRS’s set
limits for each head accounts, then there is a good chance of getting
audited. Some common head of accounts and IRS acceptable limits are given as
under:
Ø
Cost of goods (25-38%)
Ø
Pay roll (17-20%)
Ø
Pay roll taxes (10-11%)
Ø
Utilities (7-10%)
Ø
Office supplies (1-2%)
Ø
Postage ($ 100)
Ø
Property tax, (actual)
Ø
Rent (actual)
Ø
Advertising /royalty (10%)
Ø
Travel expenses (minimum)
Ø
Entertainment (minimum)
Ø
Repair (2-5 %)
Ø
Charity (maximum 1%)
Make sure your expenses are realistic and
within the range given above as extensive claim red flag IRS auditors for
audits which can cause you extra paper work, time and money.
SELLING A SMALL BUSINESS
Selling a small business is always the
hardest as you have to convince the buyer that it is a profitable business.
Most of the buyers are new in business, scared whether they should leave the
weekly paycheck and join the uncertainty of the new business. So you have to
be prepared for a few silly comments and questions. To avoid any extra pain
you should take a few measures to reduce wastage of your time.
Prepare a business profit and loss statement
as stated earlier in the paragraph. This should be based upon facts and back
up material as it could be a factor to get a judgement against you if you
give false figures and the purchaser takes legal action against you to
recover the losses incurred per deceptive trade practices.
Advertise the business with
basic numbers, gross sale, net profit, and location asking price and terms
(owner financing or cash). Give your cellular phone number with a recorded
message with extra details. After the prospective purchaser hears your
message, and if he is interested, he will leave his phone number so that you
can return his/her call at your leisure time. Once purchaser shows interest,
you can arrange a meeting at the business and show him around but be
careful. If your employees sense that you are selling your business you may
lose some dedicated and loyal employees. If possible, ask the purchaser to
visit your business in your absence and request him not to discuss any
business details with the employees. If your employees do find out, tell
them that you are assessing the market value of the business for bank loan
and you have no intention to sell the business in the near future.
Once you have signed up sales contract, you
could take the owner to meet the employees who should assure the old
employees that no personal changes would be done. Generally new owners don’t
make changes right away till they learn how to operate the business. By this
time it will be the new owner’s decision as who to keep and who to let go.
But don’t let the people go without proper planning, as your unemployment
rate will jump sky-high. Make slow and gentle actions.
I generally don’t recommend owner-financing.
You can be sued on wrong grounds and lose the loan amount; or new owner
doesn’t know how to operate the business; or due to some new competing
business coming in the area, reducing the new owner’s profitability, and his
inability to pay the bills. In case you are financing part of the purchase
price, you should be prepared to take over the business in case the buyer
goes into default. Don’t co-sign a bank loan for the buyer, as you will be
liable for the loan if the buyer defaults his payments. If you are financing
the part of purchase price, give an incentive of 5-10% price reduction if
the loan is paid within or before 6 months or a year.
If you have acquired substantial cash out of
the sale of a business, you need to reinvest the profits within the same tax
year to avoid any capital taxes. Plan accordingly before selling your
business. Discuss with your CPA for advice on a case-to-case basis.
The success of American
culture is due to the success of small businesses; therefore, I encourage
everyone to get out of the hole and take a chance as you could be the next
millionaire on the block.
Human life is like a
straight line from ‘A’ to ‘B’. God has decided span of your life so as soon
as you are born you are losing part of the life. The graph of your success
in life either goes up or down but has to end at point “B” which is the end
of your life. So it is up to you to take the graph up and be successful or
take it down or be the loser. Your end will be carrying nothing with you but
the struggle you made in your life. So take a chance as in the worst
scenario you will be at the same place as the richest person in the world
would be. Do some thing positive, take risk, rinse your heart, put honest
effort, and love God’s creations, love humans and anything which God has
given us. Eat natural, reduce your expenses, and find happiness in small
things. Expect less give more. Be a good human being and I am sure God will
bless you with everything: happiness, prosperity and spiritual satisfaction
that all are seeking from almighty God. Good luck with your new business.
Tips on How to Build Your Dream House
 To own a house is everyone’s
ultimate dream. You can stay ahead and save a considerable amount when
building a house if you follow a few simple tips and invest some of your
time and resources. The following are a few tips that can help everyone
achieve this goal.
1.
Land and location
When building a house, the first
and foremost important thing is to find the area where you want to live. I
always recommend building or buying a house close to where you work or own
your business. This will save you commuting time and reduce your driving
stress. The other factor is to perform an analysis about the resale value of
the area where you plan to build the house. Most people build houses where
they want, but it is important to construct or purchase a place where resale
value of your house is most attractive to enable you to sell it if the need
arises.
Once you have selected the land you need, go
to the county appraisal district to find its appraised value. Based on
recent years sales figures provided by the appraisal district that you could
make the offer, which should not be more than plus or minus 10% of the
appraised value of the land. For example, a piece of land with an appraised
value of $15,000 should be valued in between $13,500 and $16,500. Once the
land is selected and its value is decided, find out about the deed
restrictions on the property to ensure that you can build the type of house
you want on this land. It is recommended to visit the city planning
department to get some guidance from the city inspectors to understand what
kind of house you can build on the proposed property. Also you need to find
out if you have a water tap and sewer tap to connect your lines to the
existing system. If not, you need to ask your plumbing contractor to
evaluate the need for those taps and depending on the site it may cost you
$500 - $2500 for water taps and $750 - $3,000 for the sewer tap. The cost
of land can be adjusted based on availability of the utilities as given
above.
Once you are sure, close the deal of the
property. Always get title insurance, survey and appraisal done by the
seller which will save you extra expenses during the building stage.
2.
Design
When designing your home,
instead of hiring architects who would charge you enormous amounts, it is
recommended to visit companies providing plans for pre-designed homes. Take
your spouse and children and spend at least half a day to go through
hundreds of the plans offered by these companies. Such companies will give
you required sets of design drawings for a cost of about $350 - $1,000 based
on the size of the house. The same services will cost you $1,500 to $5,000
if you hire an architect designing your custom house. Make sure you have
checked from the city what size utility easements are required on the land
you are purchasing so that you can pick the right design based on those
criteria. Generally you buy three sets of the drawings; one of them is
submitted to the city for a permit and one for your contractor and one for
yourself. In my view you should get some extra sets if you want to act like
a general contractor. The general contractor means you will hire the
sub-contractors and manage the job but you won’t be doing any physical work
and save at least 20-30% of the total cost of the house.
It is recommended that during closing time
you should look for the following sub-contractors to finish your job:
-
Foundation, Slab and drive way
-
Framing,
-
Roofing
-
Sheet Rock
-
Cabinet and trim
-
Insulation
-
Brick
-
Plumbing
-
Electrical
-
Air-conditioning and heating
-
Paint
-
Carpet and flooring
-
Landscaping
-
Garage door installers
3.
Permitting
Once the design drawings are
obtained and you have decided to be the general contractor you should
contact the sub-contractors and select a slate of the contractors who would
perform the actual work. You make an application to the city to get a
building permit. Permit fees are based on the cost of the house, therefore
don’t exaggerate the figures, it will not only cost you more in permit fees
but it will increase the appraised value of your house costing you more in
property taxes. The projected cost should be based on a $45-$50 per square
foot for a decent house, $55 - $75 for a semi custom house and $75-$100 for
a custom house.
4.
Construction
Once the permit is in hand,
apply for a water meter with the city and call your electric and gas company
for the meters. At the same time, apply to install temporary electrical
meter which is required to build the house. Most of the cities require a
portable toilet at site and a construction fence to safe guard the existing
homeowners. If your lot is in an existing subdivision, you may have to
install culverts, which are the storm drain pipes connected with the city
storm drain system. Ask the city inspectors while getting the permit. By
this time you should have lined up most of your sub-contractors by getting
at least three bids for each phase of the house as given above. Once you
are ready to sign up your contracts, you can commence construction. During
2006, I have experienced the following costs per square foot for various
phases of the house building. If you are building a custom house with extra
features you can add a 10 – 15% increase to these figures. Every year there
is a modest price increase in material and labor. Adjust your estimates
based on the current prices.
All the prices are
based on a per square foot basis.
-Appliances
$2.50
-Brick labor/
material $3.00-3.25
-Cabinets
$3.00-3.25
-Drive way
$3.25
-Electrical labor/
material $3.50
-Framing labor/
material
$12.00
-Insulation
$1.25
-Paint inside and
Outside $1.50
-Plumbing labor/
material $5.00 –
5.50
-Sheet Rock
$2.50
-Foundation and
slab $6.50
-Roofing
$1.50 – 1.75
-Misc. items like trim,
carpet,
-Flooring, fans, garage
door,
-Landscaping, grass,
-Should cost roughly
$8.00-9.00
The entire house should not cost more than
$50 per square foot for a decent house. These figures are based on the type
of material you are using as well as you are doing a cost comparison from
various suppliers before buying any material. For a custom-built house with
better doors, trim, cabinets and carpet you can add $10 per square foot.
Keep in mind that a house which you can build for $50 per square foot costs
you $75 per square foot when you purchase a house build by someone else.
Following are the steps through
which the house is built and for which you have to plan with your
sub-contractors and with co-operative weather you can complete the house
within 60-90 days from the day you start. The city inspectors will be
required to inspect each phase of the house so before you advance to the
next level get your inspections approved.
Clearing Site: Level the ground to the
slopes as required for proper storm water drainage.
Foundation and Slab: Preparation, with
iron/steel rebar’s as specified in the design.
After the inspection, concrete pouring
should be planned based on good sunny weather. You must have two sunny days
for curing of the concrete so plan accordingly. You need to get your
plumbing contractor ready at the same time to lay underground pipes that
will also need a city inspection. If you want out door lights and sprinkler
systems, get an electrical and plumbing contractor to run the necessary
pipes for future wiring and water lines.
Framing: As soon as the slab is dry you can
start framing and erecting the structure of the house. The new code requires
hurricane clips to be installed at each rafter and wood beams of the house.
Most of the inspections don’t pass due to this reason. Make sure you keep
inspecting material used in the framing, as this will give extra life to
your house. Make sure you have ordered good quality lumber, which will last
longer. Don’t cut corners in the quality of lumber. By this time you have
already selected your doors and windows. Once those are installed you are
ready for your next phase.
Electrical Contractors can start running the
wires and install junction boxes simultaneously with the air conditioning
and heating contractor to install the air handling unit to be installed at
the attic of the house. Before pouring the slab you must remind electrical
contractor to install grounding electrode.
Insulation is done in two phases. Once the
framing is done, the walls will be insulated and once the attic is ready it
will be insulated. This is a half a day job.
Sheet rock is next which can be done within
a few days depending on the size of the house. This will include tape, float
and texture of the walls ready for painting.
Brick can also start as soon as framing is
done, after installation of sidings of the house. Framing contractor is
responsible for this part. Generally brick orders take 6 – 10 weeks to
arrive on side therefore you must order the brick as soon as you have
started making forms for the slab. Brick installation is very important and
you must supervise the contractor. Before hiring brick contractors ask for a
list of their jobs completed recently. Take time to see their quality of the
job and to ensure that your house will look nicer as you want. One bad
brick can damage the image of your house for life, so be careful.
After the
brick is done, get the outside and inside of the house painted followed by
installation of electrical fixtures, plumbing fixtures, cabinets,
appliances, AC unit, garage door, etc.
Cabinet shopping is a key to saving money.
Home Depot and other big chain stores carry very nice cabinets but for a
high price. Therefore, look for a wholesale cabinet place in your town where
you can save up to 50% of the price if you buy from them as a general
contractor. Hiring someone to build cabinets will cost you enormous amounts
of money, so go for the pre-fabricated cabinets. Take the house layout to
them, they will design your cabinet layout for free and sell you cabinets at
a much reduced price and no wait time. This way you can be done in two days
whereas if you order through Home Depot or similar stores it will take you
six weeks to get your cabinets.
Once all the trim, doors and
locks are installed the attics should be insulated followed by the driveway
concrete work and landscaping.
For appliances you should be making a
research while you are building the house and buy a range, dishwasher,
garbage disposal, oven… while those items are on sale. Store these items in
your house to save some money. Again, check prices at Best Buy, Conns, Sears
and other appliance stores and get the best price.
Final steps
to complete the house include city inspectors doing final inspections for
foundation, framing, plumbing, electrical, air-conditioning and heating and
the final inspection.
The carpet should be the last
thing to install. I don’t recommend light color if you have smaller
children in your house. Once the carpet is done and you have all the
inspections done you will need an occupancy permit which will allow you to
move in the house. To save extra money you can buy carpet and padding and
look for carpet installers to install the carpet. This way you can save
about $ 2-3 per yard.
The key to saving money when
building a house is to have the money in hand to avoid interest payments,
have an executable plan and realistic schedule where you will know the exact
sequence of events. Bargaining with contractors, quality of materials and
proper research are important tools that will help you in saving money.
Though this looks like a very
technical procedure, saving money is the goal and you will enjoy and end up
living in a house which looks as if you have built it with your own hands.
This gives you a feeling of confidence and at the end of the day when you
will see your cost savings you may want to start building houses as a side
business.
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