The Yvan Haince Business Model

A business model is an essential tool used by almost every entrepreneur. Haince's version was simple - maximum income with the least work. Elements common in most business models appear to have been overlooked - integrity, timeliness and quality workmanship, for example.

Haince had a number of tricks up his sleeve to keep the money coming in. Here are some of them:

1. Tell the client that a milestone had been reached, and ask for the agreed-upon progress payment. In most cases, the milestone had not been reached but Haince bullied them into paying. We'll show some examples later, including the electrical part of the project.
2. Same as #1, but specific to the stairs between the 2nd and 3rd floors. In this case, the task had not even been started. He was only able to pull this off because he commandeered a loan - due for repayment - which had been given to help him with a cash flow problem aggravated by being shut down by a building inspector. Haince unilaterally applied the loan against the milestone payment for the 2nd-to-3rd floor stairs, which had not been started. The loan is still outstanding, and another contractor built the stairs.
3. Sabotage or negligence? Haince demanded - and received - $8150 in milestone payments for finishing the plumbing in the kitchen, downstairs bathroom, 2nd floor bathroom and laundry, and 3rd floor bathroom. After he was fired, a new contractor found several unconnected water lines and code violations. The contractor thought he'd fixed them all, but one was overlooked - in the kitchen ceiling. When water was turned on, the new kitchen ceiling flooded and came within seconds of wiping out a new $17,000 kitchen. The new contractor replaced the ceiling at his expense. As shown later, most of Haince's milestone payments were collected for projects which had barely been started.
4. Find "surprises" which were expensive to fix.
5. Hire unskilled labourers to perform tasks intended for tradespeople - carpentry, drywalling, plumbing, etc. Much of their work had to be ripped out and replaced.
6. Stay under the regulatory radar. Haince operated as "Yvan Haince" according to his occasional invoices, but there is no "Yvan Haince" registered to carry on business in Nova Scotia. In some cases that's ok, but when you have two employees and make Canada Revenue Agency GST and payroll remittances, the situation becomes a little more complicated.
7. Collect HST, without providing a GST number.
8. Haince said that he wanted $30,000 of his $52,000 in cash "because the first $30,000 of my income is tax-exempt," and his bank, he said, was placing a 10-day hold on his deposits.
9. Borrow money. Don't pay it back.
10. Credit card fraud? You decide.
11. Ask for extra money - $4000, for example - to hire extra tradespeople "if necessary" to meet the latest move-in deadline. Miss the deadline, keep the money.
12. Volunteer to pay the client a penalty of $300/day for each day he misses a deadline. Miss the deadline, and don't pay the penalty - any of it.
13. Help yourself to what is not yours. Haince ordered the wrong window for a bathroom. He ordered a new window but instead of returning the old one for a credit, he simply took it. The client paid for both windows. When he was fired, $200 of fiberglass insulation disappeared out the back door and was seen being loaded onto Haince's truck. A stack of drywall disappeared a few days after he was fired. A perfectly usable front door and large skylight which was replaced by a new dormer similarly disappeared without consultation. About $200 worth of LED light bulbs disappeared. And so on.
14. When no payments were made for a few weeks (because nothing had been done) Haince insisted that the clients pay his crew's wages. When the clients refused, Haince went home and sent his crew home. Unbeknownst to the clients, the house sat vacant for several days even though time was of the essence for them. This became a pattern and soon enough the clients were forced to choose between losing time or paying Haince money he had not earned. In the case at hand, on a Friday he threatened to "lien the property over the weekend." When the client was getting ready to change the locks, Haince showed up on Monday as if nothing had happened. Ultimately, Haince did "lien the place" even though he had been paid $20,000 over the quoted price and had not yet finished the project.
15. Same as #14, but this time "my mom told me to lien the place." He said because he had not been paid, he could not afford his medication for the last 3 weeks, his blood pressure had spiked and his "melanoma had acted up". On December 29 2014, the client asked Yvan if he was insolvent. Haince said "well yeah, technically." That was the last straw and Haince was fired.
16. Remorse, apologies, regrets - none of these was ever seen in Yvan Haince. For each of the four completion dates he missed, Haince did not acknowledge that his clients were facing another month in temporary housing at a cost of $2700, and storage of their personal effects at a cost of $800, amounting to $3500/month.
17. Lessons learned: Are all reno contractors like this? No, there are some good people out there. But as a general rule, homeowners should deal with a reno contractor as if they're playing pattycake with a rattlesnake - take your eyes off him for a second, and you'll probably regret it. Advice based on experience is usually worth paying attention to, and here's a good one.

When a new contractor was brought in to finish the project, he quoted about $80,000. That included about $32,000 to correct Haince's substandard workmanship and code violations. The new contractor finished the job on time and on budget.
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