Business Owners?

[Midwesthonky]

I'm seriously thinking of taking the plunge and buying my own business. I'm tired of the corporate BS (you constantly say employees are the most valuable asset, yet no raises in 4 years despite record profits). I could go on and on, but let's just say I am seriously frustrated.

I have found a business that is a very good match to my knowledge and skill set. It is currently profitable, has a diverse customer base, and good employees. It is viable longer term and has good prospects for growth should I pursue that avenue.

The purpose of the post is for those who own their own businesses, what would be your advice on what I need to learn, watch out for, etc.

 

[Rickster71]

My wife has had her own accounting business for 25 years. She does accounting for small and mid sized businesses.
While it would help to know the type of business you're speaking of; we can offer a few suggestions.

When I first read your post to her, the first thing that came to mind for the both of us was:
Learn how to run a business.
For example, a person that is a great chef may not know all the other many aspects of running a restaurant.
Being able to manage people is a skill set all it's own.
Something we've seen over the years is, that to be done well you can't do it all yourself.
Hope that helps a bit.
Feel free to PM me if you have any other concerns or questions,
Rick

 

[jinjuku]

I'm seriously thinking of taking the plunge and buying my own business. I'm tired of the corporate BS (you constantly say employees are the most valuable asset, yet no raises in 4 years despite record profits). I could go on and on, but let's just say I am seriously frustrated.

I have found a business that is a very good match to my knowledge and skill set. It is currently profitable, has a diverse customer base, and good employees. It is viable longer term and has good prospects for growth should I pursue that avenue.

The purpose of the post is for those who own their own businesses, what would be your advice on what I need to learn, watch out for, etc.

I work with small business owners day in and day out. PM me and lets get in touch over the phone. I think this would deserve a real time conversation.

My first piece of advice: Most people I come into contact with want to run a gym/yoga/boxing studio. I tell them they need to be a running a business first.

 

[ParadigmDawg]

I had my own small medical business for 2 years.

My first year I made 120k and it took me 133k to make it.

The second year, I made 156k, it took me 162k to make that.

There was something about working 23 hours a day, 7 days a week and losing money that I didn't like.

It was actually a very viable business model and would've shown a profit in time but I was able to sell it and make a small profit.

Don't take this as a negative. I wish you best of luck.

 

[Bryceo]

Yep i own a contracting buissnes pm your email address and ill throw you a detailed email

 

[Midwesthonky]

Thanks everyone, I'll start PM'ing those that offered to talk.

I probably should include some details. It is a niche machine shop type business that essentially does specific high-precision work on a customer's parts. I have an engineering and technical background and have spent years in factories. I am also a Six Sigma Blackbelt and have spent the last 5 years working as a LEAN / Continuous Improvement specialist teaching varied employee groups how to identify problems and how to address them. I understand the importance of producing high quality work with short lead times, just like this business operates. It's a good fit for my skills. Initial analysis shows I can keep my current pay rate (working for the "man") and produce enough cashflow to service a business loan and retain significant cash to re-invest in the business.

My strengths:
- The technical side...understanding what the customer's needs are
- Working with diverse employee bases...I often have to go to a facility and get them to implement changes with no direct authority for me to do so. I actually, don't really make them do anything. I get them to tell me the problems with their job and then draw out the answers on what to do to fix it. Then I help them implement the improvements. Since I try to make it their idea, I get buy-in.
- Not greedy...yes I like money, but I have a long term view and am willing to be patient rather than suck out too much cash and put the business at risk.

Weaknesses:
- the Accounting / financial side...I get the big picture, but the day-to-day will be something I need to learn
- Scheduling the work load of the operators...haven't done this before
- updating the business system...seems to be operating on spreadsheets and access databases. I have a relative that can set me up with a new system at a good discount. A trusted relative... not that cousin that sells speakers out the back of his chevy van.

 

[lsiberian]

Check out Dave Ramsey's Entre Leadership.

1. Don't take out a loan
2. Don't do a partnership
3. Pay your taxes
4. Subtract the cost of a managers salary to get the real profits.

For example the owner says we made 100k last year, but he was the manager of the business doing a job it would cost 100k to hire someone to do. Then that business is really not profitable.

Could you start this business or manage this business on the side?

 

[jinjuku]

Weaknesses:
- the Accounting / financial side...I get the big picture, but the day-to-day will be something I need to learn
- Scheduling the work load of the operators...haven't done this before
- updating the business system...seems to be operating on spreadsheets and access databases. I have a relative that can set me up with a new system at a good discount. A trusted relative... not that cousin that sells speakers out the back of his chevy van.

Accounting: Is your accounting load small enough to hire an outside book keeper and write it all off of your taxes? That is what we do.

Business management software. I can speak to this at length. You said new system and 'at a good discount'. UHG don't be one of those. Those being people that call our business and it goes something like this:

"Wow you're how much? Heck the system that we currently use, that we absolutely hate, drives us bonkers on a day to day basis, never can get the data/reports that we need was only X amount of dollars".

Next to your floor machinery and staff your management application is CRITICAL and probably the least expensive of the the machinery / staff. Are you using Job BOSS or the like?

DO NOT LET PRICE ALONE PICK YOUR MANAGEMENT SYSTEM SOFTWARE.

 

[Midwesthonky]

Accounting: Is your accounting load small enough to hire an outside book keeper and write it all off of your taxes? That is what we do.


Next to your floor machinery and staff your management application is CRITICAL and probably the least expensive of the the machinery / staff. Are you using Job BOSS or the like?

DO NOT LET PRICE ALONE PICK YOUR MANAGEMENT SYSTEM SOFTWARE.

Accounting: Yes, it is simple enough that I could either learn it or pay someone to do it on a part time basis.

Management Application probably doesn't exist. The business has 10 employees. History of old quotes is kept in an Access database. New jobs are quoted manually using formulas the current owner has developed. I'll document those formulas, but I also fully expect that I will be spending time on the floor with a stop watch to better understand the setup times for each equipment and material type. I want to understand how accurate his formulas are as I'm not a fan of losing money on jobs because the "swag" isn't close enough. I'm big on knowing what is going on and having accurate, real data. Scheduling jobs is pretty much done manually as near as I can tell. I plan on improving that.

 

[BMXTRIX]

I run my own A/V business, it is nothing like what you are talking about, but it takes time. I think one of the biggest aspects is ensuring long term sales for the company. It is fine if you know how to run the gear, and have the skill to run everything yourself, but at the end of the day, you need clients. Yes, poor accounting can kill you, a poor strategy can kill you, being a douche boss can kill you, but most of all, a lack of customers WILL kill your business.

You want to work on a plan of growth and go in with that plan. If your goal is to sustain what is there, then you will fail. Not because you couldn't succeed, but because you won't have the resources to move up to bigger jobs, and you won't have the resources to deal with lean times. Every company I've seen tends to ebb and flow through their finances. Sometimes you have a million dollar year, sometimes you have a 700 grand year. During that lean year, you either fire people (bad) or you take a huge pay cut (horrible). So, you want to aim to have a ten million dollar year, or a thirty million dollar year. It is not about greed, but about knowing that if you have a core of 70 great employees, and 30 so-so employees, that if times get tough, you can let those 30 people go and still have a backbone which is solid and has minimal impact on the overall company strategy for growth.

My business is all A/V and I do it part time, so it is not the full time commitment you are considering. I probably did about $120K in business last year with maybe a 25-33% profit margin, so it certainly was a very nice boost to my family income, but it just helps to pay the bills. If I were to go full time, I would want to intensify advertising, hire full time installers that were good, and to hire more sales professionals. I wouldn't want to shoot for $500K in sales where I would make $133K. I would be shooting for ten million in sales, where I made considerably more, but was secure in how the business was operating and had a group of people who also felt secure in their job security.

Good luck!

 

[Midwesthonky]

Ok, update time!

I gave my two weeks notice yesterday at work. I have the bank loan approvals. I am going into business for myself. Or actually buying my own. Kinda freaked out, but also excited. All the risk is mine...but then all the rewards are mine.

No more stupid forced distribution performance reviews. No more waiting until late March to get your objectives only to be reviewed on your performance in later September. Probably will still have no raises but my effort will directly reflect in the bonus! Significantly less travel. Shorter drive to work. No more crappy cubicle from the 1970's (seriously, these cubes are from the 1970's). No more security of being an anonymous cog in the giant corporate machine...

Oh SH!T!!!

 

[psbfan9]

Congratulations and the best of luck to you MWH!!

 

[Adam]

Congrats! Best wishes, man. Let us know how it's going!

 

[markw]

Wishing you all the best. Small business are the backbone of this country.

 

[jinjuku]

What industry are you servicing? Did you buy into a franchise?

 

[Midwesthonky]

What industry are you servicing? Did you buy into a franchise?

It's a custom woodworking business. Niche is bars, kitchen cabinets, counter tops, bathroom cabinets, etc. A small percentage is other items like poker tables, custom tables, booths, etc. If you can dream it up, we can probably make it...for a price. All custom stuff to meet the customer's needs/wants.

So I am sure someone will ask about custom speaker boxes. Yes, we are fully equipped to make custom speaker boxes.

I know my wife will have a list of projects for the house. My mother's response was "Oh really..." while scanning her kitchen.

Won't get rich, but I can make a comfortable living while doing something I enjoy.

 

[jinjuku]

That's great. Another idea for the future (depending on what the population density looks like) is a membership based DIY wood gym (so to speak).

It's structured just like a gym including point of sale for supplies.

 

[ImcLoud]

Congrats, I love seeing people starting something like this.

I can give you some advice, the first thing I would have said is don't quit your job unless you were subject to "non-compete" terms, lol since that ship has sailed I'll move on...

When I started my business I bit the bullet and worked my normal job as service manager of a full service fuel delivery company for a while, I utilized a home office, and I didn't quit my job until I already had 2 employees and needed my second truck. So I took little risk in the beginning, if it didn't work out I was out very little, but I had a family to consider and my wife there to talk me out of quitting, lol...

That was years back and I have to say going into business for my self was one of the smartest things I have ever done. I was making good money for the time, at my old job {wd b 33.50 hr, 1/2 day mandatory overtime every week, 2 weeks vacation, 12 sick days, sales commision, and they matched my 401k, + family plan health/dental/eyes}..

When I started my first business I started by gathering work and doing it on weekends, days off, holidays, and after hours, when that got to be too much, I hired a tech for 40 hours a week, in the beginning that was shaky because he worked fast and I had to find him 40hrs of work a week, soon he needed a helper, and shortly after than I had to leave my job...
I got up to 6 employees and then the climate changed {financially}, my work was almost 100% residential at the time so I had a few months where payroll just about matched my what we billed after materials, so in other words no income for the president... So I made a decision, I already owned some rental property at the time so I used that to keep my guys busy, upgrading and building additions kept everyone busy but I was eating up savings keeping everyone going... UNTIL I sold my first house, then WOW, it was a property as well as paid for and sold in the mid 3's, I wanted to go buy a boat and a new sports car, but refrained lol... I bought more property, rentals, buildable lots, ect.. The rest is history, after a while the hvac caught on and strong, the realestate is a solid business plan and keeps everything moving with my retirement well handled as well as my kids... I only continue the hvac business because I would like my kids to take it over when they finish high school and a few business classes...

Point of my story is, its not easy and hard times come and go but if you plan for the future grow as you need it, reinvest profits, and keep an open mind when it comes to changing the business plan when it needs to be altered- you should do well...

PM me a price for an arm wrestling table, I would love to be your first customer, also I always have custom amp stands made, that would be an awesome niche for you, they are super easy, just glue the boards together like a bowling alley floor and then add pointy feet, lol..

heres a pic of one http://i998.photobucket.com/albums/af107/turbobike1/IMAG0482_BURST002_COVER_zps0f6e44b1.jpg the bottom has spikes as well as the top, plus I have a piece of 1/2" thick tinted glass that goes on top{ I haven't put it on there yet, its still at my office}, but instead of searching for a 4" think peice of hardwood, you just glue it all up like a cutting board, that one is hard maple stained to rosewood...

Good luck...

 

[fuzz092888]

just glue the boards together like a bowling alley floor

C'mon man, get with the 21st century. Bowling alley's are all switching to synthetic lanes, the old wood lanes are on the outs

 

[ImcLoud]

C'mon man, get with the 21st century. Bowling alley's are all switching to synthetic lanes, the old wood lanes are on the outs

I don't know where you are located fuzz but we don't have any new bowling alleys around here, lol.. I only know they make the floor that way because I bought a house that had 3 lanes in it, it had a small room behind the lanes where the servants would wait for the balls to be dropped into the troth and one would return the ball while the other put the pins back up... I partnered in that property and we sold them 3 lanes for a good amount, we also sold the tile floors out of that house to a contractor in new jersey for $300 a square foot and he removed it {it was only a 3 small bathrooms and a pantry, someone ripped the kitchen floor up years before}..

anyway we went bowling the other day and it cost me like $200 for me my sons and 2 of their friends...