How to Turn Your Construction Company Into a Money Pump

Journal of Light Construction

Half a dozen years into my career, an older and wiser builder showed contractor David Gerstel that if he put his mind to it, he could rapidly make way to financial independence. Work would then be a choice, not a necessity.He'd rise every day free to do what he'd liked, unfettered by monetary necessity.

Here what Gerstel wrote for the Journal of Light Construction: That sounded good to me. I went for it. Likely my thinking and strategizing was not quite so clear in my mind as I see it in retrospect. But I did know that I wanted to stay in construction. I liked the work, from bidding and estimating to orchestrating the trades and driving nails at a jobsite. I liked the camaraderie among workers and builders and felt valued when clients referred my company to their friends.

I could also see, however, that construction is, financially speaking, a marginal business. Failure rates are massive; consistent profits are hard to come by. I concluded that building a company with the intention of eventually selling it was not my best path to financial freedom. There was not likely to be a robust market for not-so-good businesses like construction companies. (Generally speaking, I was right. As I explain in my new book, Building Freedom, A Construction Pro’s Path to Financial Independence, selling a construction company is likely to be difficult but not likely to be lucrative.)

Instead of conceiving of it as an eventually marketable commodity, I viewed my construction company as a money pump. If run properly, it could pump out enough cash to provide me with adequate pay, reward my employees generously, build up capital reserves, and provide funds for the investments that would set me free.

To read the rest of this story from our partner publication, JLC, click here.