Starting out and making a profit with Earl and Calam

I didn't become a builder to become rich, there are lots of less risky ways to do that. I noticed that the prosperous builders I was working for in my youth were mostly relying on their experience and knowledge built up over many years to run a successful business and make a decent profit.

Getting started

I started my own building company aged 27, which at the beginning did really well. It was a sharp learning curve and was a lot of stress, dealing with all the new sides to owning a business, like employing people, dealing with suppliers, subcontractors, accountants and most stressful of all, finance.

I found that when we were turning over less than £500k there wasn't enough profit and overhead to employ office staff and run an office. This put me in a position where I was doing everything, which meant I was doing the best I could. Some of it well, some of it not so well and some of it not at all. It was like being on a roller coaster.

Ultimately, I wanted to be a good builder and to deliver quality end projects for people to enjoy living in and add value to their homes. That, I am proud to say is something we have always maintained and have lots of happy satisfied customers. 

Rolling up our sleeves

I thought that starting a business meant I would have more control and therefore bigger profits but I wasn’t at all prepared for the amount of work involved like managing enquiries, pricing jobs, winning work, engaging subcontractors, employing people (mainly on CIS), starting jobs, ordering waste removal, billing clients, buying materials, paying people, building, paying tax, did I mention paying people?  Sorting trade accounts, financing a van, snagging, Paying VAT, paying accountants, this list in endless.

We were making money on the front end of projects but then losing money on the back end. Sometimes being in cash flow difficulties and sometimes having large payments coming in. Our accountants at the end of the year would say we had made a few thousand-pound profit but this didn’t reflect our cash flow. Some projects were profitable, then others being a drain.

Growing pains

As our reputation grew so did our job size and our turnover started to increase. Larger expenses meant we had some serious growing pains.

It all came to a head when one of our clients couldn’t pay their bill, and we had invested heavily in this particular project. These are the moments that make or break you in this industry and although this caused us no end of problems, we also learned some valuable business lessons.

We needed to re-think how we did things, I reduced the size of our projects to reduce the risk and we also vetted our clients. We decided to invest in software to track the costs on a project basis to allow us to work out what is going well and were the problems are in order to make adjustments and ultimately understand where our profits were disappearing. We trained in retrofit and energy efficiency measures to make clients houses fit for the future.

This has also been quite a costly learning curve, but things are coming together massively now. We now offer a client lead design and build service, where we charge a nominal amount for an initial consultation and a budget costing based on the client’s wish list.

Challenging times ahead

So why am I telling you all this? Well, we are entering some uncertain times economically and socially. There will be some bumps in the road for all of us, but we are a resilient bunch. My advice is, when you face these challenges, it’s important to stop, learn from it and adapt.

We now have an apprentice which is really encouraging as we are putting back skills into the industry. Again, financially that's quite a cost, but we see we need to change and train and inspire people. We are now on a mission to do some more training to grow this business and build a new team.

Am I making millions of pounds and sipping cocktails on the beach? No. But our experience means we are now in a place where we can handle what’s thrown at us and our training means we are ready for the future.

Nik Nelberg

Earl and Calam