Self employed poor money management help!

[Treesnbirds]

Husband is a very hard worker, self employed builder. Has done projects in the past eg buy a flat, renovate it then sell it, and has done well with these on rising markets.

However he refuses to look at the figures and hopes for the best. We've managed ok but only due to an inheritance from his Gran which has helped to keep us afloat the past few years.

He's just done a job where materials were over £300 and he paid a mate £400 to help him out with it. It took 6 days. Because the client asked for a quote up front he said £600 at the start. He hates working for other people. He's done a great job but clearly this won't support our family. Even we may end up subsidising the job! 😞.

It's not the first time this has happened.
If I mention anything money related he gets incredibly angry/ hurt.

Is there a documentary or something I could watch with him which shows how this plays out?? His parents used to bail him out but that situation has changed now and I'm really worried. Any advice at all appreciated.

(To add, the flat renovating is no longer viable for us due to cost of materials rising, cost of living and now with kids our family is much bigger than it was.)

Any ideas welcome please?

Bump

If he's incapable of giving a price reflective of the work and materials then he needs someone else to do it for him. Who does the tax return? They must be aware of the figures rather than just assuming it'll all balance out and be fine. I don't think you can convince him if he hasn't shown any interest to this point, but yes it's crazy to be working at a loss.

This is insane.

You & your DH parents have been subsiding strangers building work.
And he's refusing to acknowledge it?

I don't even know where you begin, but I think I'd start with piece of paper with the following written on it:
300 + 400 = 700
600 - 700 = -100
And then ask who's paying the £100?
That's YOUR family's money!

If he finds it too hard, he hands it over to you and you do the money. Not an uncommon arrangement and then your salary is tax deductible from the business.

Just getting hurt and refusing to talk about it over and over is not acceptible.

You can try asking when he is calm why talking about money upsets him so much. Or pushing through when he tries to stop you by getting upset/angry. Or seeing if he would discuss it in couple's counselling.

But honestly if he is determined to stonewall, then the relationship is over.

It really shouldn't take a documentary to show him the maths that this is not how to run a successful business.

If he won't listen to you, is there anyone he respects who runs their own business who could talk through their finance handling? But of a mentor type thing.

I'm struggling to be helpful TBH it's so basic.
Maybe he's embarrassed that he's messed up more than once, but ignoring it won't stop it happening.

Maybe as a minimum he needs to put in place some rules/ boundaries for himself e.g. no on the spot quotes because I'm really bad at them/ always add a contingency of 10% if whatever my final figure is?

My mum used to type up quotes for my dad; she would keep him on the straight and narrow! He had a set formula and would break it down in the quote.
Suggest that he NEVER give a price there and then, and he ALWAYS says he will send it over within 24-48 hours. Then YOU ask him for estimate for materials and for labour. Then add a few quid on to labour costs for admin (you!).
Only by being really formulaic can this work. It worked for dad and he is ND.

It's dead simple. He factors in labour per day at day rate, his and anyone he hires, including time spent sourcing materials. He adds an hourly rate for admin (eg looking up prices of materials, creating a thorough breakdown of costs etc.) He adds 10-20% contingency for unseens and VAT if necessary. On top of this he adds cost of materials.

That way, if you need to spend an extra day on something, the client knows it's another £200. If they finish early, they can knock £50 off the bill as the job was easier than expected. He'll enjoy working for other people far more once he is charging a fair rate.

It's really common for people who are skilled at craft to be bad at admin and finance. I know a few. Their wives all run the admin side of the business.

He needs to be an employee …,.don’t thinks he’s cut out to be self employed

I think the first thing he needs to do is to stop quoting on the spot. Tell the customer he'll work out the quote/estimate and email it in the next 48 hours, say.

I have a handyman who looks at jobs at my house, sticks his finger in the air, and pulls out a random price. He quoted for several jobs last autumn (still not finished) for £550 which I know would barely cover the cost of materials. He'll then start the job but takes forever to finish it because it's not worth his time.

Always take time to price up a job properly and don't be pressured to give a price whilst you're there.

Really if he's losing money in a simple job like this he probably doesn't have the acumen to be self employed. Making money on renovations in a rising market is easy. At the moment it's difficult because it's so hard to sell and in some areas prices have stagnated. There must be YouTube videos in how to price building projects if he's hell bent in sticking with it.

That’s not a business, it’s a very expensive hobby!

He needs to ask his accountant for help in how to price jobs, or engage an accountant if he doesn't have one already. They wouldn't price every job for him, but would show him how to do it.

Clearly he can't be doing jobs and losing out on them, that is insane.

He also needs to put aside 20% of everything that he earns, to pay his tax bill. I recommend Premium Bonds, as it is not instantly accessible, but if he can be disciplined, then a savings account is a good idea with guaranteed interest.

He can increase a quote if he comes across something unexpected, but he can't quote £600 then tell them its actually £700. he has to stand all losses where he has underquoted.

But if he can't quote properly in order to make a profit on the job, then he is not cut out to be self employed.

Sounds like he only made money on the house flipping because of the rising market. And with his parents and then inheritance bailing him out (how embarrassing) it looks like he’s never been any good at this.

I would suggest 2 things:

1. are you working? If so (and even if not - I’d start) and prioritise your career and financial potential over his little hobby
2. immediately split his costs into materials and labour. His materials needs to be exact (he should estimate rather than quote if necessary). That way, if he underestimates the time it will take him, it is “only” his time that is the additional cost, and not actual hard cash having to be taken out of an account somewhere

He would also note every cost along the way in a spreadsheet (or written notebook).
Start with the quote (£600) and minus from it every cost as it occurs, underlining what he’s projected to earn. Then when it comes to the decision to get a mate to help, he can see in black and white that either he (a) reduces their hours (b) pays them less (c) makes a loss.

I’m not sure this is documentary territory. Do you have access to small business advisors via any local charities?

No only is he not adding up the costs properly, he isn't taking any account of his own wages in it. He should be charging his own time to the customer as well.

Can he hire himself as a subcontractor direct to other businesses or via an agency?

They'll pay him a day rate, probably around £150-250 per day and he doesn't have to worry about quoting for jobs and getting it right.

A successful builder should be earning £30/40/50k pa.

Massively appreciate all these responses. Some great ideas. I do his tax returns so he knows it's not great, but because we have had money in the bank he's been able to ignore it somehow.

Reassuring to be reminded it's often the case that people are good at one thing but not the other, also that often it's the partner who deals with this side of things- which I could totally do- didn't realise I could offset my time too- that's so good!

Thanks so much, just working my way through responses.

Yes 😭

I love this idea, I mean that is the truth of it, also our outgoings are fairly significant (as I'm sure they are for everyone these days) so it's not just that we are subsidising that job, it's the fact he's also not charging/earning for his time, and our money goes out on bills/ food etc regardless so we lose money every day he does that on top.

This is such helpful advice, thank you. I hadn't thought of asking that. I think he feels like I'm criticising him, though I try to talk about it in a positive way.

Yeah it's a good idea re. listening to someone else, I have thought about this, but I think he'd find the idea of it very intrusive and he wouldn't want to go there. Like you say he must know 😕

Really good idea. Thank you, I think this is the only way through actually.
My only problem then is him being very reluctant to work for other people.

Such a good point!!! If he wasn't earning £50 for a long day if he's lucky I bet you're right, it would feel much better for him.