Contract Management

Archive for the ‘Contract Project Management’ Category

Almost every business owner wants to see his/her business grow.
If you are thinking about the future of your business you
probably have more questions than answers. But making sure you
ask the right questions in every area of your business should
lead you towards solutions that can move your business forward
positively.

These are all serious questions, which need addressing on a
regular basis if your business is to continue on a pathway to
success.

Once you have survived the start-up phase of your business, you
may be wondering how to take the next step and grow your
business beyond its current status.

Choosing the right way to grow and the right strategy to grow
through will depend on the type of business you own, your
available resources, and how much money, time and sweat equity
you’re willing to invest all over again. If you’re ready to
grow, we’re ready to help.

Step 1 Decide if you really want to be bigger

Making a decision on growth is a huge decision. So, coming to a
conclusion should be based on factors such as what you want the
growth to accomplish, whether you will still have the control
you want, if the growth will still allow you to deliver the
service and quality that you built your business on? What are
your goals? For me, at least at this stage, my goals revolve
around making a decent income, to be in a reasonable semblance
of control of my own destiny, and to work from home to at least
be near my family as I pull long hours.

Talk to your peers: Talking with folks in the same position as
you, or folks that have been in the same position, is a great
way to help you in the decision of growing or not growing. Often
these people have been through exactly what you are going
through, and as the saying goes, it’s always better to learn
from someone else’s mistakes! Ask questions about why they chose
to expand, why they went the way they did, and most of all, what
they wouldn’t do again.

Look at the positives and the negatives: While it is easy to say
that if you expand, you’ll make more money, have more power,
etc., don’t forget the negatives. With growth comes increased
costs, more responsibility, more risk, and, like they aren’t
already long, longer hours. Hiring more people doesn’t
necessarily mean you’ll have more time–in fact, the opposite is
often true.

Could your growth hurt your business? Now there’s a thought! And
that’s what weighs heavily on me. Could my growth actually hurt
my business? As a service-based business, virtually all of my
work has come from word of mouth … folks that are happy with
the work I have done and spread it around. So, if they hire my
company to do work for them, at this stage, they are hiring me.
Will bringing on a new hire and growing hurt that? It may. Step
2 Hiring new employees – and good ones at that

Well, you’ve made the decision. You’ve weighed the options and
you are going to grow.

The first thing you have to deal with is getting help and hiring
the right people. Hiring employees is a huge step that can
radically change how you work and how you feel about your
business–both in positive and negative ways. Friends and
Family: As the saying goes … “Better the devil you know.” Your
family knows you the best. You know them. But can you work with
them? What sort of working relationship will there be? Can you
be their boss and a sibling/spouse/best friend at the same time,
or can you separate it? One advantage to family is that they may
be a bit more understanding when it comes to issues such as late
pay, family situations, etc. Of course, this could also be a
disadvantage (you may also be expected to “excuse” family
emergencies). Also, it can be difficult to speak to “employees”
as “employees” when they are also loved ones, and this can cause
problems–both professionally and personally. You must set clear
ground rules in advance and remind people that work is work and
personal is personal. This is much easier said than done!

Full-time or part-time? Just what do you need to grow? Do you
need a full-time sales person or will a part-timer do nicely?
Figuring out where you need the most help is very important. The
other thing to think about, aside from the cost of full-time vs.
part-time (benefits, taxes, etc.) is if you want/need these
people as employees or contractors.

Employee or contractor? The big difference between the two
really gets down to things such as taxation and benefits and
payroll, etc. With an employee, you have to factor all of those
things into the mix. But, if your job is retail or requires that
someone be at your location of business, then you likely don’t
have much of a choice.

Local or remote? One distinct advantage for a business such as
mine, or one that uses technology a lot, is that location isn’t
as important as it was just a few years ago. I have worked with
subcontractors on projects that were not only out of my time
zone, but in other countries as well. I am working on one
project for which the client is in California, US, I am in
London and the person running the backbend systems is in France
…. cool! This arrangement is also good as the remote person
most likely has his or her own equipment (a great expense
savings), so you don’t need to open an office to “store” the
person (see, more money saved), and you can still have your own
mental space to work in. It also allows you to find the best
people–not just the best people in your area.

Step 3 Overhead and additional costs

With growth comes additional costs and overhead. Being one who
is rather frugal with my expenses, I try to look at as many
options as possible. Here are a few to add to the mix.

Office space. First off, if you don’t need the space, for
example, if your small business is purely on-line or you don’t
ever have walk-in customers, why rent or lease space? Do you
have space in your home to set aside as a location to run your
business? I’m talking about a separate space. One away from your
family and one that you can write off on your taxes? So you need
some space–what about a business center/business incubation
center? These are popping up everywhere. Basically, you rent out
a small office within the center, but with that comes a front
desk person to answer and route calls, access to equipment that
you don’t have to buy (fax, copier, etc.), a “prestigious”
address, and access to things such as conference rooms that you
may not be able to afford otherwise. This is a great way to
start! One other option could be to share office space with
another company. This is a great way to offset costs, but if you
go that route, make sure you set some ground rules, in writing,
first. It’s always better to cover your assets!

Equipment: Another killer of expansion is equipment costs. Rule
#1 seems to be that leasing is the best way to go. It is better
for your cash flow, you can write virtually the entire lease
amount off on your taxes (depends on where you live, of course),
and, when it comes to computer equipment and given the nature of
the advancements in technology, you won’t be stuck with a
useless techno-dinosaur. Time: Yes, that’s right, time. Remember
that it will take a fair bit of time to get your growth level
into a mode you are comfortable with. It will take time to hire
and train the right person, to set up your bigger office and to
get your equipment together. This is an important factor.

Step 4 Raising Capital

To grow beyond the start-up and initial growth phases, you will
need capital to inject into your business. Now this,
unfortunately, is easier said than done. Banks can be leery of
entrepreneurial ventures and venture capital is not easy to
obtain. But, although obtaining borrowed capital is difficult,
it is by no means impossible.

Here are the main sources of funds: Banks Cultivate a good
relationship with your banker. The more he or she understands
your business and knows you, the more likely it is that your
application will be approved. And this means more than just
fronting up when you need money. Keep your banker informed of
all significant developments in your business and routinely
provide copies of your annual business plans.

Be prepared to demonstrate that your business is capable of
generating cash flow and think about what collateral you have
available to put up if necessary.

Venture Capital In addition to a solid business plan and track
record, venture capital providers want to see that you
understand your customers and how your business is a good fit
with their needs. So arm yourself with competitive intelligence
and satisfied customers as references. Also, be prepared to show
you have access to experienced management staff. These
individuals need not be on your payroll but you should expect to
show that you have a depth of experience and talent available to
you at least in an advisory capacity.

Revenue Stream Instead of selling equity to raise capital,
consider selling part of the revenue of the business. In other
words, investors advance loan capital and get repaid by way of a
percentage of the sales of the business. This preserves your
equity in the business and is attractive to investors because
they receive an immediate cash return.

This method has the considerable advantage of avoiding
securities laws (it is a loan rather than a sale of securities)
but it is only viable for businesses with high margins and
strong sales.

Direct Public Offering If your business has a strong
relationship with its constituents (employees, customers,
vendors and community), consider selling stock via a direct
public offering.

Here are 10 popular growth strategies that can be used with
great effect.

Open another location. Offer your business as a franchise or
business opportunity.

License your product. Form an alliance. Diversify. · Sell
complementary products or services · Teach adult education or
other types of classes · Import or export yours or others’
products · Become a paid speaker or columnist

Target other markets.

Win a government contract.

Merge with or acquire another business.

Expand globally

Expand to the Internet.

Which ever growth strategy you choose, make sure you are ready,
plan well and assess your options often.

Ben Botes
http://www.articlesbase.com/ecommerce-articles/small-business-growth-an-introduction-3217.html

Our company buys houses across the United States and we are constantly asked, “How do you do this successfully and live so far away from the properties you buy? How are you handling the rehab living so far away?” and “How are you so successful at this and not even living in the same states you’re investing in?” Here is my answer: I have an awesome power team of people that I trust in each and every market we go into. This team includes lenders, contractors, handymen, property managers, appraisers, attorneys, real estate agents and brokers, sign companies, insurance agents, tenants and buyers! It can sometime take a while to put this team together and yes you are probably going to go through a few not so great ones to get to the ones you like, know and trust. As your portfolio begins to grow, you will need more people on “your team”. The very BEST place to find these people is by a referral. That referral can come from another investor, a local real estate investment group member, a member of a local landlord association, a realtor, a friend or anyone else that you trust. Just be sure that they are “In the Business” and understand what it is that we do as investors. Always remember, the due diligence end of things is always your responsibility. Just because an investor recommends you use a certain agent, appraiser, lender or contractor does not mean they are the best person for the job. You should always get references from anyone you are even thinking of using.

Property Managers – Like your real estate agent and attorney, you need to find someone you can get along with. Interview them, as if you were going to rent a property to them. You want to make sure your property managers will handle your house like a landlord not a slumlord.

Insurance Agents- Shop Around to find an agent who can do non owner occupied (NOO) properties and give you a fair rate! I always look for a broker who can give me a competitive rate and is fair and most importantly, honest. I like to find insurance agents through referrals-that usually seems to be the best!

Lenders – This can be a tedious process. However, once you find just a couple of lenders in a specific area and they understand Investment property and NOO (Non-owner occupied) loans, you’re set! First and foremost, you will need to find someone that can loan in the area you are looking at investing in. There are private money and hard money lenders that are available in every state there is and sometimes using private money or hard money loans can be the easiest way to buy and rehab a house without using your own cash, especially if you don’t have good credit or much cash to put into the deal. Most private and hard money lenders charge anywhere from 4-8 points to originate the loan and 10-18% interest. This is not cheap, but it’s not really a horrible price to pay for the convenience of having money in 1-2 days. Sometimes, its not the cost of the money but the availability of the money that is most important. As long ad the yield is higher than the cost….that’s all that matters. In other words, if you are going to make more than what you spent to get into the deal, it should be a no-brainer! Here is the difference between lenders: Private and Hard Money Lenders are quick and can provide you with the cash you need quickly, but you are going to pay more. They provide a service that mortgage lenders and banks cannot typically do. They give you the money to purchase the house as well as provide the money to complete the rehab on the house. However, you must remember that you can’t keep a hard money loan on your property for any long period of time and expect to make any money-the money is expensive and will eat up your profits quickly. When taking out a private or hard money loan, you should not plan on keeping it more than 90-120 days at the most. If the project cannot be completed in that timeframe, don’t use hard money! To get a copy of our Hard Money Lender Rolodex, go to reitrainingcenter.com or reiconferences.com and enter your name and email on the popup that comes up.

Conventional Lenders are much less expensive but usually require better credit-at least decent credit. There is definitely more documentation and it takes a lot longer to complete a deal-typically 30-45 days to close. It’s nice to find a funding source that can provide both; however that’s usually not your typical scenario.

Whatever type of lender you decide to use, be sure to always line them up before you go searching for properties. It’s always best to have the money in place BEFORE you need it. Then, when you go to make offers, there I no delay. The last thing you want to do is get a property under contract only to find out you can’t get the money to purchase it. The investment market is a very small one and you definitely don’t want to develop a reputation for not being able to close deals!

Sign Companies – You can pick any sign company out of a phone book or wherever. I have previously used sign companies to put out and pick up signs in addition to showing my vacant properties to prospective tenants.

If you are going to manage your own properties, while living in another state, you will need a person to show the property to potential tenants. Realtors, Handymen and sometimes even appraisers can be great people to use for this, but sign companies are going to put out your signs in front of the house anyway. For a nominal fee, they may be willing to let someone in and show them the property. Don’t try to use a large national company for this. Call a local one-man type of shop. You can sometimes find them through referrals from other real estate investors or realtors.

Real Estate Agents & Brokers – This is not the easiest person to recruit for your team! You should never put all your eggs in one basket (ie…one realtor) However, you definitely want to develop strong relationships where agents know you, know you are a serious investor and that you are serious about purchasing multiple deals in one given area. You need to be on a mission to find a buyers agent who is willing to put in some legwork and then be compensated accordingly. If the agent knows you are looking to buy properties in this same area over and over again, they will almost always do whatever they can to accommodate you (take picture, email you comps in a timely fashion, for research, run the financials, etc) There are a lot of gents out there doing the real estate thing part time-those are not the ones you want. You also want to din agents whoa re investors themselves or who work with investors frequently and understand how to “play the game.”

After, you have a property in mind and you are calling an agent for the first time, you need to know a couple of things about the property. What work does the property need? What will it be worth once the work is done-that is the ARV (After repaired value)? What will this property rent for-what are rents in the area for properties similar to this one (Have them send you a rental analysis or something on paper-don’t just take their word. Alternatively, you can look in a local newspaper for the area and calla few local property management companies to verify local rents) What is the average time on the market if I were to resell the property? What do the ¼ mile and ½ mile comps look like? If the agent can’t give you this information on a property , they are not the right agent. Also, you will want to make sure you find an agent who will go to the properties you are looking at buying and take several digital pictures and send them along to you. If they are not willing, find another agent! These agents need to understand that the chances are that you are going to buy this property without seeing it. They are acting as your eyes and ears on this purchase and its important that they look at this as if they were going to buy the property themselves and pay close attention to detail. After you purchase a home or two from one agent, they are going to be more willing to work with you and do what you need them to do. They want to see that you are serious and then they will usually perk up, pay attention and do whatever it is that you need them to do. This is the type of relationship you are seeking.

Attorneys – You need to employ the services of any attorney when wholesaling houses to other investors. We won’t get into the legalities and tax issues of “double closings”. This is where you use your buyer’s funds to pay the seller. You don’t spend any money out of your pocket. Your buyer writes a check to the attorney, the attorney pays the seller and writes you a check for the difference. Some attorneys will do this, some will not. If you don’t have the cash to fund the purchase, it’s nice to identify an attorney who will allow this. It can be as simple as asking. “Will they do a double close? And can you use buyers funds for your deal?” I recommend the honest approach, tell the attorney what it is that you want to accomplish and if he can make it work, great!

Before you decide who you are going to use, speak with a few different attorneys via telephone. Make sure are clear about your investment goals and what you are trying to achieve. Also make sure they are experienced attorneys who are used to working with investors because if the attorney understands you as an investor and what you are trying to accomplish, he or she can better protect you in the long run!

Tenants – If you are planning to buy, fix and rent out your properties, then you need to have tenants for your properties. Two great places to look if you want to rent your properties out through Section 8 is www.socialserve.com and www.gosection8.com. They will allow you to list your property in their databases for free and then those properties are marketed to tenants with section 8 vouchers who are looking for housing. This program is great and has saved me thousands of dollars in advertising costs to get tenants! If you decide not to rent your properties through section 8, you can run ads in the local newspaper. Also, be sure and put a sign in the yard letting everyone who drives or walks by the property that it is for rent. You will be surprised how quickly the word will travel!

Buyers – If you are going to wholesale a house here and there to another investor, you need to have a list of people that you can sell to and who buy houses wholesale to rehab and rent or sell. Its best to develop this list of people BEFORE you go out and put properties under contract.

As a company,, we have thousand of people on out list that say that they “Buy Properties.” However, our core list of really serious buyers who have lines of credit lined up and can pay cash for a property on a days notice is less than 100 people long. In your area, you need to know who that core group. You can always find buyers at your local landlord association or investment group meetings. You can also find buyers via referral through other investors or even agents. WE find a lot of our buyers online in local news and chat groups like yahoo as well. Ask local appraisers and title companies who the “Serious Investors” in the area are. They are usually more than willing to share this information with you. As you develop a reputation in a given market, the buyers will come to you for the deals. This is the best case scenario!

Appraisers, Handymen and Contractors – With these contacts, you not only need to find professionals that you trust and can work with. But you also you need someone that is preferably an investor themselves but if not, understands investment property and the end financial result you are seeking. A $45,000 home in a lower income neighborhood would be rehabbed differently than a $450,000 house in an expensive neighborhood and your appraiser and rehab crew need to understand those differences. Also your appraiser must understand the need to go through the house and give you an after repair value (ARV)as if any needed repairs were complete. In other words, he need to give you an AS-IS appraisal and at the same time a solid professional guesstimate of what the ARV will be when the property has been rehabbed completely.

You may need to go through a few appraisers to find a good one who is honest. You can usually call your bank or lender you are planning on using. This is sometimes best as they have specific lists of people they will and will not work with.

Take the same approach with your handymen and contractors. Tell them you need the job done for $4000, when you know it will cost $8,000. Make sure they are not cutting costs when they give you a bid, just to get the job. Some trimming is fine, but cutting the price in half, just to get the job, will almost always end up in a poor quality job as far as workmanship is concerned.

When identifying a new contractor, be tough. Ask for the moon and stars. Tell them that you want a rehab quote with pictures and estimates broken down by labor and materials as well as room by room. If they offer to give you this, then you have someone who is flexible and is willing to work with you.

Since time is the biggest factor when rehabbing a house, make sure your contractor gives you a firm date that the job will be completed. Also, when getting bids,make sure you get them back from the contractor in a timely manner. If you have a 7 day inspection clause in your purchase contract, tell your contractor “We are rushed and need thi back within 48 hours. Can you get this done for us right away and fax the bid to me within 48 hours?” You want to make sure they follow through on what they promise.

Also, send more than one handyman or contractor to a job, unless you’ve worked with them before. If you are working with someone new, make sure they are not the only quote you get. They may be too high or may do poor work and you will have no idea-even if they have been referred. If you get three or four bids for that same house, you will have a really solid idea of the scope of work and an accurate price of what it’s going to cost you to rehab that property.

Charrissa Cawley
http://www.articlesbase.com/real-estate-articles/building-your-real-estate-investing-power-team-55049.html

I’m very tossed about this.
Been unemployed for a while, am weighing a contract offer from Accenture.
Sounds awful… project management analyst.

I have a bachelors in electrical engineering and a MBA.

Would i be wasting my time working in a role / company like this?
The original plan was something in the investment sector.

The U.S. is moving toward contract work, and away from traditional employment with benefits. It’s better to be working than not working. And even contract work can lead to something else.

I’m in the same boat, right down to the BSEE. This may well be the employment model we see for the rest of our careers.

If I were you (and I am, almost), I would take it.