In California it's been getting tougher and tougher being a licensed contractor. I recently examined not only why I was losing bids but to whom I was losing them to. I'm talking about small residential jobs like remodels and additions and also residential service work.
Let me add that I have not successfully obtained a small residential service job in over a year. I've bid (for free) dozens of small jobs like hanging ceiling fans and cutting in recessed cans, adding outlets, hooking up hot tubs, etc. I have never gotten these jobs no matter how low a price I offer.
I've been in business 25 years, am licensed, have full liability insurance and comp insurance and have a new $40,000 service vehicle with $20,000 of tools and materials on board. So, in other words, I'm a professional electrical contractor, just like you guys....
When I began this study I knew the answer to why I was not getting these jobs, my price was too high, I knew that I was being under bid dramatically. For example, I charge $350 to cut in fan rated box in the attic and assemble and hang a ceiling fan. The guys who get these jobs typically charge $100 to $150 for this task. We all know this is about a 4 hour job...
So I began to look into my competition, to see how they could deliver such low pricing. I learned that over the last year, every single job I lost was awarded to an unlicensed contractor.
I've been aware of the fantastic growth of the unlicensed contractor ranks for a few years. I wondered why the growth of this industry has exploded in the last couple of years. I discovered that the Contractors State License Board (CSLB) is responsible for the explosion of unqualified, unlicensed contractors.
In California, anyone that advertises to alter or perform any alteration of any building must be licensed by the CSLB. There is an exemption for work under $500 The contractors license law has always required that unlicensed contractors include the following statement in all their advertising and customer documents: Not A Licensed Contractor
Having to include the "Not A Licensed Contractor" language in all your advertising understandably had a chilling effect on unlicensed contractors. The public has a right to know when they're dealing with an unlicensed contractor and this legally required language was intended to inform the consumer.
So in my quest to try to understand why I am competing with so many unlicensed contractors I came across this startling addendum to the CSLB's web site:
Is anyone exempt from the requirement to be licensed?
Yes. Here are some of the exemptions:
·Work on a project for which the combined value of labor, materials, and all other costs on one or more contracts is less than $500 falls within the minor work exemption. Work which is part of a larger or major project, whether undertaken by the same or different contractors, may not be divided into amounts less than $500 in an attempt to meet the $500 exemption. Until January 1, 2005, unlicensed contractors were required to provide to a purchaser a written disclosure stating that they are not licensed by CSLB. This disclosure is no longer required;
Wow! No wonder I see so many guys working out of their trunks! Unlicensed contractors no longer have to inform consumers that they are unlicensed. Thank you CSLB!
As a licensed contractor, because of this law change, I have had to forfeit the sub $500 electrical wiring market to the hacks. The CSLB has made life easier for hacks and more difficult for legitimate, licensed contractors.
Thank you CSLB!
But this is not the first time the CSLB has deliberately made life hard for licensed contractors.
During the 1990's the CSLB did massive sting operations, identifying unlicensed contractors. Instead of subjecting these unlicensed contractors to disciplinary actions, they rewarded them by allowing them to use their experienced as outlaw contractors as qualification to sit for the contractors exam. This was called "Amnesty" and suddenly our ranks were swelled with thousands of unscrupulous law breakers and scofflaws. Anybody with a license number that starts with a "7" is suspect for this reason.
The CSLB has done more harm to our industry that can be imagined. This is what happens when the Government gets involved. Instead of setting standards, the CSLB lowers them.
Thank you CSLB!
Last edited by Romex Racer; 04/21/0711:32 AM. Reason: Spelling corrections
With that kind of overhead you are going to need to focus on larger jobs.
What do you mean? Are you saying a 40K truck and 20K in inventory is a high overhead?
Most of my overhead is in insurance (business liability, vehicle & health), taxes (state & city sales, State & federal income), fees, fuel, and tools. And let's not forget about your retirement savings, unless you plan to live on Social Security.
Unlicensed contractors are a threat to all of us who do things right, it sounds like a raw deal in Calif.
Re: The Scandalous California Contractors Board
#162571 04/21/0702:32 PM04/21/0702:32 PM
Even when there is a law on the books outlawing it, enforcement becomes the issue. My state outlaws any work on electrical or plumbing without the proper license, regardless of dollar value, but enforcement is for all practical purposes extinct.
The problem is not the government. Or the contractors. It's the customers.
Like it or not, some folks see licensing, etc., as but underhanded attempts by politically connected groups to line their pockets. They see permits as letting 'big brother' get his foot in the door. And they worship at the alter of 'cheap.'
Some of it is perception. Another ECN member, as a test, set up a 'shadow' operation. By day, he was "Mr. Licensed Contractor," everything on the up & up. By night, he was "doing side work - don't tell the boss." By day, nice service truck. By night, beat-up mini-truck.
The results? By day, he had no trouble catching up on his sleep. The phone hardly ever rang. By night, more work than he could handle. The irony was that he deliberately charged / quoted 10% more for the 'side jobs.' The last laugh was also his ... as he is a sole proprietor, and IS in fact licensed, bonded, etc. If, heaven forbid, a job goes bad .... he's got his tail covered. If some predator tries to stiff him, assuming he has no license ... well, he's ready to sue, ask for, and collect triple damages. License, Your Honor? Sure ... he never asked! Doom on him!
Romex, are you proposing that the purpose of licensing should be to eliminate competition that is willing to work for less than what you charge? I thought the purpose of licensing was supposed to be to protect the consumer from unqualified workers.
Hey Reno, that is a great idea. I might just try something like that. Maybe a sign on the rear door of the van saying "cheap electrical no license or insurance premiums to pay" and then use 3rd column pricing. If I get busted for "Unfair and Deceptive Trade Practices" for advertizing as being unlicensed when in fact I am, I can defend myself to a judge by producing all the times the board got notified and no action was ever taken on it.
Re: The Scandalous California Contractors Board
#162588 04/21/0710:09 PM04/21/0710:09 PM
The CSLB has the "SWIFT" unit that has been doing sting operations on unlicensed contractors. They set up once in awhile, get a (very few) couple of hacks, and proclaim their successes loudly.
In the meantime, Craigslist is just loaded with unlicensed "contractors" advertising for work that requires licensing. (I flag them as prohibited every chance I get, enough people doing the same will remove the ad) Both RR's area and mine are just full of these guys that will do a service change for you, or build you a whole new house. Handymen advertise "Electrical" with city business license numbers on the sides of their trucks where a State Contractors License should be.
This all seems to go right over the head of the CSLB, who don't do a darn thing about it.
The message seems to be Get a license, insurance, work legit, pay your taxes, but remember....No good deed goes unpunished.