I just got a spam call from Angie's list trying to enlist me to take on projects in the rural areas I service. I had to explain to the gentleman that the rural market is a different animal and can't be handled the same as an in town project. He didn't quite get the point of what I was telling him but it made me think.
Any rural market has its challenges when it comes to getting people to show up to do a job, big or small. Here's how it works in my head;
Being in business is expensive.
Being in the construction business is absolutely expensive. Rural contractors can't do the volume of in town guys. Volume keeps the wheels on the bus turning. The more business you get the more labor you can keep on the rolls and the more large and small projects you can do profitably.
As a small rural company, I can't go do small jobs and make any money. Here's how it breaks down; Average job call out 5 days.
Insurance: Liability, Auto, Workman's Compensation annually = $13,500 or $1,125.00 per month. Average $37.50/day or $187.50 for the week
Fuel costs: We drive trucks, big ones that don't get good mileage. I tried getting my tools into a Tesla once, it didn't work out so well. We drive an average of 100 miles round trip to any job. Our vehicles get 12-16 MPG. So that 6.25 gallons per vehicle. Average 2 trucks per crew, 12.5 gallons at $3.69/gal= $46 /day or $230 for the week.
Labor: I can't get labor to show up in the rural areas for less than $25-$30/hr. I should be marking up my labor to cover overhead and profit. At a minimum I have to charge my guys out at 30% over cost or $32.50-$39.00 /hr. and that's too low really to make a profit, due to the unforeseen elements in the rural areas that eat your lunch. Final labor cost $40.00-$48.00/hr/man. Three man crew for 5 days only working 8 hour days because I still have to pay them for the drive time which is another 2 hours. Cost $400-480/day/man or $2,000.00-2,400.00/man or minimum $6,000.00 for the week.
Vehicle, trailer and equipment wear and tear: Where we live and the condition of the rural roads, we have to charge for seen and unseen damage on the thing that get us to the job and the things we use when we're there on the job. 3% is minimal but it has to come from somewhere, and that is a job expense and needs to be accounted for. Taking 3% on just labor comes to $180 for the week.
So customer Bill Smith wants a deck and a patio cover built, the lowest I can go, stay in business and actually make a profit is $6,597.50 for a 3 man crew delivered to the jobsite per week. We still haven't talked about the required materials...another $6,500 minimum for this deck and patio cover. For a whopping total of $13,097.50 Project Total!
Being rural, how many of these jobs do I or can I possibly line up? I guarantee not enough to make a living year round.
So Johnny and Freddy (Labor) go back to the other things they have to do to try and make a living. I (The General Contractor) begin the unpaid portion of my business which is looking for more work.
I'm not griping, I chose this life and I'm happy with it. But next time you or your clients are complaining about the price of rural construction, try to remember how much it really costs to be in business, let alone the difficulties of business in the rural areas. We have licenses and insurance and expensive tools that we like to maintain, the local handyman can do the job for less, but this is the reason why legitimate contractors don't chase rural work and thus harder to find.
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