I don't really have any specific questions on starting a business nor am I anywhere close to starting my own business. I have a long long way to go but I want to soak up as much information as I can along the way. What this is for is for those of you that have started your own business I was wondering if you would share your story on how you did it? If anyone has a minute and would be willing to share I would love to read all the responses. To get it going maybe you could share what the hardest part was? What did you wish you knew at the time that you didn't know before? Is there something you wish you had done differently? Anything a long those lines or any tips you have for starting your own business in general. As long as using this for myself to learn, I think it could become a place to consolidate all these random posts and could be a quick shortcut to valuable answers and information. If anyone else has any questions they would want to add feel free to post them below. Thanks to anyone that replies and shares their knowledge, I look forward to reading it.
OK....I'll bite The first thing you need to realize is everything you do today effects your future. My biggest mistake....not establishing my credit as my first priority. Not that I ever had bad credit....I didn't have any. If I couldn't pay for it I didn't buy it. In hindsight I should have bought my groceries etc on a credit card and played it off every month. Hands down the best move of my life was going to work as a concrete finisher as the number two man on a two man crew I learned a scary amount about construction in a really short period of time.....and it wasn't long until I was considered the second best finisher in town
learn every aspect of the business you are trying to start. I started out working for a small trucking company just doing maintenance and light repairs on trucks and some equipment. when I decided I wanted to be out on my own I dug in and learned as much as I could from all corners of the repair business. I bought an old used service truck from cianbro and started doing some work on the side. when I got the chance to go work at a dealership I jumped on it. after 6 months of empty promises of schooling I was lucky enough to get a job offer at a different dealership who gave me tons of training. all the while I was working on the side. my schedule went like this- get up at 7a.m. go do side jobs until 2p.m. go home, shower, pack my dinner and go work at dealership until midnight. work all day Saturday and sunday. I did this routine for a year and a half to build up my customer base and get as much experience as I could before striking out on my own. You can never have too much experience. being your own boss has great rewards but be prepared to work harder than you've ever worked. If you screw up, and you will, be honest with the customer, make it right with them and move on. also get a good accountant who you can talk to on a regular basis if needed. good luck.
dito
Thank you for all the great advice so far. This can definitely help anyone that reads it. I have actually been trying to get a credit card but having no credit yet they are a bit hard to come buy. Hopefully soon I will be able to get one and I will just buy all the little things I get with it and pay them all off right away to help establish a good base while I finish college. I am already trying to learn as much as possible. Well to me it is not really learning because of how much I love construction and always have since I can even remember. I'm sure a lot of people on here can relate to this hahaha. My parents use to say that I was the kid that would rather sit and watch a construction site than go on the playground. So it's not really a pain in the ass to learn for me like it is to some people it is actually fun. Out of all the threads I have read people always say get a good accountant and luckily I am covered on that part for the most part. My mother is a certified CPA and has been an accountant for over 30 years and is currently the Director of Accounting and Reporting at an insurance company. My sister is in banking and accounting, and my soon to fiancee is actually finishing her degree to become and actuary. So luckily I'm very covered on that financial front and will be able to get great amounts of advice in that area.
Nate, unless things have drastically changed, you should be able to get a credit card by opening up an account where you put money in a CD like instrument and that money is used as collateral for a credit card. So for instance, you open up the account by depositing $500, as an example, and they give you a credit card with a $500 limit. Since your credit score is based on your performance using your available credit you want to do two things...use the card and pay it off each month when first starting out, and secondly, after a couple months makes a purchase that almost maxes out the card and pay that off on or before your next payment due date. The reason you want to max out the card is because you need to show the system that you can handle what it's given you responsibly. But you need to pay it off immediately because a maxed out card will kill your credit score if you leave it like that. Additionally, if you do take your card to the limit a few times in the first year and pay it off in a timely manner at the end of the first year it's easy to get your credit limit raised. This is because the paper trail you left shows you not only could use a larger credit limit, but you also have shown you can handle a higher amount. And as always, respect the good or the damage your credit score can do to your life. Having good credit can grease the skids of life like few other things can. Bad credit, of course, can be an overwhelming roadblock to growth. Use it wisely.
True Story
Seem's to me that's like playing with fire. Running with maxed out credit is a recipe for major catastrophy.... just my opinion.
Not necessarily, that can be good advice if one practices fiscal restraint. Use the prepaid card to purchase items one would normally pay with cash during the month and use the cash at the end of the month to pay it off. However, you can dig a hole for yourself quickly if you are not disciplined.:cool2
I run most of my monthly expenses through a credit card using it like a line of credit. I pay it off monthly so I pay no interest, and I collect the points my card gives and I convert that into cash back. The only items I dont run through my card are things where I get a direct bill. So I pay the phone, gas, cable, electric and house payments direct.
Look at your recent luck,,,, a gal plow's into your pickup and poof its gone. Now if you'd been running the edge you wouldn't be driving the new one you are today. Just saying about the time you think things are running smooth come's along another financial obstacle.
Grandpa, I'm all with you on not loading up credit cards. Most of the time (not all the time) it seems that they are used to be reactive when dealing with a situation - a blown motor, a flat tire, etc...., rather than just doing the proper accounting and saving for a rainy day. I'm too old fashioned for being 30. I started part time, nights and weekends, on really ( and I mean REALLY ) used equipment. I kept my day job, and busted it nights and weekends for quite a while on $400 homeowner Saturday Specials. I work for a mechanical contractor during the day, and watched all the excavation work get subbed out to guys who never seemed to try to do it better than "the way we always did it". I realized that there was a market for the small stuff that could really be capitalized on, so I started taking the prints home at night, and started to bid the excavation end of it through my own company. Now I'm starting to pick up the small commercial work through customers that I already have a relationship with. I am slowly building up equipment by reinvesting everything from the company back into the company, while keeping the lights on and the kids fed with the day job paycheck. My absolute favorite part of having the day job is that I can tell the lowballing homeowner NO when they try to beat every cent of profit out of me. I know that I don't really need the work to live just like I have been, because I still have the day job, and have made sure that I bought what I could afford when I could afford to buy it with cash, so there is no about a bill coming from the Cat Man at the end of the month. And when the day job gets to be too much, I can honestly tell them to go pound sand, as I can make what they pay me (or more) from working nights and weekends. It has taken longer to get to where I am than what I expected, but I feel that its a good position, as it offers me a good bit of peace of mind having no debt in the business, and being able to reject "good" opportunities for great ones.
I applaud you Rossaroni :notworthy !!! That is the basic principle on the founding of my company. Amen to taking longer than you expected to get anywhere. I'll share with you.... a competitor used to come by and visit years ago and he had all new Cat iron. On credit! I remember him stating once " You still working on that junk to make it go?" That now was forty years ago. He's no longer in business and I am. And im still working on junk everyday. But its all MY junk and I now have over 75 piece's. I have a credit card , don't get me wrong, but its Never used unless im ordering parts (for my junk) over the phone. Grandpa
Ain't that the damn truth..
I have been asked many times, “why don’t you start your own business?” My stock answer: I am very good at what I do, I am NOT a businessman. Most people I know of that do well in business, spend an equal amount of time with a pencil and the books as the do with a lever or a wrench. An electrician I know works three days a week with the tools and three days a week with the books. He is a one-man band and does well. The real discipline is doing your bookwork not just paying the bills, but also collecting the bills, and spreading out your income to keep accurate track of where and how your money goes out for your business. I personally, if I really got a wild hair and thought about going into business for myself would take every cent I had head down to the local beer hall and buy everybody beer until I was broke. I would have the same effect; broke, but it would be lots of fun while it lasted… Know your limitations, and then go at it as hard as possible. :my2c
The best thing I ever did was to read this book: "The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It". It was written by Michael E. Gerber. Unfortunately I didn't find it until about 3 years after my husband and I started our business. It contains many ideas about what you can do to set up your business from the start so that you can work on what brings in business once you open your doors. Otherwise you spend too much time trying to do what I call "administrative" stuff and not enough time developing yourself and your business. If you already know who is going to be responsible for what and how each task is going to get done you will be miles ahead of where we were! We have been at it for 7.5 years and I still feel like we are catching up on processes and procedures! Many people start businesses because they are good at their job. However, if you don't learn about and accept all the other "jobs" it's going to take to make the business run you may be terribly overwhelmed at some point. I think this may be why a lot of small businesses fail in the first few years. If I had one suggestion it would be to read and research something about every area it takes to run the business. Accounting, Human Resources, Payroll, Safety, Equipment, office cleaning, sales taxes, property taxes, etc, etc. I think that will give you a stronger beginning than learning it all "on the job". Also, I wouldn't take the experience back for all the money in the world! (well, maybe ALL the money!)
I just wanted to add to grandpa's post, someone a long time ago told me this, the defination of a sucessfull business person is he who decides when he's done playing with his toys and can do whatever he wants with them and when he sells out, he gets the largest portion of the check even more than the government does in the form of taxes, those are a sucessfull run business, all the rest are dictated to. If you want to run a sucessfull business, always remember no matter what you do, your customers make you a sucess, you don't make yourself sucessfull. Whatever you do and where you do it, just be honest and do the best you can, tell the customer the truth, even if its not what they want to hear, if you don't know, tell them so, don't try to bs them in any form. You need to offer then something are not currently getting, either more knowledge than your competators, cheaper price, better service, faster service, something that nobody currently does now, something but figure out what it is going to be before you even start, if you can't figure out what it is the customer wants, don't even think about starting a business, your not going to make it. I always wanted to run heavy equipment, so I bought some and was using it for myself on my own property and neighbors noticed I had equipment and started calling, it took about five minutes to realize the reason they were calling me was because the local guys weren't getting to them in a timely manner or would do small jobs at all, normally it would take them months to years to get to them, I'd be there in days to weeks and its never let up since. Most of the rest everyone else has covered, good luck and remember, if you don't want to work every day of the week at any hour of the day, you might want to keep your day job, a business is run by those that do what others won't or can't do, and it usually ends up being done by the owner at odd times of the day or week, not 9 to 5 monday through friday, at least not at the start anyhow, you get back what you put in so to speak.
I just got back online after getting home from my first year away at school and a couple weeks upta camp for some relaxation. There have been some great posts made on this thread as I have just read through them all. I think that all of this information will help a lot of people (myself included) as them come across it. There are a lot of very knowledgeable people on this site so if anyone else reading this has any questions I encourage you to ask them and I guarantee they will be answered or someone will be able to point you in the right direction.
Good post JenniferB
I'll take a few minutes to share my story with you. I worked as a pipelayer and an operator in my younger years, when the excavating company I was working for posted a position for an estimator. I applied, got the position, and was able to learn from a really talented , seasoned estimator. I worked at this company for 11 years, 6 as an estimator.This was about a 50 man outfit. During this time, as my skills progressed, I started to get inquiries from a few smaller companies wanting me to do estimates for them on the side. Not wanting this to be a conflict of interest, I asked the owner if he would mind if I moonlighted for a few small companies, he told me he didn't mind, as long as it didn't conflict with our work. That opened the door, it was a slow start, first couple of years it was 20 or 30 jobs a year, nights and weekends. The third and fourth year, the heavens opened up, my name got out, and I started getting more blueprints than I felt comfortable with, but I stuck with it. It actually started to interfere with my day job, by way of numerous phone calls from my side customers. At the same time as this was happening, ( this was the early 90's ) I was offered a job by an even larger company who was willing to offer exactly double my salary overnite. I asked my new prospective employer if he would allow me to continue running my side business, he told me to go right ahead, again, as long as it didn't conflict with my day work, and even told me I could use his office space and software after hours. The side business took off incredibly, I'd come home from my day job and there would be plans just thrown on my back deck with a name & number on them. For the next 4 years, I worked 50 hours a week for my day job and worked every night and weekend for my side customers. It had never been my goal to start an actual business, but here I was, and the money from the combined jobs was amazing. After 4 years, I finally had enough of a customer base to go out on my own. Gave notice and thanks to my employer, and struck out on my own.It's been an amazing ride. I've now been solely a freelance sitework estimator for 7 years now, my niche is 3-5-10 man companies where typically the owner is out in the field all day, or on a machine , and has neither the time nor the inclination to sit down in the evenings and lay plans out and try to come up with an estimate that doesn't look like a Chinese menu. I get involved with a nice mix of public and private jobs, from 5K to 5 mil. Mostly earthwork and utilities. I have been running Trimble Paydirt and HCSS software for almost 18 years now. I work out of my house way back in the woods, no employees, no materials, no equipment. I have about 50 companies I work for, but a core group of about 10 guys that keep me hopping. It's a great business that I had no real intention of starting, it just happened. People seem to trust my experience, I've done almost 3,000 sitework / utility estimates over the years. So that's my business story !
Welcome to the Forums Red Roan!:drinkup
Congratulation's Red Roan..... I enjoyed the synopsis of your life..
I have my own business, its not in the dirt work or construction side but I do own my own gun store. Biggest piece of advice is take it slow don't rush in thinking you will learn it all at once. Find somebody who can mentor you and you can go to when you have questions no matter how simple you think they may be. Oh and don't be in a race to the bottom, let your work ethic and quality of work speak for itself.
Number one rule, don't be friends with customers.you don't need their problems, and they will use yours against you. No bullsh.t.
I'd agree with this.... you can have friends, but business is business.
The E-Myth is an incredible book. The Knack, by Norm Brodsky and Bo Burlingham is also incredible, both of these changed my life and I would advise anyone considering starting a business to read them. The main lessons I have learned in my decade of business ownership are these: a business doesn't need work, a business needs profit. A grading/pipe business needs repeat customers just like anyone else, I spent several years hard bidding projects in plan rooms and public projects before I established relationships with a few entities large enough to keep us in semi negotiated work, and sometimes even give us work that wasn't urgent simply to help out when we were slow but don't put all of your eggs in their basket. Plan for the bad days/legal disputes/nonpayment/accidents, they will happen, they're part of doing business in modern america, and you will survive if you expect them and plan accordingly. Make project owners and vendors share the risk in projects, avoid personal guarantees whenever possible, they'll work with you, or their competitors will.
Roddyo has some amazing insight. What I have to add to what he touched on is work in the industry you want to go into. Do right by them and they may help you out a lot when you start your own business. This also provides an amazing opportunity to learn on someone else's dime, and not your own. Credit is life blood as well. Find others who want to do what you want to do. Preferably those with money to invest. Then make an LLC. Get a lawyer to help so as to protect your company so that when you want to fire someone or someone leaves the company doesn't die. As well as how you hire and everything. It's good to have everything in line first. allaccessequipmentrentals.com
Such an amazing book! The E-myth revisited helps you know what to do so as not to drown in your dream business. Thank you for mentioning it. Many different business gurus have suggested something called the "power hour". Take an hour to work "on" your business and not "in" your business. Some people i suggest while your researching: -Guy Kawasaki (straight talk about the way to do business) -Tony Robbins (good pump up talker) -Timohty Ferris (how to automate and work less) starting off I would suggest being honest about being a small business and not try to appear as a large business. You can deceive pretty easily but when you're not able to deliver they'll be more upset than if you were upfront with them. You can then have the advantage of finding those that appreciate the small business aspect and stay devoted. They also are more understanding when you don't have enough equipment to deliver. allaccessequipmentrentals.com
the biggest advice i can give you is nothing is free. im not saying charge your best full rate but you will learn the fine line between friends and business and how to balance the bill accordingly. people are quick to talk bad things when you want to charge them for something but will be the first to say how was he gonna make it doing everything for free when you go under. other than that don't be discouraged if your aren't making the big buck right off the bat my 1st year was brutal but one big break was all i needed to get my self on track to getting more work.
I'd have to agree with all that, great post full of wisdom. As someone who has set up their own business and failed (i'll try again in a few years) I have experience doing a few things the opposite way of that advised above.
You won't find any better advice than this paragraph right here, written by grandpa. Thank you grandpa... Couple that with keeping a day job while building your own entity as long as possible if possible...and you'll be amazed how things will flow. If you have to borrow every cent to startup and grow...you'll be a slave to the lenders and they don't make good tenants in the house. Usually their relatives, "Broke" and "Lonely" will move it too, if things don't materialize like you thought they would. I am guilty of the "I'll get it done no matter what" syndrome personally. A couple of times over the years, I stepped out on my own without proper preparation, no cash flow, etc. and ended up just like the hobos you see in the cartoons next to the railroad tracks around a fire barrel, with a stick with a bandana tied to it, with all I had left to my name. The worse part is, my wife was standing next to the fire barrel with me every time I did it because she's way too supportive. She was the one cooking the beans in the tin can over the fire. In reality, it's a personal quest and sense of satisfaction that drives one to go on his own. I get that probably more than anyone on the planet. The problem lies in the present day politics, business environment, competitive scene and mostly now, this unchartered sea called Obamacare that has me wondering how things will go for the small businesses that have to struggle to survive without any more issues pressing them. That's a big deal to consider now. Should we stay gainfully employed, or should we dive into that sea and pay, pay, pay?
We are shut down for winter now, and this is the time for me to begin to get caught up on paperwork and all those things that will help the business, like web site improvement, updating our Statement of Qualifications, etc. I also have a bit of time to read and re-read some of the great threads on HEF. My wife says that I am addicted, and I suppose that I spend WAY too much time on here, but I have learned a tremendous amount. More importantly, I think about things that may not be directly addressed in these hallowed threads with a broader perspective having gained insight from you all - thank you for that. I started in business in March of 2008, and as I have said many times since, my "Crystal Ball" was a bit foggy. Within 6 months of starting the economy private sector work fell flatly on it's face. We are fortunate to have experience in a niche area of earthmoving, and managed to secure some Forest Service contracts that were awarded on a "Best Value" basis; evaluation criteria in which the bid amount was not the sole determining factor for awarding the contract. The technical proposal and past performance/references were equal to the business proposal in the evaluation process. As a business we had little past performance history, but our references with people that I had worked with while working for another contractor helped tremendously. I have been operating equipment since 1980, and have been fortunate to work for some excellent contractors. Some were much better at moving earth than the business end of things, but all provided a wealth education in one form or another. The business end of this industry is incedibly important for survival, and it is a struggle for someone like me to learn quickly enough what must be done on the business end of things; however, if one is contemplating starting a small business the most important component is to have a passion for what you are doing, not just a passion for being in business. If a person has enough of a love for what they are doing, and then pays close attention to the details , it is possible to start and eventually succeed with modest resources. I am fortunate that my wife has a good career that can take care of most of our household expenses, and even with that advantage it has been an incredible struggle. This is the first year that I will need to address purchasing decisions that include the aspect of tax management. All previous years it has been no problem to show a loss. To get back to more tangible advice, much of what I am about to say has been addressed by others, but the following has worked for us thus far: (1) The cost of money is as important as the cost of fuel, labor, equipment, or anything else. I am constantly looking at our profit for a specific job at the end of that job and thinking "we did pretty good, we should be able to gain on our obligations", but 45 days later when we get paid we have accrued enough other bills on the next job that it seems we are right back where we began. The statement "Managing Cash Flow" makes it sound as if the secret is being a great manager. This is only partially true, because if you do not have the cash to begin with you CANNOT manage it wisely, and then you are forced into using poor fiscal choices in order to keep things going. I use a charge card that must be paid off every billing cycle for as many of our expenses as I can, this buys me 45 days of time which helps to offset the time awaiting receivables. I pay a modest annual fee, but no interest or any other charges, and I have developed a track record now with this company that if something unexpected comes up (which it often does) that requires a large purchase they will back us. This has been very helpful for us starting our business, and soon I hope to be in a position in which we have the capital to not have to rely on this card. It has been a very helpfull tool in the mean time. (2) Work with your small local bank. They will get to know you and will be incredibly helpfull. We were awarded a large job (for us) that required bonding. Because we had little experience as a business the bonding company wanted us to put up 15% of the bid amount. I was able to secure a short term loan from our local bank based upon the awarded contract to cover the $45,000 that I had to put up. If I recall correctly, the loan cost about $1,300 which I had figured into the bid. This goes back to what I said earlier about the cost of money and making good fiscal decisions. Imagine how much more I could end up with if I didn't have to ever borrow money, but if I hadn't borrowed this money I would not have been able to get this job. Working completely debt free is obviously a worthy goal, but in some circumstances if one manages debt carefully it can be a valuable tool. (3) Do not be afraid to rent equipment. Grandpa mentioned that a former competitor had all brand new equipment and was looking down at him for using older equipment and keeping it maintained, and that the former competitor is no longer in business. An option that has worked well for us is renting. We have rented most of our equipment and are now beginning to purchase those items that we use the most. I firmly believe that rental costs are not that much higher than owning costs, and maybe lower if a person is using a specific machine less than 1000 hours per year. If one is honest about repair and replacement cost, property tax, and the amount of money tied up in a piece of equipment (back to the cost of money again), renting equipment can make economic sense. We do a lot of work in stream restoration, and we cannot have ANY oil leaks. By renting, we are using like new equipment that is well maintained and for the most part trouble free. We have a great dealer that will address any issues immediately, and if they cannot be repaired quickly will replace the machine with another. In our business we need a variety of equipment depending on the project. We may have a dozer, blade, roller, water truck, 80,000lb. excavator, and 30 ton ADT's on one job, and then need just a loader and a couple of 50,000lb. excavators on another, and then a long reach excavator on another. Because of our specific needs we may be an exception in regard to renting as opposed to a contractor that performs primarily one type of work, but renting is certainly worth looking at. Add to that showing up on a job with all newer equipment adds an air of professionalism (I know grandpa, you can't eat air, but it may help in getting the next job). Downtime is often greatly reduced, and capital reserves for major repairs are not necessary. Plus, the overhead involved providing a service truck and mechanic just doesn't fit into our tiny little company yet. At some point the numbers will reveal different answers as our business grows, but for now, renting has worked well for us. (4) Know your costs. People in this business obvioulsy learn production costs like $/ cubic yard, or $/ foot of pipe intallation etc. I found out the hard way that knowing costs such as labor, which includes overtime, travel time, per diem, workman's comp, unemployment insurance, company match of FICA, and liability insurance expense that is related to payroll amounts, not to mention benefits is easy to overlook when you are first starting. I would see companies charging $45 or $50 per hour for labor and thought that they were really gouging. Add a modest profit to the labor cost and those labor rates are certainly not excessive. Then there is overhead. I know you business majors and accountant types will have a different perspective on this, but quite simply anything that I pay for that is not directly applicable to a specific job is in my simplefied way of thinking overhead. This includes vehicle costs, office expense, my pay while putting together bids, etc.. This of course does not take into account return on investment, asset accumulation, capital gain, and what not, but those things are not very important when you are first trying to get going. All you want is to bring in more than you spend! When I first started I had no track record or data with which to use to quantify overhead, and I used 10% as a guess - way too low. For 2012 my overhead was 20.4%. We use quickbooks for accounting software, and I bring up profit/loss per job it only calculates expenses directly attributable to that job. In order for me to accurately guage profit/loss I have to then add 20.4% of the total to the cost side, then compare to the total. It has indeed been quite an education, but with our small business it just boils down to keeping track of every penny spent and modifying future bids and estimates based upon what we have learned. (5) Treat your employees as if they were partners. I am amazed at what I miss on a job site when my mind is contemplating making payroll, or bidding another job, or whether or not to buy new tires for the lowboy or re-treads - you get the idea. I rely heavily on our key people to pay attention to job details, and think about what needs to be done next, etc. I remember being frustrated at a former employer when I was completely focused on the job at hand and he was talking abstractly about future jobs, or equipment that he would like to buy, or whatever. I was trying to get information and his insight on how to proceed on THIS job. I now know a bit of what it is like on the other side of things. Furthermore, I find that the more you can engage your employees in the decision making, the more they tend to think about the whole picture of a project, and the more pride they take in the outcome. After all, your employees will represent your business on and off the job, and if they are given more input on the outcome they also tend to take a sense of ownership in the final product. Crap, I exceeded the allowable post size. continued on next post.
(6) Be completely honest in billing clients. If you credit them back when you encounter a savings they will be more apt to work with you when you have an overage. On firm fixed price jobs this does not apply so much, but on return clients that may hire more on a job by job basis I believe that complete transparency will build long lasting relationships in which the client trusts that they are being treated fairly. Well, I have gone on far too long here and I will be amazed if any of you actually read the whole thing, but these are just a few of the things that I have learned in the past 5 years that may help someone contemplating their own business venture. Cheers!
I read every single word Oxbow. Congratulations on your 5th year, and for all your short-term success. Honesty and integrity have obviously been your focal points according to your story.
Well said Oxbow!:thumbsup That is good advice for anyone who owns a small business.
Thanks LowBoy, I share your sentiments regarding government and the ACA. One thing about it, we will all be on the same playing field in dealing with the new healthcare regulations, I think, if they ever figure out what those are. Thank you too CM. They say "live and learn". My problem is I'm not going to live long enough to learn what I should have long before now.
Take a course in small business at a local community collage. Most business fail due to mismanagement. Don't buy equipment then look for work for it. find the work then buy or rent the equipment needed to do the job. Don't look for growth till you have your business established then only after you have the work that requires it. Getting to big for your britches is one of the fastest ways to go broke. Take what ever money you have and put it in savings then take out a loan using the savings as collateral. ( most banks charge 2% on this type of loan, some as low as 1% ) That way if you fall short 1 month you always have the money in savings to cover a payment. Always do a little extra on every job. Show it on your invoice but do not charge for it. (like a little extra cleanup around the job site) Always maintain a loan at a local bank even if you don't need it at the time. Again use that savings account for collateral. Borrow against it then put the money back in that same savings account. You will be surprised how fast it will grow. As long as you owe money out do not spend any of your income on toys, (snow mobiles, motor cycles, hot rods, etc.) You do not need the best piece of equipment to do a job at first. Save the A/C, air ride seats, pretty paint jobs etc. till after your totally in the black. Plan on a lot of extra hours, and I mean a lot just to get started. The first 10% of every job should go into a retirement account. After that it is up to you to figure out how much you need to make a living. I brake mine up into 1/3rds. 1/3rd for supplies, overhead, insurance, utilities, equipment, etc. 1/3rd for? labor which includes me. (you must pay yourself along with everyone else.) and the last 1/3rd for profit. (profit is money that is not needed to maintain your business but can be used for anything you like with out hurting your bottom line.) Don't plan on making a business succeed in an area that does not have any money. It is much harder to make money ware there is none then ware there is a surplus. This is not the only way to make a business succeed but it worked very well for me.
Very good advice Dwan. Two of my fathers sayings that I take to heart when it comes to business - "I can stay at home and be broke, there is no need in working towards it." "A poor man never wrote me a check."
Really great thread, it should be stickied, I check this thread pretty often. I read your whole post oxbow, great words!
I am glad this thread has helped so many people. I love to read all the information and stories that people post! I hope others will continue to ask more questions for people to answer and I hope others will continue to share their knowledge.
Lots of good info in this thread as I read thru the whole thread. So I will share a bit of my story. Started my business while working a full time job as an electrical foreman while doing work on the side. One of the reasons for starting my own business was so I could work side by side with my boys as they grew up. As a foreman I could not believe the work ethics of a lot of the young people coming into the work force. Not to sterotype all of them but it seems to be a lot harder to find the good ones. Some people have asked what if your boys do not want to do what you do someday. I am fine with that as my goal is to hopefully instill a work ethic in them for what ever they choose to do some day. 7 years into the business looking back I wish I would have done more long term planning on the business/books side of it. The work is not a problem but finding time for the book work and PR requires a lot of time. I am to the point in my business where I need to scale back and turn some work away or hire a few more people and I would be more of a manager and not as much hands on. What I also learned the hard way was going into a partnership. If going into a partnership it needs to carefully planned going into it and also an exit plan. I did not plan well ecspecially
Well I hit the wrong key so I will finish here. I did not plan well for the exit plan as I had to buy out a partner. I brought a partner in 3 years ago and had to buy him out this spring. We got it sorted out but it would of been a lot easier with preplanning. I was actually advised of this by my accountant but I responded we will never need to split up should have listened to him. I was very fortunate with me business because the other main contractor in my area was continually over booked and had customers he never got to for years and always told them was coming. I was fortunate because word spread like wild fire of my business and I instantly had a lot of work to the point now where I can say no when I feel I have enough work for the year. Typically when I say I cannot get to them they usually just tell me to call them when I can. So I can say it is best to always be honest with the customer even though a person hates to say no to work. For me saying no has gotten me alot of work. Be prepared for alot of hours as this always something that needs to be done. I've rambled on enough so that is some of my story
Welcome to HEF HDI, and I find myself in the same quandry regarding the expansion of the business to the point where I can no longer be on the machine. Is there a scenario where one can restrict the amount of business volume and succeed? I hope so because I think that our business will proceed with that model.
I like that quote, but I have had poor people write me a check. Still never got paid but karma will come back on him one day.
I learned the majority of my business skills from my father. He started out poor with no skills, started toting lumber at a young age and ended up being the largest home builder in our area at one time in the '90's. Fortunately he is still alive and kicking, enjoying retirement in a warm place with cold beer.:drinkup
Oxbow, HDI, and Dwan- great stuff. As a small business owner in another field. you have presented great info here. Thanks greatly!
Looks like no one has posted for about 5 months. Let's see if any new faces have any new ideas to contribute to this thread for all of the young and prospective owners on the forum. Some great information has been shared and I think there is definitely a great deal more that can be said.
Well said. Mac
I have a small equipment repair shop in town that I started with nothing but my tools an my work ethic. Boy has it been tough. I don't think it will ever get easy but a few of the lessons I have learned are. Don't think you will be the cheapest and always busy. Be affordable and you'll always be steady the most productive thing you can ever tell a customer is "no I can't do it today" if you want to wait I'll get on it as soon as I Finnish what I'm doing. People make you cold. Nice guys only win in the movies don't let anyone's tough luck tug on your heart strings. I have more trouble getting money out of the people that I know. Than the people I don't. Free work is for the salvation army. Don't let them big dogs crap on your head. Stick to your guns don't back down, They are expecting you to.