I did this for a number of years when I first started, and that business model did not work for me. The problem I had was there just was not enough electrical work to justify the amount of money needed to make it work. I ended up doing refrigeration, plumbing and anything else I could to try to make more out of it but then ended up a glorified maintenance man. I have seen guys make it work with infrared testing, and the documentation that some companies like, but at the time that kind of equipment was well over $20K (now you can get it for about $5k). For me the better move was to go into straight new construction contract work, and throwing my pager away felt great.
When I got more established I tried this again it did not work out so well either; a few big plants around town love to do contract maintenance for controls work, and I took one of these contracts about 5 years ago. Basically how that works is a big plant wants a good union control guy, but they don’t want to actually employ him, so they get a local contractor to do a maintenance contract and hire the guy they want. You as the contractor become a go between the plant and the union. The deal is negotiated on percentage, and you get a fixed percentage of what you pay your electrician.
The problem with these type of contracts is that big plants are run by bean counters, and sooner or later they will figure out a way to work the deal so you cant make any money. First they start off with documentation on their forms, that would choke a CPA with detailed break downs of all the fringes and which ones they will pay for and wont.
On paper it looked like I was making a little bit of money for a lot of headache, but when you look at how much money is spent on headache and paper work it started to look like it was not such a good deal. Making 2%-3% on labor contract you negotiated at 12%, does not look so good when you can make 15%-30% on a new construction contract.
This went on for a number years because I was making a little money and it kept a good electrician working. Then the plant bean counters started to question why the electrician needed a truck, even though he did work with his tools on a very large plant with lots of different buildings. They wanted to provide a golf cart for his use, and to remove the truck from the contract. When I told my electrician that he was losing the truck, he got upset and wanted me to suck it up because after all, I was making all that money off his labor.
(There is a unwritten rule in our business, if you give a man a truck, he will quit if you take it away. It does not always happen but 95% of time it does work out like that.)
He quit, I lost the contract. Later he went to work for a competitor doing the same labor contract for the same plant, and I sincerely hope they other guy figures out how to make it work.
Sorry for the long story but I don’t see service contracts as a real lucrative deal; yes there are guys that do them and there have been a few outfits that have come to town and tried to get me to partner with them on them but it never seems to work out for me.
The only maintenance "contracting" we do is lighting. We lose a little bit of money on this, charging a small fee for inspection and relamping once a month or once a quarter, having one of our lower payed workers performing the relamps. Lamps are not included in this contract price, and are billed in addition to the regular fee.
What this does for us is gets us the repair work, which adds up quite a bit. Ballast and fixture replacements, photocells, time clocks, misc. repairs, etc., are all billed at full pop after the problems are reported to the property management and the proposals approved.
Quite a bit of more involved electrical work of every variety and level is thrown our way as a result of these relamping contracts, because now we have a relationship and trust built up with the customers.
In addition to this, we also get quite a bit of company exposure (logos & phone numbers on t-shirts, trucks, etc.) from being on these sites regularly, and we've gotten quite a bit of work as a result of this exposure. The more you work, as they say, the more work you get.
It's proven to be a good business strategy for us, and definately keeps the money tube pumping between the big construction projects.
As for other types of maintenance "contracts", I cannot say. I'm sure ITO knows of what he speaks, and you should heed what he said above.
Whatever you decide to do after weighing your research, good luck!
Thanks guys. I guess what i'm looking for is a one man show for trouble shooting. I do mostly Industrial work. I currently travel for work and I have summers and winters off and I am losing my mind just sitting here. I know my the last EC had a service guy, it was just him doing the work. I think he was responsible for call outs and trouble shooting work. He was always busy. I have also been kicking the idea of being a temp worker for a company. Kind of for back log work. That is basically what I do now. Something that would keep me busy and maybe get me full time so I don't have to travel. Thanks. I should call my old supervisor and ask him a few questions. I won't be his competitor sense I relocated. Usually those guys don't reply back but he is a down to earth guy.
RE the truck. My trucks stay at the shop except for rare occasions. It has saved me a fortune in towing, repair and fuel bills. And that was when gas was $1.20/gal or so! I had an old timer who "didn't want to drive his truck to work". He came highly recommended but he stayed home. I won't do it.
I've not had any problems with such other than this one guy. They know it when they are hired. I explain if asked that it makes us more competitive which means more jobs and job security. If they can't deal with that they can move on down the road as I'm not in the transportation business.
I also don't furnish them with cordless tools. They buy them, I finance it for them along with any REQUIRED hand tools. IF they break them or the battery dies I replace or repair it. This way if they want to pawn it it is theirs. If they leave it somewhere it is theirs to replace.
Theft is therefore kept at a minimum also. One other benefit I think is that it builds a confidence in them that they have a good set of tools to work with. Being it is theirs most of them take good care of it.
This is something of a 'mine field,' especially if you get away from lighting work.
In my experience, such work varies greatly with the ebb and flow of corporate politics. A manager gets replaced, or they hire a new guy, and your work load changes greatly.
I've seen it at both extremes ... where the contractor only did major work, and where the contractor did it all - including changing light bulbs.
Issue #1 involved personnel and equipment. Can you use the customers' scissor lift? Will the customer provide manpower for digging and pulling? Heck, one place would not even let the shipping dock be used for parts deliveries!
The second barrier is the scope of the work, and the expected monthly bill. Workload tends to grow ... then accounting gets upset over your 'outrageous' bill!
Issue #3 is, again, corporate politics. Sometimes folks see the contractor as the "fall guy," and blame it all on him. Other folks promise full co-operation ... then have endless ways of interfering with the work.
Issue #4 involves tools, training ... and inventory! If you're going to do a lot of work for one customer, you will end up using tools and performing tasks that will be of little use to your other customers. You will also end up with an inventory of customer-specific parts. Be sure to allow for this in your pricing.
The "simplest" maintenance contracts are lighting contracts, and can be a good way to pay the bills until you have a better customer base. Keep in mind, though, that you will end up making regular visits at sunset to check the lighting .... as well as correcting an amazing amount of handyman "fixes."
They will only contract this work out after they have failed to do it themselves - several times!