Starting a small business/how much?

[Anonymous Poster]

Steeel_Wheels,

My cousin and I are in a similar situation in that we share profits in our business 50/50, however it did not start that way. My cousin was doing business on the side (no company name, cash basis, etc.). When I started working in my current position (insuance broker) the money was tight and I worked with him weekends to take in some extra cash. During the first 4 years he paid me very well and the business grew. After the 4th year, he wanted to make the business official for tax and many other reasons and since I had been with him for almost 5 years and have a background in accounting he offered to bring me in 50/50. I handle all the administrative side and my cousin handles most of the bidding of new jobs. We both run crews when we are working. It has worked well and we have added some additional employees. Even though we pay our employees well ($25/hour), occasionally we run into an employee who asks how much we make on a job and I get the feeling that he thinks we should be paying him more because of what we are taking in. What he doesn't realize is that we have taken on more risk and expense. If a customer doesn't pay it comes out of our pocket, our trucks are going through the wear and tear and we are the ones dealing with the administrative end of things. The point is, make sure both parties understand who is taking on more risk and how the profits will be split--there's a lot more than just splitting the check. Planning everything out before any work is done will make for a great partnership in the long run.

Also--the people we have working for us are considered independent contractors. You can eliminate a lot of admin and tracking/paying of taxes if you can set this up so he is considered independent--check with your accountant. One note of caution about making your cousin and independent contractor--you may need to help him put some money aside to pay taxes. It's real easy to spend everything you get and real hard to come up with money to pay taxes when April 15th rolls around.

You may want to get creative with the pay and put some incentives in for finding new jobs. Money and working for yourself are great motivators if your cousin is that type of person. Not sure where you are located, but if your business is seasonal like ours (not lawncare, but we have about 8 weeks in spring and 7 weeks in fall to get jobs done), you need to have employees who are willing to use all daylight to get things done. In our business and yours, if no one's working, the money's not coming in.

Good Luck

Bob

 

[thcri]

Bob,

What kind of business are you in. I own a heating, air conditioning and plumbing company down in Rochester Minnesota. We sure get some seasonal business and your right, you have to have people that are willing to put in the extra time during your peak seasons.

Murph

 

[Bird]

<font color="blue">the people we have working for us are considered independent contractors. You can eliminate a lot of admin and tracking/paying of taxes if you can set this up</font>

Yep, but there are some very specific rules on whether they're independent contractors or "employees" and I assume you know what you're doing 'cause you can sure get into trouble if you don't.

 

[Anonymous Poster]

Murph,

Thanks to the Minnesota winters and large number of lakes, there is a big demand for installation and removal of docks and boat lifts. We don't deal with many roll-in docks--ours use galvanized pipes driven into the lake bed and we have a unique system of floating sections out so we never actually get in the water. This type of system is very strong, but is generally not something a homeowner or cabin owner would do himself so we do the same jobs every spring and fall. It's extremely hard work, but a nice break from sitting behind the desk and as you know spring and fall (especially) can be very nice times to be outside in MN.



Bird,

You are correct about independent contractor status which is why I made the statement about speaking with the accountant. Depending on who owns the equipment and a whole host of other items, a person may or may not be considered an IC. As long as they are in the planning stages, I figured now is the time to explore all options.

Bob

 

[thcri]

Bob,

You should not have told me your were in docks. I have been fitting this for years. I have a cain on Lake Pepin, water level changes on a daily basis. I have to move my dock at least once a week or basically pull it out when I am not there. Does you system work in that situation or is yours permanent once installed.

Murph

 

[Anonymous Poster]

Murph,

The most popular system we use can be raised and lowered with the water level. We use tools that we designed, but it can be done with a come-along (sp?). Someone like you could do this yourself however it could get old if your doing it a lot. The other type of dock is floating. We still use pipes driven into the lake (river) bed, but the dock floats and uses the pipes for support only.

We have both types in use on the Mississippi. In the spring near Minneapolis the river level can vary a great amount and this is where we see the first type of dock strected beyond its limits. If we can not raise (or lower) it enough, we have to take it out and reposition it. Doesn't happen often, but we've ran into this year with all the rain.

If you want more info, send me an email to the address listed in my profile. I'm going to send you a question about your service area.

Bob

Steel_Wheels--sorry to take the thread off topic.

 

[dmccarty]

Steel_wheels,

There is a website that is all about landscaping and lawn care
that I think would be helpfull to you. It has lots of business
information such as billing, prices, marketing, nonpayment,
etc., as well as general questions.

Unfortunately I can't find the link. /forums/images/graemlins/shocked.gif I think I have it
booked marked on one of my home systems. If someone
else cannot think of the site address I'll try to find it tonight.

Later,
Dan

 

[hazmat]

I think what Dan is looking for is Lawnsite FYI that group isn't nearly as helpfull as the TBN crowd is, but there is a good deal of info there. You just need to search it out on your own.

Steel Wheels, as others have said, you & cous. need to talk to an accountant etc. Work up a business plan. As far as partering, I like how Gary set up his body shop business.

I mowed lawns as a high school & college student. Still the most fun job I've ever had. I'm considering starting a part time tractor business myself. (Wife isn't convinced yet)

After reading a bit on lawnsite, & doing your business plan, I think you'll find that $5,000-$6,000 will be waaaay short as far as capitilizing the business. You don't need brand new truck & equipment, but it must be reliable. $5 - $6K would be a good downpayment to assume some debt / lease to get the equipment. Just my humble opinion. Plenty of guys mow lawns carrying their push mower in the back of their compact car. If you want to make decent money, you need to step it up a notch or two.

 

[frank_f15]

not to be negative , but if u are putting up all the $$$$ to purchase things , including insurance, what would be his incentive to do a good job and make the businnes grow? u are the only one that can make a final decison on this + it is your $$$. think it is great that you want to help, and have the funds to help, but just be careful. nothing ruins a family relationship faster than a joint business gone sour.

 

[Anonymous Poster]

I guess I would like to hold the reins,but give him some incenetive to bring in some money...maybe a commision...I would like to keep everything in my name and let him have a percentage of the earnings,if I make more he makes more...but hey,I am listening...there is a lot of experience/knowledge here....tell me what you think....I am not afraid of work /neither is he....keep on being honest with me.....I can take it... /forums/images/graemlins/wink.gif