Experiences From The Storefront

For the small business owner few things are more frustrating or gut twisting than getting halfway through a project and having your contractor give you a change order for unexpected items that totally blows your budget.   You are left contemplating where to get the money to finish your store and get the doors open.  As you scrabble for the money, the store sits partly finished for weeks, or even months, and valuable time is lost.  You can’t walk away from the store because you have committed everything, and you’re obligated to a long-term lease. You are “caught.”

How do you avoid this trap?

Select a good quality contractor who has been in business for many years and is licensed and bonded. Contracting draws to it many people with little experience organizing and managing projects.  The only requirements to obtaining a general contractor’s license is to pass a test and pay the fees. The ease of getting a license draws people who maybe talented as framers, but who do not have a clue how to organize, manage, budget the work and payments to the sub contractors. Longevity in the business means a lot. Contractors generate a lot of their business from referrals, and they only get referrals if  they have satisfied customers.

Many people find a contractor in a way that I do not recommend.   They simply put out their plans to bid.  This requires plans to be complete and ready to submit to the city, or plans that have already been submitted to the city and been approved.

I prefer to select a contractor before the plans are drawn and have the contractor team up with the architect in the design phase. The architect brings creativity and knowledge of codes and structural issues. The contractor can bring the same things, but with practical hands on knowledge of what happens during construction. Using both of them in the design phase will generally catch problems that could or would have come up during construction.

I have found my best contractors by word of mouth. Ask for referrals from leasing agents, developers and business owners.

Select the contractor from interviews and after you have checked with the state licensing board and better business bureaus for complaints. Rather than bid the project, I prefer working on a negotiated contract basis with a contractor that will open up his books and give me a detailed line item budget.

If the project will take longer than thirty days, progress payments to the contractor and his sub contractors will have to be paid.  These payments should only cover  the work completed at the time of the payment.  An amount of money (retention amount) generally 10% should be held back from each payment pending completion of the project, receipt of a Certificate of Occupancy from the city, satisfactory evidence that all the sub contractors have been paid, and complete lien releases have been given to you.  The retention is your insurance policy for getting the contractor and the subcontractors to return and repair the “pick up” items that occur on every job.

Planning and using the right people at the right time is the key to a successful store opening.