How we closed our construction business after 10 years of work. These are my 10 commandments:

By Slava Ryumin

Marketer with a team and business experience. Come for traffic and coverage. http://hipolink.me/rumin

There was 2010. 50k had been borrowed by us from my grandmother, a CAD computer had been bought and a construction company had been opened. While my friends were getting the latest iPhones, my husband bought me a soldering station for my birthday. The cost was 5k, now, of course, it may cost much more.

DISCLAIMER: The article was written by the author of the blog “Fell and Rose” based on an interview with an entrepreneur.

We built cottages, bathhouses, renovated apartments and clinics. When it closed, the teams went to work on contracts, the designers went freelance. And me:

Here are my findings from 10 years of work:

Table of Contents:

1. Pay People First
2. Don’t Fine, Share Responsibility
3. Don’t Bid on Contracts If You Don’t Have the Tender Amount in Your Account
4. Be Transparent with Your Employees
5. Use Trash Bags for Trash Only!
6. Break Down Contracts
7. Document Calls, Issue Receipts for Cash Transactions
8. Keep Warranty Documents
9. Choose Your Clients Wisely: Did a One-Bedroom Apartment Renovation for 98,027 Rubles, Spent Six Months, and Earned Only 15,000 Rubles
10. Do No Harm: Why the Framework Builder Turned out to Be a Lousy Contractor

Conclusion: construction is self-employment.

1. Pay Your People First

Around me, there were good people, and I was very afraid of losing them because I understood that the future of the business depended on these people, and they were the ones who could help me earn well in the future. That’s why, when tough times came, we chose to live frugally and delay office rent. The employees didn’t feel the “tough times.”

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During tough times, I would visit my office through this window to avoid encountering the landlord, but all salaries were paid on time.

2. Don’t fine, but share responsibility

In construction, the average kickback from material suppliers is up to 10%. I always set aside this money for mistakes. If someone didn’t heed the “DO NOT WALK HERE!!!” warning and damaged freshly laid tiles, I would retrieve that little fund and compensate for the error. It didn’t matter whether it was a force majeure event like COVID-19 or an employee’s mistake. However, if an employee’s mistake exceeded the allocated fund, the remaining lost money was shared between me and the one who made the error. As an entrepreneur, I am also responsible for every mistake. Such occurrences were very rare. No employee incurred significant financial losses.

For example, a supplier made a mistake and bought paint in the wrong color. The team painted without checking, even though the adjacent wall had a different color. As a result, the team repainted this with the correct paint for free, and the fund went toward the new paint.

3. Do not take a tender if there is no tender amount in the account

Once I took a government tender for a children’s polyclinic. I nearly went bankrupt as payment for the work and materials was delayed for a year, and I had to dig into all my reserves just to survive.

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But she had the opportunity to restore the Soviet clinic

4. Be transparent with employees.

All office employees and teams could see a table that detailed all expenses and income. The teams knew how much they were earning, and they could assess that the entrepreneur, in the form of myself, was not being unfair.

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This document had 127 revisions to ensure that all logs were saved, allowing us to trace who edited which figure. Therefore, nobody made retroactive changes, not even myself.

Over the course of 10 years, I offered partnership to two individuals. One eventually became my partner and later my husband, while the other declined but continued to work with us as an employee for a decade.

5. Only trash in trash bags!

One builder threw a hammer drill into the trash bag, while another thought it was just garbage. Expensive tools were ending up in the landfill. That’s why I introduced a rule: nothing but actual trash should be placed in the garbage bags!

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This drill is in danger of ending up in a landfill

6. Split contracts

Conclude a contract not for the construction of a house, but separately for each type of work: foundation, tiles and electrical wiring.

For a foundation contract: 50% of the payment.

Once the foundation is poured: another 50% of the payment – a foundation completion certificate.

For a pond contract: 50% of the payment.

After the pond is excavated: another 50% of the payment – a pond completion certificate.

With this scheme, any claim against you can be specifically tied to a limited scope of work, not just a vague accusation. For instance, there was a flood in a house once, and the client blamed us. Eventually, it was revealed that the inlet valve, installed by the developer, had burst, but we still received a dose of negativity. Separate contracts allowed us to peacefully exit the project. We simply completed the next stage of work, signed the certificate, and left.

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The business is over, but the folders with papers are still there.

7. Keep your guarantees

The instrument was not stolen from us, but it broke regularly. Keeping the guarantees saved the day.

The warranties protected the tools from being confiscated by the traffic police.

At the traffic police checkpoint, they asked to see the warranty, and we were able to prove that the tool belonged to us with just a photo of the warranty sent from our office. However, our acquaintances had their tools confiscated because they didn’t have the warranty with them.

8. Record phone calls, issue receipts for cash transactions.

To avoid getting into a “you told us something else” situation, we began recording all incoming calls. At some point, everyone understood that everything was being documented, and conversations like “we asked for a yellow paint job” could be easily verified.

I also started issuing receipts for all cash received: this way, I wouldn’t get confused about the funds for materials from different clients, and the client would have a document stating how much they had paid.

9. Choose your clients carefully: we completed the renovation of a one-bedroom apartment for 98,027 rubles, spent six months on it, and earned only 15,000 rubles.

The previous builder removed the entire floor and brought two pallets of bricks up to the third floor, which is very dangerous in a “Khrushchevka” apartment building.

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He installed the electrical wiring haphazardly and with a disregard for safety.

He dismantled and disposed of all the plumbing fixtures except for the cast iron bathtub. The client insisted that he “source plumbing fixtures from anywhere but return them.” In the end, he found a toilet and sink from wherever he was sent, but it cost the colleague a year of effort and 600,000 rubles of the client’s money.

The client reached out to me in a state of panic, without much money on hand. I thought, “Can we really help this person with just a hundred thousand rubles?” As they say, “challenge accepted.” We didn’t cut corners, so we offered the client alternative compromises.

High quality, fast, cheap… -> Slow, crooked, expensive…. -> Fantastic VS Expensive

Our compromise was that for this particular renovation, it would be cost-effective, of high quality, but time-consuming.

We called the team when there was a gap between current projects, and we weren’t rushed or pressured to make design decisions. Wherever we could save, we did. For example, we preserved the cast iron bathtub by bringing in an enameler.

The renovation took six months, and the profit for the office was only 15,000 rubles, but we helped someone in a difficult situation. That’s what came out of it. The cost estimates in the tables here are preliminary, but the final figures didn’t differ significantly. These prices are from 2017.

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1/ Iron profiled sheet for the backsplash: 3,200 rubles. Installation of the backsplash: 500 rubles. Wooden countertop: 4,268 rubles. Installation of the countertop: 2,000 rubles. Particleboard cabinet doors, leftover paint – free of charge.

2/ Bricks were reclaimed, primed, and painted. I found this tile at the landfill. I purchased the remaining tiles on sale, 2 square meters for 269 rubles.

3/ Wall leveling, 10 square meters of drywall: 3,500 rubles. Skim coating for painting, 71.4 square meters: 6,426 rubles. Wall priming, 86.6 square meters: 1,732 rubles.

4/ Painting walls with two coats, 64.6 square meters: 5,186 rubles. Wallpapering, 21.5 square meters: 3,225 rubles. Materials: plaster – 368 rubles, putty – 459 rubles, beige paint – 3,254 rubles. Self-leveling compound “even floor” – 2,754 rubles. Sanded plywood – 3,420 rubles. Installation of plywood – 1,520 rubles. Installation of baseboards – 1,702 rubles.

These are preliminary estimates. In the end, they changed significantly.

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10. Do no harm: Why the frame house turned out to be subpar.

If you want to build a house in a year without selling a kidney to fund it, a framing contractor is an excellent option, but there are nuances to consider.

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By the way, this is also a frame house. Loft design, dried glued timber, triple-chambered glass windows, and fireproof insulation.

When we were buying specific tape for proper wind and vapor insulation of a frame house, we always encountered difficulties in sourcing it. This led me to ponder why frame houses are often considered subpar in public opinion. If builders don’t use this tape, they can’t make the house truly airtight. It’s precisely the lack of airtightness that gives frame houses a bad reputation.

Imagine it’s -30°C outside, and your home is kept at a comfortable +25°C. At this moment, condensation occurs as cold tries to enter the house, and warmth tries to escape. When cold meets a surface, condensation takes place.

If condensation occurs within your insulation, in the mineral wool, the mineral wool will become wet, freeze, and crumble. Gaps will form, and the mineral wool won’t fulfill its function. Some areas will become cold, and mold will grow on the walls. Moreover, if the insulation particles enter the atmosphere and you breathe them in, it can trigger asthma in children.

As a result, the reputation of frame houses as “subpar” persists.

I once saw that the insulation was so poorly sealed that children were picking at it. This is very dangerous.

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Good developers often have specialized blower door tests that precisely assess the quality of insulation work. However, I’ve never seen this with local builders; it’s expensive.

Conclusion: construction is a form of self-employment.

Throughout those 10 years, we hoped to establish a business so that not to be actively involved but to streamline processes so that it could run on it’s own. However, I found that this was only possible in a narrow specialisation and within segments considered “below average.”

"Fly with wings or die" - a folk wisdom.

A typical construction project is a constant action. Every day, you face tasks you’ve never tackled before and might never encounter again. In the non-budget segment, the client is the real boss: today, they want a Renaissance-style loft from the original build, and tomorrow they’ll call you to fix a subpar house that’s already been built with violations. Every day, you explain to the client that quality materials and craftsmanship come at a higher cost, but they constantly try to negotiate and get the best quality for the cheapest price possible.

"The camel has two humps because life is a struggle" - a folk wisdom.

In the end, you live in a constant struggle and compromises. You receive a dose of aggression, try to shoulder others’ mistakes, and have your soul squeezed out over shades of gray “just because.” Yes, later you’ll prove your point, but your good mood is already gone.

I love challenging tasks, unleashing my creative qualities, and experimenting with different inventions and solutions to solve clients’ problems, which is why they loved me and recommended me further. They understood that I would do everything to solve their problems, and when I said “it’s impossible,” they were completely sure that it was.

And for the same reason, you eventually quit the construction business: the stress and complex tasks don’t easily blend with family life and raising children. I closed the company and breathed a sigh of relief. Now, I can enjoy such exotic things as watching a movie or writing an article.

End Credits

The article was written by the author of the blog “Fell and Rose Again,” based on an interview with an entrepreneur.

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I make a living through marketing:

• We helped employers find shift workers from VKontakte.

• How I lead the marketing department.

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In search of heroes!

If you have had your business, did you close it? Maybe you had to?

I would be delighted to discuss it. And, potentially, prepare the review about it.

By Slava Ryumin
Marketer with a team and business experience. Come for traffic and coverage. http://hipolink.me/rumin
Published with the permission of the author.
The original article is here.

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