Do you want to become an independent installer?

So you have decided to take the plunge and become your own boss as an independent installer. You have the necessary skills, experience, passion, and want to have more control over your future (and income).

Photo by Andrea Piacquadio

This is a big step and one not to be taken lightly. The truth is many people that start their own businesses fail. I am not saying this to scare anyone away, in the contrary, I encourage entrepreneurialism. It is however important to understand that just as being a master installer takes skills and experience, so does running your own business. If you acquire the necessary skills and put in the effort, there is no reason why you can’t be successful.

The purpose of this article is to provide some direction for those thinking about becoming independent contractors. I need to emphasize that I am just providing some direction, and the information in this article should be used as a guide only. You need to consult with the necessary county, city, state, and federal agencies, as well as obtain specific guidance form specialists or legal counsel to ensure you comply with all laws and regulations.

What to expect

If you are currently working for an installation company you probably receive reliable weekly, bi-weekly, or monthly payments based on hourly wages, amounts paid for each job, or a combination of these. Your daily routine probably consists of receiving work instructions, performing the work, and closing out the job cards. When you need time off from work you put in vacation time, and you don’t have to worry about work until you return. You get paid for every hour your work, and when you not “on duty” you don’t have to work.

All this will change once you are self-employed. You will have to market your services to find work, perform all your own scheduling and admin, invoice customers for work performed, and you will probably only be paid 30 to 60 days after work has been completed (in some cases you might even wait longer and potentially face some struggles with vendors that don’t pay on time).

Photo by Obsahovka

Being your own boss requires multiple skill sets. Having the necessary skills to perform installations is just one part of the puzzle. To be successful you need to acquire additional knowledge and skills to ensure you will be profitable.

Here are some things you need to be prepared for. Again, I am not trying to scare anyone away. I am merely trying to make sure you go into this with your eyes open. Imagine a boxer going into the ring without studying his opponent, not training, or even being blindfolded!

Rule 1: With a lot of planning, hard work, focus, and passion…you will be successful.

  • You must have a passion for what you do.
  • You must be willing to work long hours, many times without being paid.
  • You must be willing to learn new skills that could possibly be outside of your comfort zone.
  • You need a plan, a business plan is great if you are planning to grow into a bigger business or apply for loans but initially, a simple plan will be just fine.
  • You must have fun!
Photo by KristopherK

Rule 2: The job is not done until the paperwork is finished.

As an installer, you probably have been exposed to some level of admin, and in most cases, this is the part of the job technicians hate the most. This includes updating job reports, submitting expenses, responding to emails, updating spreadsheets, etc. Unfortunately, there is a bunch of additional admin that must be done as an independent contractor which is just as important, if not more important, than the work itself. This includes:

  • Keeping a record of all communication related to a job (approvals, delays, issues, etc.).
  • Keeping accurate records of inventory, consumables, mileage, installation details, etc.
  • Submitting invoices with all required detail and supporting documentation.
  • Submitting all required legal, state, county, city, and federal documentation prior to due dates (income tax, business registrations, sales tax, unemployment, social security, business licenses, just to name a few.)

Rule 3: Registrations, licenses, and insurance.

Make sure you register your new venture. There are many ways to register your new business. In most cases, independent contractors operate as self-employed 1099 contractors. You could also register an LLC. The focus of this article is not to explore the differences between these registrations. The main point here is to ensure you register with the authorities and obtain all the necessary licenses and registrations. There are many great resources online, and many agencies that can assist you to set up your business whether you need to register your DBA (business name), an LLC, S-Corp, or 1099. One example is incfile, they have great resources and are very reasonable.

Another extremely helpful resource is the government’s Small Business Administration website (sba.gov). They have a multitude of resources to help you get started. There are sections on taxes, registrations, and many more. Please take the time and visit them. There are also have information on Small Business Development Centers and mentors that can assist you free of charge.

Rule 4: Manage your finances, and pay your dues.

As a subcontractor, you will be liable for all costs that were previously covered by your employer. This includes travel, job consumables, insurance, software licenses, tools, equipment, uniforms, staff or contract labor, vehicle expenses, etc. It is therefore key that you track expenses closely to ensure that you don’t lose any money.

One of your biggest challenges will be cash flow. You will have to cover expenses and wages until you receive payments from your clients. Therefore you need to make sure you have available funds to cover you while you wait for payments. Having cash in the bank is the best as you won’t pay any interest on it, however, alternative funding can be done using credit cards or credit lines. It is important to note though that you need to manage the last two options closely and pay back any advances ASAP to prevent paying huge amounts of interest.

You furthermore need to ensure that you don’t forget to invoice all the work you performed. You will probably spend most of your time doing installations and will have limited time to perform administrative tasks. This might lead to you only focusing on the admin every couple of days which will expose you to a huge risk. The fact is every cent counts. Once you take your income and subtract your expenses (which will leave you with your net profit, you will be shocked to see how many hours a day you need to invoice just to be able to cover the costs.

‘A penny saved is a penny earned”

You need to be disciplined and have to plan your finances accurately. The money you receive must be allocated correctly or else you will find yourself unexpectedly owing the IRS a bunch of money, or being over-indebted.

Photo by Karolina Grabowska

In my opinion, the best way to prevent this is to ensure you have a basic accounting system. There are many great tools available for small businesses. One example is Quickbooks, a very simple tool that is widely used (easy for accountants and tax professionals to provide support), very reasonable, and provides you the ability to expand as you grow. Starting at around $12 per month, it also integrates with applications like Turbotax to make your tax returns easy. You can set up tax payments, and other state or federal requirements to be submitted through the application. It also includes a simple app to help you track mileage and upload receipts.

Don’t use spreadsheets to do your bookkeeping and invoicing!

I also suggest setting up a separate bank account, and if possible credit card that you can link to your bookkeeping software. This way you can track your business income and expenditures easier, and it will help you in the long run.

Make sure you capture every expense. Try not to pay cash for things. If you use the linked credit card, the software will automatically detect the expense and all you have to do on a daily basis is to choose the correct category to save it under. The same goes for payments, let your customers pay you electronically and the software will automatically link your income.

If your software is configured correctly from the start it should be a simple daily task to just update all income and expenditures for the previous or current day. Many of these applications are easy to set up if you have basic bookkeeping skills. If you do not have basic bookkeeping knowledge but have the time and willingness to learn, then make sure the application you choose has a comprehensive help section and is a well know application so that it will be easy to find free support on forums (again I mention Quickbooks as there is so much information available online). Alternatively, search for a small bookkeeping firm that will be able to assist you with this task. Make sure you find someone that will not charge you a fortune to set the software up and will provide you with the necessary training to administer the daily data capture.

Pay your taxes. Make sure you know what taxes you need to pay. This varies by state, county, and city. You also need to check if you are required to register and pay sales and use tax. Each county, state, and city usually have very informative websites that can assist you. Your tax liabilities will vary depending on how you register your business. You might only submit your tax returns annually, and will then be liable for taxes. You therefore you need to ensure you plan for it and either set aside the appropriate amounts every month or even better set up monthly payments to the IRS and other entities. Being self-employed you will be responsible for self-employment taxes which includes social security and other liabilities – read more here: https://www.irs.gov/taxtopics/tc554

Rule 4: Customer Service and Quality.

There is a lot of competition in the industry. It will not be easy to obtain new clients and when you do it is important that you keep them. It is a lot easier to work on keeping clients than to find new clients. Happy clients pay better, provide referrals, forgive mistakes, and ensure return business. You have to stand out from the competition.

  • Make sure your workmanship is topnotch. Don’t take shortcuts.
  • Go the extra mile. Back in the day when I worked for a Mercedes Benz agent, we were trained to always try and find something small to fix on a customer’s vehicle that was not part of the job request. It had to be something they would notice or something you can mention when you hand the vehicle back. Some examples are to replace missing screws in the dashboard, secure the phone mount that is hanging loose, fix the 12v auxiliary plug, or interior light. Furthermore, ensure you clean up after yourself even if the vehicle is a mess. Always leave it in a better condition as to what you found it.
  • Be professional and courteous. Remember they feed you and your family.
  • Communicate well, be responsive. Respond to emails, messages, and phone calls promptly and in detail.
  • Don’t nickel-and-dime everything. In this industry, you will win on some jobs and lose on others.

Rule 5: Knowledge and Certifications.

Continuously grow your knowledge, join forums, read blogs, etc. Take notes on every new vehicle type you work on. Try to find a better way of doing things even if it is the same equipment you are working on. Stay abreast of new technologies and regulations (CAN bus, cellular, GPS, DOT regulations, vehicle electronics). Try to obtain an MECP certification, or have a look at the MESA certification through the Installer Institute.

Rule 6: Network.

Network with other technicians, yes some will not be open to sharing but you will be surprised how many will, especially if you are willing to share. Join Facebook groups and look at online installer forums. Be willing to help other technicians.

Rule 7: Branding and marketing.

  • Create professional social media accounts (Facebook, Instagram, LinkedIn) and showcase your quality work. Just take care not to display customer names or vendor brands.)
  • Invest in some branded shirts. they are very inexpensive and have such an impact when you show up at a customer.
  • Get business cards, yes it is old fashioned and they will probably be thrown away, but it creates a perception that will last.
  • Make sure you use an appropriate vehicle for the work and maybe even add magnetic or vinyl signs with your business name.
  • Invest in tools and keep everything neat and organized.

Good luck with this huge step and please feel free to comment on this article or ask questions.

Remember… Nothing ventured, nothing gained!

https://en.wiktionary.org/wiki/nothing_ventured,_nothing_gained

Resources:

I have included links to the resources mentioned above and some additional resources that will assist you in your new venture.

I would like to hear from others and feel free to add resources or comments that can assist individuals in trying to start their own business.

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