Interview: Patrick E. Moore
Company: Patrick E. Moore & Associates
Position: Financial Consultant
I interviewed Mr. Pat Moore on the important aspects of pre planning for a start-up construction company. Mr. Moore has worked as a financial consultant for 22 years. He started his own business selling insurance and group benefits. As his business grew, he obtained all of the necessary certifications and has been doing financial consulting for the last 18 years. Mr. Moore recently merged with Lincoln Financial. The following section details with Mr. Moore’s advise for someone looking to establish a small business.
I asked Mr. Moore the question, “As a Small Business Financial Planner, what things are essential to a Construction Business start-up? What steps can be taken before hand to help with this process?” He broke down his answer into several categories. These categories were business plan, financing, insurance, employees, partnerships, cash, and accounting/legalities.
Mr. Moore’s first advice was to create a business plan. He suggested that this plan include realistic performance projections on sales, income, and expenses. He suggested that these projections be broken into one, three, and five-year increments. He felt creating this plan would provide an excellent opportunity to research the market and research the availability of the work force. Mr. Moore emphasized that it was vital to look at all aspects of the market before entering.
The purpose of creating this business plan was to aid in the difficult task of securing adequate financing. Mr. Moore felt that at least 20% of the start-up capital would need to come from the new business owner. He also felt that the owner would probably have to collateralize assets to obtain financing. He suggested that everyone with intentions of starting his/her own company go to the Small Business Administration for help with loans and business plans. His final thought on financing was that anyone considering going out on his/her own, should start saving as much money as possible, as soon as possible. It was his recommendation that the potential owner be prepared to not draw an income the first year.
Mr. Moore recommended that adequate insurance policies be obtained to cover any type of accident. These included auto liability, business liability, disability, and life insurance. He felt that a business was the most vulnerable in its infancy, and even a small mishap could have a devastating, if not fatal, impact on a start-up business.
On the topic of employees, it was Mr. Moore’s advise to recruit the best employees possible. He felt it was vital part of getting the business off the ground. He felt that you should plan to pay salaries that are slightly above average to help attract above-average employees. He also suggested offering profit sharing as an incentive for employees. Mr. Moore emphasized that good employees would pay off in the long run.
When deciding on the legal form of business for your company, Mr. Moore felt that it was important to obtain an attorney and accountant who have prior experience in the construction industry. He felt it was important to look at all of the legal forms of business entities and then decide which one is right for your business. He implied that the proper accountant and attorney would dictate this decision. He warned that a partnership is a dangerous form of business, and insisted that anyone forming this type of business have a formal, written partnership agreement and a formal, written succession plan. He over emphasized the most vital part of any partnership is 100% trust in all partners.
Mr. Moore felt that it was also vital for every new business to keep cash invested at all times. His recommendation was to keep the money in money-market accounts so there were no penalties for withdrawing the funds. He instructed that an established line of credit would be important during the birth stages of the business. Again, he re-emphasized the importance of not taking money out of the business the first few years, he felt that any money that could be reinvested would enable the business to expand.
Interview Notes
As a Small Business Financial Planner, what things are essential to a Construction Business start-up? What steps can be taken before hand to help with this process?
Must create a Business Plan
Should include realistic performance estimates for:
Sales
Income
Expenses
1, 3, & 5 year projections for all
Should also include substantial research on the market
Must do thorough research on availability of work force
Look at all aspects of market before entering
Must secure adequate financing
Own & Bank financing
Minimum of 20% of own money probably will need collateralized assets
Look to SBA for help with loans
Very important to save before going out on your own
Make provisions to not draw an income
the first year
Must have adequate Insurance coverage
Car Insurance
Life Insurance
Business Insurance
Disability insurance
Cover
all bases in the event of an accident
Employees
Research availability of work force
Be prepared to pay 40%-50% above salaries in benefits and taxes
Pay them as much as you can, try to attract and retain above average employees – they will pay off in the long run
Establish profit sharing if necessary - as incentive for employees
Partnerships
Must
have complete trust in partners
Have a written formal partnership agreement
Have formal business succession plan – in the event of partner death, disability
Have
Insurance against for things
Cash
Keep cash invested at all times, every little bit helps
Keep cash in palaces where there are no penalties to take it out
Have business checking account
Create a line of credit only use on short term basis
Reinvest back into business heavily first 3-5 years, this will enable business to expand
Be
careful with taking money out of the business
Accounting and Legal
Hire good established accountant and attorney in the construction field
They can help make sure that you set up the type of business that is right for you
Look at pros and cons of all types of businesses before choosing