# New to the business..need advice!



## 352TrEeWoRk (Sep 21, 2011)

Hi all! My names Darrell. My business partner and I happened to stumble across this website looking for ways to improve our Tree Service Business. We both have experience prior to opening our own business. Officially purchased our license and insurance the beginning of this year along with a rope, saws, and pretty much anything we would need to get going. We didn't have as much to start out with as most companies do but my partners father in law owns a dump truck, flat bed trailer, and a brush trailer that we use at will. We purchased an ad in the phone book which we have gotten quite a few jobs from, but our main source for finding work right now is going door to door and bidding jobs on the spot. We drive around nice neighborhoods, looking for people that could use work done and 90 percent of the time the answer is not right now but 10 percent has been paying the bills and getting us by. My main question for the pros in this business is where do we go from here? Is the best way to build our clientele the way we are doing now? What more can we do? We are dedicated and would love to turn this into a life long business, eventually becoming arborist. Thanks for the advice in advance.


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## CNBTreeTrimming (Sep 21, 2011)

Go out of your way to do excellent work and the referrals will be all you need to keep you busy.


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## troythetreeman (Sep 21, 2011)

CNBTreeTrimming said:


> Go out of your way to do excellent work and the referrals will be all you need to keep you busy.


 
agreed
also post ads in shopper type papers, a website and facebook page are good ideas too
sounds like youre spot hitting, theres an art to that man
canvas a neighborhood, nice fliers with bullet point info, hit every door
saturday is the best day to go on the beat, monday is the worst, people need to be home and want to talk to you
wouldnt hurt to contact municipalities as well, get some city jobs, that will also put you on their list of companies they refer homeowners to when they mark trees for removal
we also do work for some of the local property developers, after they build we come in and take care of the trees
and homeowners associations
im not a big fan of phone book listings, tried that myself, was lucky to see it pay for itself
your first couple years will be the hardest
do not give yourself a reputation as the "cheapest" company, you want to be the best company


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## deevo (Sep 22, 2011)

352TrEeWoRk said:


> Hi all! My names Darrell. My business partner and I happened to stumble across this website looking for ways to improve our Tree Service Business. We both have experience prior to opening our own business. Officially purchased our license and insurance the beginning of this year along with a rope, saws, and pretty much anything we would need to get going. We didn't have as much to start out with as most companies do but my partners father in law owns a dump truck, flat bed trailer, and a brush trailer that we use at will. We purchased an ad in the phone book which we have gotten quite a few jobs from, but our main source for finding work right now is going door to door and bidding jobs on the spot. We drive around nice neighborhoods, looking for people that could use work done and 90 percent of the time the answer is not right now but 10 percent has been paying the bills and getting us by. My main question for the pros in this business is where do we go from here? Is the best way to build our clientele the way we are doing now? What more can we do? We are dedicated and would love to turn this into a life long business, eventually becoming arborist. Thanks for the advice in advance.


 
Get a website as well. That will drive some business your way.


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## 352TrEeS (Sep 22, 2011)

Thanks everyone for the advice!! Great so far KEEP it coming please!!:msp_thumbsup:


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## tree md (Sep 22, 2011)

Never go partners... I know this is not what you want to hear but believe me, you will think back on this one day and say to yourself that dude on AS was right.


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## 352TrEeS (Sep 22, 2011)

So let's say hypothetically it isn't a partnership... Now to have an employee I have to pay workmans comp and all that right?? Because right now as a partnership we can be workmans comp exempt thus having lower overhead... This was just my thoughts on it and I by all means am very new to the business end of things... So if there is a better way to do things please let me know. Thanks in advance.


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## Zale (Sep 22, 2011)

I would suggest you pay for workmans comp. You never know.


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## squad143 (Sep 22, 2011)

Do a good clean up. 

NO - do a great clean up. Leave their yard cleaner than when you came.

Get a backback blower and some tarps. Cut what you can on the tarps and use the blower to clean everything up. Leave nothing but the stump (unless you also do stump removal).

People with remember the "extra". Most of my work is now repeats or from refferals.


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## troythetreeman (Sep 22, 2011)

squad143 said:


> Do a good clean up.
> 
> NO - do a great clean up. Leave their yard cleaner than when you came.
> 
> ...


 
agreed, doesnt matter how nice your work was in their tree if their yard looks like crap


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## troythetreeman (Sep 22, 2011)

1099 might get you around workmans comp too, idk what your state laws are, i do know in my state if the employer doesnt have the insurance, the state pays the claim and then they go after the employer, this is a dangerous business, i had a workmans comp pay me 64k over a couple broken bones, plus all medical costs past and future are covered, those bills were something like 200k


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## DangerTree (Sep 23, 2011)

352TrEeS said:


> So let's say hypothetically it isn't a partnership... Now to have an employee I have to pay workmans comp and all that right?? Because right now as a partnership we can be workmans comp exempt thus having lower overhead... This was just my thoughts on it and I by all means am very new to the business end of things... So if there is a better way to do things please let me know. Thanks in advance.


 
What you need is to learn about business. Employees make you money and they are a business expense. That's right you guy's are not taking advantage of that deduction and are therefor loosing money to uncle Sam. If you were a sole proprietor, his income would be partially deducted from your total income and you pay less tax. Additionally you make more money charging labor out at a rate higher than you pay the labor. If you want to be in business you need to take advantage of tax strategies and asset acquisitions. An example, my taxes would be too high as I made too much money cutting trees in the summer and then working the winters on an oil rig. As a sole proprietor I pay taxes on my total income no matter what the source is. But I needed a chipper and it cost 40,000 bucks. No problem I get to depreciate it over time and the expense offsets my income so I pay less or no taxes at all! Plus I now have an asset -the chipper that in fact I will get for free damn near at the end of it's depreciation if you do the math it does work. It is an asset unlike a car because a car does not generate revenue the chipper will and it adds value to the company. Important thing to understand if you don't like paying taxes it means you have written yourself down with asset acquisitions and that is perfectly legal. BUT if you are covered under Worker's Comp and are injured they base the payout on you income. So if you are like many other businesses trying to pay less tax you must also show less income therefor less or no payout!

The partner thing is not a good idea. Remember friends and money are soon parted and you will have a difficult time growing asset value without ownership problems. You are essentially talking share value or who has more invested in the company. And when it's time to part way's somebody's gonna want a buy out. Kinda like a huge balloon payment that you likely didn't save up for or anticipate. Also should something go wrong and it was his fault well guess what it's now your fault too! Because as partners you share liability even in debt.


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## 352TrEeS (Sep 23, 2011)

What would be a good source to begin learning about the business end of things? Also as far as tax strategies what would be some of the most important to remember? With tax time creeping around the corner and all. I understand the asset aqiusitions to a certain extent... What proof does the IRS require that you've actually purchased these items? Is it just receipts? Or are there other ways? And as far as what I've earned what is the best way to show that... As most of the people we have dealt with up to date have paid with cash... Please bear with me if my questions are way out there like I said I'm very new to the business aspects and would love to learn as much as possible before I screw myself or the business. And once again thank you for all the help... It is greatly appreciated.


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## DangerTree (Sep 24, 2011)

352TrEeS said:


> What would be a good source to begin learning about the business end of things? Also as far as tax strategies what would be some of the most important to remember? With tax time creeping around the corner and all. I understand the asset aqiusitions to a certain extent... What proof does the IRS require that you've actually purchased these items? Is it just receipts? Or are there other ways? And as far as what I've earned what is the best way to show that... As most of the people we have dealt with up to date have paid with cash... Please bear with me if my questions are way out there like I said I'm very new to the business aspects and would love to learn as much as possible before I screw myself or the business. And once again thank you for all the help... It is greatly appreciated.


 
Firstly I am Canadian so my tax regulations are slightly different than yours. I can tell you this for sure I didn't here you say cash ( but the IRS might ) don't do that again not here not anywhere! To answer your other questions you will require receipts for purchases. All purchases such as fuel, repairs, courses or anything that is allowable by Uncle Sam. Those things are described in full by IRS I'm sure. You can hire an accountant and submit your receipts monthly and you can learn to use an accounting program like my wife did. We still submit to an accountant for editing. Also a good accountant can give advice on things like investment strategies as they vary with income levels. Please keep in mind that not claiming income when you are starting to build a business is shooting yourself in the foot. The only person that benefits from it is the client. You will not be able to get an Operating Line of Credit without showing an income. As a business there will be times when credit is necessary. A revolving line of credit is preferred because you may repay it and have access to funding again without re applying for a loan. And the interest rates are far lower than credit cards or personal loans. Also if there are any legal issues that pop up do to an accident or property issue method of payment may come up as it has something to do with responsibility. Uncle Sam won't like to here that you have not been paying for his war effort! If you get my drift. 
Here in BC the current ( about to change again ) tax that we slam on the client is 12%. They complain and I say the same thing " I don't get to keep it I just collect it for the Queen " and that's it. I explain that it won't hurt my feelings if they call the competition and sometimes they do. But remember this " if the client wants to be cheap right off the bat that is a warning" they may be strapped and unable to pay. They also keep asking you to do more than originally agreed.


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## treeclimber101 (Sep 24, 2011)

Don't ever under any circumstance place a body part in a running chipper , that would be bad ... and always have safety chains on the trailers that also can turn out bad , and if the HO is watching you than make sure you don't break anything especially the house that too is bad ... And for GOD sakes never and I mean never cut the line that you are hanging from it gets so jammed in the brake of the saw it is a complete nightmare to get untangled ...


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## troythetreeman (Sep 24, 2011)

treeclimber101 said:


> Don't ever under any circumstance place a body part in a running chipper , that would be bad ... and always have safety chains on the trailers that also can turn out bad , and if the HO is watching you than make sure you don't break anything especially the house that too is bad ... And for GOD sakes never and I mean never cut the line that you are hanging from it gets so jammed in the brake of the saw it is a complete nightmare to get untangled ...


 
lol


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## 352TrEeS (Sep 24, 2011)

^^ haha I was thinking the same thing

Danger Tree- Wow lots of good information I think I read each of ur posts 10 times to make sure I got everything. Thanks again.


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## stihl.logger (Sep 25, 2011)

i cant really add any more than the good advice already given. in my experiance, it doesnt matter what your using, just get the job done right, 98% of home owners cant tell the difference between a friction hitch and the hitch on their soccer van in the garage but they can tell the difference between a fly by night operation and someone that really takes pride in their work. most guys dont know or catch on to it but not only are you doing the tree work but also assuring the home owner that they have picked the right company for the job, run them thru what your going to do and how its gonna happen be for you yell timber, they prob wont completely understand the process but thats why your the professional and it gives them piece of mind. do an outstanding job and you will be surprised how word of mouth travels. best wishes


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## VA-Sawyer (Sep 26, 2011)

I have to disagree with Danger Tree's statement about how depreciation saves you the cost of the equipment. It only saves you the taxes on the cost. If you buy a $100,000 of equipment you don't get the whole amount back on your taxes. As a sole proprietorship ie. Schedule C here in the US, you can take a portion of the cost as a deduction from your income for a predetermined number of years. If you are in the 28% tax bracket, you will save about 28,000 in taxes over the depreciation life of the equipment. The other $72,000 comes out of your pocket.

On the other hand, if you are a true Corporation ( also known as a C Corp ) they are basically taxed at a rate of 50% of their profits. In this case your tax savings will be $50,000 over the depreciation life of the equipment, and your out of pocket cost is only $50,000. I can remember the company president of a firm I used to work for, griping about the $80,000 price tag for upgraded props for the company plane. After a minute, he realized that it really would only cost $40,000 for the new props as they would save the other half in taxes so we got the new props. 

S Corps and Partnerships file a separate tax return, but the income (or loss) transfers to your individual tax return and is taxed accordingly.
Rick


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## 352TrEeS (Sep 26, 2011)

^^ I'll keep that in mind... And thanks again to everyone here... AS is a great site that I'm glad I stumbled upon... And to all who recommended no partnership thank you. As We have made different arrangements so I will now be sole owner.


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## w1rej0 (Sep 26, 2011)

*Norway Pines*

I have three pines that have been in the ground just over a year - clay soil - but this year I have noticed that all three have pines are starting to turn yellow to brown on the needles. Two trees so far only on one side but the other tree two brances from the bottom all the way around the tree. Too much water, not enough, or other issues?? Royce


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## Jeffsaw (Sep 26, 2011)

*Norway Pines*

From my experience, these pines like a well-drained, sandy soil. The clay might not work for them.


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## stihl.logger (Sep 26, 2011)

w1rej0 said:


> I have three pines that have been in the ground just over a year - clay soil - but this year I have noticed that all three have pines are starting to turn yellow to brown on the needles. Two trees so far only on one side but the other tree two brances from the bottom all the way around the tree. Too much water, not enough, or other issues?? Royce


 
I am also with Jeffsaw on this, but i just cut these boogers for a livin, never paid attn to details, try posting this in maybe the 101 forum, might get some better results?


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## Doc Hickory (Oct 11, 2011)

The business end of your operation is the part almost everyone dislikes. It's more fun climbing trees than it is crunching numbers. Keep your business finances separate from your personal finances, separate checking accounts, everything. Learn to be meticulous about getting receipts for all supplies: rope, chainsaws and parts, fuel, oil, every single item you buy to operate your business. This includes envelopes, stamps, copier paper, ink for the copier, a million different things you have to purchase to keep your operation humming. Any permits, fees for business licenses, any regulatory expenses can also be deducted. Instead of keeping records of fuel/oil,and expenses for vehicles the tax authorities allow you take off X cents per mile if you use your personal vehicle for business. You'll just have to keep track of both to see which is most beneficial to you. Insurance on business vehicles, workman's comp payments, advertising expenses, referral fees, etc. are all expenses which lower your tax liability.
Your income is what you charge the customer for your services, the amount that comes in from sale of goods (if for instance you sell logs or firewood from the trees you remove. Sale of equipment you decide to liquidate is income, especially if you've depreciated that equipment. Set up a system to keep track of all these items, perhaps find someone to do this scutwork fror you. It is amazing how these small things in the end amount to a large amount, and that large amount (expenses) is subtracted from your income, which then gives you your net profit (or loss). Most new operations will see a net loss initially because start up expenses will exceed income for a time. It is also possible to carry a loss from one year over to the next year's net profit, thereby reducing that profit which causes you to pay less taxes. It's part of being in business, so learn to do it well. That'll keep you from getting those nastygrams from your new partner, the IRS-or if you do get the nastygram, you'll have the paperwork to back up your figures. Makes it a lot easier to sleep at night. Good luck!


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## Fairbanks Stump (Oct 12, 2011)

*Be the best!*



CNBTreeTrimming said:


> Go out of your way to do excellent work and the referrals will be all you need to keep you busy.


 
Further remember to charge for the use of the equipment even if you have free run of it. there is no since giving a service away just to get the work!


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## jefflovstrom (Oct 12, 2011)

352TrEeS said:


> ^^ haha I was thinking the same thing
> 
> Danger Tree- Wow lots of good information I think I read each of ur posts 10 times to make sure I got everything. Thanks again.


 
You  him-
Jeff


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## 352TrEeS (Oct 12, 2011)

jefflovstrom said:


> You  him-
> Jeff


 
Oh darn caught me...:help: HAHAHA


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## VA-Sawyer (Oct 12, 2011)

The first year that you take the deduction for vehicle expenses, you have to choose between mileage or actual expenses for that vehicle and stay with that choice in following years. You can't jump back and forth. There are also restrictions on fleets.
Rick


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## defensiblespace (Oct 13, 2011)

*Lots of good advice here*

I started off similar to you, as a partnership. I didn't have work comp because my partner and I did all the work. BUT, partnerships suck. Eventually you will have a disagreement and it may lead to one or the other buying out the other half. That's what happened to me and it was the best thing I ever did. My partner had no interest in spending money to invest in the business. I did. Now I am a sole prop with 3 employees. Employees make you money if you manage them correctly. Bottom line. You will get far more done having more employees. Now how do you get enough work to hire employees? That's the hard part, but with some dedication, it can be done. First, get a website. The phone book is a dinosaur. Nobody looks in it anymore. Websites are tricky. Get a crappy one and you look like a schmuck. Get a good one and you look professional. Also, make sure your site is optimized. A site is no good if nobody can find it. My gross sales quadrupled the year I got a website. For keeping track of your numbers, get Quickbooks Pro. It will pay for itself in the first year. When you do work, make sure you take the extra step. Keep a clean job site from start to finish. Make sure you and your employees wear ppe. If a customer is not happy, make them happy. Customer service is huge, especially in this crappy economy. If you have to give people their money back for something or repair something you screwed up, suck it up and do it. Last but not least, educate yourself in the business every chance you get. You can find a lot of great advice here, from the ISA, and TCIA. Another thing that helped me a ton is to recognize when a job you are looking to bid is out of your league. This can be a good learning opportunity if you embrace it. Hire a sub to do the portion you can't do and be there when they do it. Watch and learn from them. This was huge for me. Good luck with everything. 

Cease Fire Defensible Space and Tree Service - A Full Service Tree Care Company Serving Truckee and North Lake Tahoe


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## w1rej0 (Oct 27, 2011)

Jeffsaw said:


> From my experience, these pines like a well-drained, sandy soil. The clay might not work for them.


 
O.K., here is the low down and to some extent you are right. Because the Norway Spruce's were back filled with clay dirt it is hard for water to get to the roots since the rest of the yard is clay dirt as well. So, you have to get water to that root ball on a weekly basis until the roots grow and can sustain themselves as they do grow. What made matters worse for me is that my neighbor has a sprinkler system - the ground around the trees was saturated as it drained into my yard so I "thought" the trees had gotten too much water. Not the case - the water never got to the root ball so in essence I was stressing my trees by not getting water to the root ball even though it appeared they had gotten plenty of run off water from my neighbor. Thanks for your help.


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