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The Four Types Of Contractors

Posted by Randal DeHart on Wed, Sep 28, 2011

I have been blessed with opportunities to work with people who own and operate construction businesses.

 

Construction was the first thing that occurred. The universe was formed by the Builder who wrote the all-time number one best seller, Basic Instructions Before Leaving Earth. He had a Son who was a carpenter. Many good people have chosen the wide wonderful world of construction as their career path.

Contractors have made countless contributions to the development, maintenance, and growth of civilization and I am proud to be counted among them. I grew up in a construction family, went to college for accounting, came back to construction, served a plumbing apprenticeship and now back to accounting.

Over the years I have encountered many wonderful people who own construction businesses and about 20 years ago it hit me like a BFO (Blinding Flash of the Obvious) there are Four Types of Contractors:


  • Dog And Pick-Up Truck

This wonderful soul is someone with a heart as big as the outdoors and likes working alone. They are easy to get to know. They usually have either a pick-up truck or a van with a dog sitting in the passenger seat hanging his head out window watching and occasionally barking hello to folks and other dogs while feeling the breeze as the contractor zooms down the road.

They do not think about retirement. When asked about it the reply I get is something like “Retire, nope, I don’t need new tires yet”. 

These contractors enjoy being their own boss, doing what they want when they want, how they want and works hard. They typically do not feel the need or desire to grow the business or hire employees since they would only get in the way.

Most of them run their business as a sole proprietor

They generally earn $20K to $40K a year after all expenses


  • Salt of The Earth

This wonderful soul also has a big heart; just not quite as big as all outdoors. They like having employees because they do not want to work alone.  As their business grows they like to take time off and enjoy travel and vacations.

These contractors will have 1-3 three employees because when the employees get out of line the contractor can hold two of them by the throat; one in each hand and eyeball the third one!  This is called “Construction Management”

This group will often invest some money to build a retirement nest egg.

Most of them run their business as a corporation, LLC or Sub-S

They generally earn $40K to $60K a year after all expenses


  • The Professional

This wonderful soul also has a big heart; they just tend to keep it under cover. This group tends to have more employees and have a structured approach to contracting.

These contractors tend to have 1-20 employees with formal organizational charts, processes and systems in there contracting businesses including a formal documented business plan which is updated and reviewed regularly with a board of advisors as outlined in my article on the subject.

They invest heavily in marketing their businesses. They understand their target market, they use The 80/20 Rule to understand the demographics and psychographics of their prime customer, the ones who generate 80% of the cash and income. and they seek to acquire more of them and will do whatever is economically feasible to turn those customers into lifetime repeat business.

This group usually engages the services of a competent financial planner, banker and accountant to work together in helping plan and develop a financial estate that can take care of them in their senior years and provide be passed on to future generations.

Most of them run their business as a corporation, LLC or Sub-S or Partnership.

They generally earn $100,000+ a year after all expenses


  • The Enterprise Level

There are a number of construction firms that have 100+ employees and generate enormous revenues. Most of the owners and managers earn about the same as a well-run professional contractor.


If you are a contractor it is not about the type of contractor you are, how many employees you have or how much money you earn. It is all about life, liberty and the pursuit of happiness. Be the type of contractor that suits you, do the work, you will have results and enjoy yourself.

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The final observation I would like to share with you is that you deserve to be wealth because you bring value to other people's lives.

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About The Author:

Randal DeHart, PMP, QPA The Construction AccountantRandal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.

Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+

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