Beginner Builders

Many pool service companies consider adding construction, but pricing that first build can be challenging.

“The [mindset] shift is realizing you’re no longer selling hours; you’re selling outcomes, and one bad bid can really mess up your whole month’s worth of profit,” says Travis Hogan, owner of Fiesta Pools & Spas in Tulsa, Oklahoma. 

Hogan started cleaning pools when he was 16 and eventually launched his own pool service company. In 2006, he bought Fiesta Pools & Spas, which already had a service and retail arm, introducing a new aspect for Hogan.

“Professional builders act like financial managers who happen to build pools,” Hogan says. “Construction is very capital-intensive, and it punishes bad estimates.” 

Professional builders act like financial managers who happen to build pools. Construction is very capital-intensive, and it punishes bad estimates.”

Travis Hogan, Fiesta Pools & Spas

Hogan cautions beginner builders preparing their first estimates not to confuse revenue with profit and says knowing the numbers — and blind spots — keeps owners from going out of business because of bad budgeting. 

“You can be busy and still go broke,” Hogan warns. 

Once builders make that mindset shift, the next step is understanding the real costs that go into an accurate estimate.

Hidden costs

On her first build, Julie Kazdin, vice president and partner of Kazdin Pools in Southampton, New York, says she underestimated how weather, delays and price increases could affect a project.

Building in the proper margins was a key lesson, and Kazdin says an accountant has been essential to the process. 

“You should meet with an accountant to review all expenses that should be included in the overhead and what markup or margin should be placed on the subcontractor estimates to make sure you cover expenses,” she advises. 

Kazdin also recommends builders have a contract and phased payments and are staying on top of completed work so they don’t get behind on payments. 

“Manage the cash flow of the project to not use deposits for one job to fund another,” she says. 

Kazdin subcontracts all phases of construction, setting a markup and trying not to go below it. Rather than pricing labor by hourly or daily rates, she aims for a consistent flat gross margin, a target established with her accountant. Nonbillable labor such as travel time, supervision, cleanup and warranty work is treated as overhead, which is built into the gross margin from the start.

For many first-time builders, these hidden costs — nonbillable labor, overhead and fluctuating material prices — are the difference between a profitable job and a costly lesson. Experienced builders say early estimates often fail not because of bad math, but because new contractors underestimate the variables.

Nilson Silva, owner of Master Touch Outdoor Living in Coral Springs, Florida, started out doing construction-adjacent jobs like paving and remodeling. When he fully took on new construction projects, he realized how important vetting subcontractors was. 

“I remember one pool that I was not able to finish because I hired really bad labor,” he recalls. “We ended up staying there for like a month to demo, and it cost me an arm and a leg.” 

Like Kazdin, Silva also started out subcontracting all phases of construction and calculating based on a flat project number, but now he does some project phases in-house. 

For calculating a project that is partly subbed and partly in-house, Silva gets prices from his go-to subs, compares those numbers to his data on similar pools and then decides which tasks to keep in‑house or give to a sub.

Silva uses data from bookkeeping to spread overhead — like supervision time, warranty trips and nonbillable labor — across all projects. So rather than guessing each time, estimates are a combination of known sub pricing, in‑house costs and data‑driven overhead.

“It’s all in your books,” Silva says. “If you’ve got a clean bookkeeping service, it should allow you to manage those.” 

Hogan says many beginner builders overlook those kinds of costs when compiling their first bids. Hidden costs like insurance, permits, office admin, warranty work and extra time on-site are overhead that belongs in every job price and reminds beginners that “time kills margins — sometimes quietly.”  

Estimating materials and subcontractor costs 

Beyond labor and overhead, estimating materials and subcontractor work is another area where beginner builders can get caught off guard.

Kazdin says knowing if it’s a long versus a short project matters. If you are ordering all the materials immediately, she advises maintaining margins for the cost of materials. However, if purchasing will come in phases, she recommends including a force majeure clause — a contract provision that accounts for cost adjustments due to circumstances outside the builder’s control — to accommodate changes. 

“This documentation allows for increases in costs outside the contracted price as the market fluctuates,” Kazdin explains. “This is a necessity when a project is lasting a long time and you won’t be purchasing product when the contract is initially signed.”

Fluctuating material costs can be tough to estimate, so Silva says going the cost-plus route and getting written supplier quotes is a viable option. 

“Make sure they’re sending you written quotes with expirations on the proposal and include clauses of contract,” he says. 

The same goes for subcontractor quotes. “Get the scope in writing and put procedures in place that will make sure you’re safe,” Silva says.

Profit margins and risk management 

Silva says for growth, stability and competitive wages, new builders should aim for a profit margin of 30%. 

“Anything below 20%, and you’re going out,” he says. 

Silva advises having everything recorded or in writing — from phone calls to change orders. 

“I’ve got a phone system in place, and everything is recorded,” he says. “You’ve got to have a paper trail. If you don’t have a paper trail, you’re in trouble.”

To protect from scope creep and order changes eating into your profit, Kazdin also says to maintain a clean paper trail. 

“Every change order is documented and signed off on by the client,” she says. 

Document all price changes, charge additional costs as separate payments, issue credits for deductions and explicitly list gratis items to highlight their value to the client. 

“There is a value to items done at no charge,” she adds. 

Hogan says living within or below your means will ensure you always have margin for unforeseen circumstances. “When we’re living right at the line with no margin, then the project better go perfect every time,” he says. “But not every project is going to go perfectly.” 

Hogan also notes that margins vary across regions. “In your Sunbelt areas, the margins are probably going to be a lot thinner,” he says. “And knowing the difference between margin and markup is incredibly important.” 

Estimating time and handling overruns 

Kazdin says avoiding overruns can be tough, but she makes best estimates using charts with the average time it takes to do each portion of a project based on previous ones. “These estimates are adjusted according to each specific job, but it is not the easiest thing to do,” she says. “Weather makes work slower, and that is not always something you can accurately predict.”

When it comes to overruns, Kazdin typically absorbs them if the company is at fault. However, if there are issues on-site, that prompts a discussion with the client about passing along some of that cost. This is another area where Kazdin says having a paper trail is critical. 

“There should be clauses in your contract that discuss issues with the site and out of your scope of work that are not covered in the contract,” Kazdin says. “Have an attorney review your contract and look at what might be beneficial to add.”

A new builder will not have as much past data to pull from, but Hogan says after doing a few projects, builders can go back and use that data to analyze and estimate for the next project. 

“Knowing your numbers is the key to putting together a project,” Hogan says. “You’ve got to know your numbers as best you can.”

Education and mentorship 

Kazdin says Watershape University has been essential to her and her building department, and she is still attending classes and learning about the craft and the business. 

“Education and mentorship have been the biggest influences in my building career,” says Kazdin. “I have built up confidence and an arsenal of people to call when I have questions.”

Silva also affirms mentoring and job shadowing and recommends reaching out to others you know or industry leaders for guidance. 

“Look for peers who are willing to teach, take classes, take courses and do your homework rather than going on an ‘adventure’ like I did,” he says.

Becoming successful is less about being the best pool builder, Silva says, and more about knowing how to scale a business. 

“Most builders fail to build pools because they never knew how to build a company,” he says. “You don’t have to be good at everything; you just have to connect the dots and hire the right person for the right job.”