To reap the rewards of your own business, you need to take a hard look at the realities.

(This is the fifth and final column in Jim Olsztynski's series on the pros and cons of running your own company. Previous columns are available at

Most contractor companies start out as a one-person operation, maybe with the spouse pitching in, as I wrote in a previous column. At most, they may have a partner and perhaps an employee or two.

Few new contractors can afford to support multiple service trucks and an office staff. That's why they can expect to put in so many hours. Some people think one of the attractions of owning their own business is the ability to work at their own pace and take time off when they feel like it. That works in theory, but the reality for most small contractors is that survival means spending almost every waking hour either working or thinking about the business.

Still, many company owners choose to remain small. They believe this creates fewer headaches. This is a personal decision, and not necessarily a bad one, depending on their goals. There are indeed less problems when you have only yourself to manage. But keep in mind that staying small also has its drawbacks.

The biggest is simply that it limits one's income potential. For instance, a rule of thumb for small shops is that the owner can expect to take home about 10 percent of billings as personal compensation. So to make $50,000 a year, the contractor needs to book around $500,000 worth of work.

Realistic income

How realistic is that? It comes out to almost $42,000 a month, which translates to a little under $10,000 a week, or a little under $2,000 a day, every working day. How many of you have the capability of booking that much work? Even if you could pull it off, it virtually guarantees 60- and 70-hour workweeks when you factor in paperwork, marketing and other administrative tasks.

Some small contractors put more than 10 percent of billings in their pocket, and as companies grow, the percentage taken by the owner tends to decrease. For example, you won't find many owners of a $10 million business compensating themselves to the tune of $1 million a year. As contractors grow larger, additional overhead tends to eat up money at a faster rate. Nonetheless, if making big bucks is your goal, it virtually demands that you grow your business to a decent size.

Growth means hiring other people to work for you. Finding good people is perhaps the most difficult part of running a business.

Even if they find good employees, keeping them happy is not easy. Managing people is an art. Big corporations devote many hours of training before they put someone in charge of others. People in a small company seldom get any management training at all. They simply get promoted and suddenly find themselves supervising others.

A contractor wouldn't think of sending a novice out to a jobsite without some amount of training and close supervision. Well, people are even more complicated than putting up ductwork, yet most contractors put crew leaders or supervisors in charge of other people without a single minute of management training.

One reason why so many construction workers are itching to go to work for themselves is because they confront so many supervisors who are ill-equipped for the role.

The odds are against people who start their own business. I don't want to paint an overly negative picture of business ownership, but I do think people need to go into such an important venture with their eyes fully open.

However, the obstacles can be overcome. Despite the odds, a fair number of trade workers do start up their own companies and succeed. Many live happy lives because they enjoy what they are doing. A few become exceedingly wealthy.

Risk and rewards go hand-in-hand with business ownership. You can't have one without the other.

(Jim Olsztynski - pronounced Ol-stin-skee - is editor of Supply House Times, a sister publication of SNIPS. He can be reached at (630) 694-4006, or e-mail