Entrepreneurial Small Business 4th Edition by Jerome Katz ,Richard Green

Exercise 21

Focus on Small Business: Tom Caldbeck, Contractor
"It's a constant battle," Thomas Caldbeck said, "home building goes up and down with the economy and there are all sort of people calling themselves contractors who will underbid any proposal you make. Frankly, contracting is one of the hardest businesses there is."
Tom has prospered in the highly competitive construction business in San Antonio, Texas, despite its many difficulties. At times he has had to close his business and take a position as an employee. But he always comes back to owning his own business. He said, "I really like working alone. If I need muscle, I can always get it for a few hours or a day just by going by I-35 and Houston. There are always men there looking for work."
His success, hard earned as it is, has come through his willingness to go after new opportunities when they come available. When new home sales sagged in 2001, Tom's then-employer started doing work for insurance claims. Tom was laid-off, and then immediately hired back as an independent contractor. Tom was now a self-employed entrepreneur. He soon found that he was actually making more money as a contractor than he had ever done as an employee. Even better, he was his own boss-able to turn down jobs that he did not want and able to set his own hours and work schedule. Once again, things were looking up.
In 2002, with $7,000 of savings and a bank loan, Tom purchased power tools and a new van body truck. He built racks to hold his tools and supplies. An unused bedroom was turned into an office, and his two-car garage was converted into a workroom and storage area. Tom's business took off as he accepted larger and larger jobs.
Things began to change in 2010. Although San Antonio escaped the worst of the 2008-2009 recession due to a backlog of long-term projects, by the middle of 2010 Tom was running out of work. He was forced to lay off employees, and he found himself accepting smaller contracts than he would even have considered just a year earlier.
Then in 2011 Tom encountered a set of serious setbacks that nearly broke his company. He lost on two major jobs in a row, seriously depleting his working capital. But the same recession that killed the market for new homes and office buildings created demand for remodeling. So Tom set up a new business, TLC Remodeling. He set out calling every former residential client he could find. Soon he had as much work as he could do, remodeling bathrooms and kitchens. To his surprise he found that he could make money doing remodeling by not providing fixed bids on work to be done. Tom said, "Always in the past I refused to do remodeling. I often said that remodeling was just one terrible surprise after another. But I have found that I can show the problems to the owners and by working with them, arrange a fix even if it means billing them more." From this, he has morphed from contractor into project manager for homeowners who want to be involved in their own remodeling projects. So he sold his van and purchased a pickup truck because he no longer needs to haul tools to his work sites.
Tom laughed. "I used to have a sign that said, 'Shop rates: $50 per hour, $75 if you watch, $125 if you help. You know, there are homeowners who will pay the buck and a quarter just to be involved in the project."
What experiences that Tom had in creating and growing his business would be considered making do with what he had