Steps to making to bus. succesful

[howel07264]

davey, invest in advertising first. THINK CASH FLOW. you said you hope to make profit in 6 months, better make that from day 1! never try to be lowest bidder. HAD YOU RATHER DO TWICE THE JOBS FOR HALF THE PRICE OR HALF THE JOBS FOR TWICE THE PRICE? I KNOW WHAT I WOULD CHOOSE. dont take 100k lump sum,leads to bad investment decisions. have your parents get 100k line of credit to be used as needed for equipment purchases as your buss. grows.think long and hard before having a partner and dont even consider unless he has 100k to put up too!

 

[howel07264]

sorry for the double post ,thought i had hit wrong key...reposted

 

[Kneejerk Bombas]

You're nuts to borrow money from your parents to start a business.
Now if your parents are very well off, and thinking of the loan as more of a gift, then I'd say go ahead. Anytime you borrow money from, or loan it to, family or good friends, then think of it as gift. If your parents can't afford it to be a gift, come up with a new plan.
I would say most of the successful tree companies I know about, were started from scratch, profits re-invested, and credit slowly built. By slowly building a company, you learn how do deal with the operation's scale at a slowly increasing pace.
You already have a stump grinding business, so you have saws, trucks, and other tools. You climb, so I assume you have basic climbing and rigging gear. All you really need at this point is a chipper and chip truck, maybe just a chip box on an existing truck. I've worked for start up companies that chipped into non-dumping, home made, plywood boxes. After a few weeks of that, you'll end up using the profits for an old, used, 5 ton dump, then in time a newer dump.
I've also run old used chippers, they get the job done and can be had for a couple, two, three thousand dollars. They can also be updated as the profits roll in.
A lot of tree companies don't own bucket trucks. If you need one, rent it. If there's not enough profit in a job to cover rental, bid the bucket work higher.

 

[xander9727]

Being the lowest bidder is bad! I got a call from a large property management company to bid a clearance prune. I bid the job at $1250. They called back and said the other 2 bids were $800 and $950. They said they wanted to use me but could pay no more than $950. I knew that if I did the work for less than $1125 I would be losing money (think big picture profit not for the day). Work is slowing down and I could use the cash flow but I know that if I work at or below the profit margin I'm really losing money (won't have money for equipment replacement, unexpected repairs, new gear purchases, etc.). I told them I could not lower my price that I would lose money. They said OK and asked me to bid on 3 removals. I did the bid and called them with the price. He told me to schedule the first job for $1250 and that he would let me know about the other job today. He said he didn't feel comfortable with the other company. I got the work with the original price, I would have done it for a loss had I lowered my price. Now the lesson here is to know what you have to charge.......down to the penny. Use your formula every time. You will have the most competative price you can give and still make the NECESSARY amount of profit to continue to thrive and grow. If you guess you will either be too low or high the majority of the time. Too low means a loss, too high and you risk being labeled a gouger or missing out on a lot of work. You must know your cost before you can bid anything.
Charles Vander Kooi puts on a very good estimating workshop. It cost about $1500 for the three day but it is worth 10 times that. I strongly suggest that all business owners attend this or a similar one no matter where you are in business. It is essential that you develop a costing plan and a budget to ensure success and manage growth.

 

[daveyclimber]

Keep it coming guys , lots of interesting and valid points . As i stated in an earlier post he is not going to really be a partner , more along the lines as my employee and partner in the actual labor aspect . Not his money , So I will make the calls ,my parents will have input in how the money is best distributed . I like the idea of a credit line and will see what I can do to find out more about that. My Equipment plans are fairly straight forward , Forestry unit , chipper , and a decent 3/4 or 1 ton pickup preferably with a flat bed . Maybe one more saw and rope , have 6 good saws already and 75% of the climbing and rigging gear already . My purchases will be budget minded however I will be spending a considerable amount to make sure I have good equipment and not something I will have to repeatedly fix over and over . A lift is a very valuable piece of equipment in my area , only a half dozen tree services have one in a three county radius and there are about 3 dozen tree services most are pickup truck trimmers . I also know how to bid , I bid fair and I bid profitable . In my county there is only two tree service that i consider a real competion , I currently work for one and the other does terrible work and he is the lowballer . I would consider keeping the job that i currently have while starting up, however I know I will get fired when the boss finds this out. He will be no competion as he will have to close shop or his job capacity will be seriously reduced as he will not find another capable employee as myself

 

[BlueRidgeMark]

You're nuts to borrow money from your parents to start a business.
Now if your parents are very well off, and thinking of the loan as more of a gift, then I'd say go ahead. Anytime you borrow money from, or loan it to, family or good friends, then think of it as gift. If your parents can't afford it to be a gift, come up with a new plan.

That's very good advice. The best way to wreck a friendship or a family is to start loaning money.

If you absolutely MUST do this, do it in a completely businesslike fashion. Written contract, everything spelled out.

But only AFTER making sure that MENTALLY your parents are counting this as a gift. The ATTITUDE says "gift", the contract should say "hard-hearted, cold-blooded business".

The best way to keep friendships friendly is to keep business businesslike.

 

[daveyclimber]

If you absolutely MUST do this, do it in a completely businesslike fashion. Written contract, everything spelled out.


The best way to keep friendships friendly is to keep business businesslike.[/QUOTE]


I agree and plan to consult an attorney

 

[xander9727]

That's a good idea. Let them know they are investing in a venture that may or may not work. That way they are prepared for possible failure but can always say........"I knew you could do it" when you succeed.

 

[TimberMcPherson]

Match the gear to the work, not the work to match the gear. when things get quiet (and things always do sometime) that extra outgoing $ on paying for that shiny new bit of gear may be the difference between treading water and talking to the big fish.

Ive worked in a few industrys as well as having my own tree co now, guys that pop up with flash gear tend to dissappear as impressively as there over stretched finances sink them like a stone.

Only you can make the judgement on how strong the market is where you are, dont make it recklessly

 

[BlueRidgeMark]

I agree and plan to consult an attorney

Oh, that's good clean fun! Let me toss in a few:


Q: What do you call 25 attorneys sky-diving?

A: Skeet.



Q: What do you call 658 lawyers up to their necks in cement?

A: Not enough cement!



Q: What do you call....



What?


Oh, you said CONsult.

My bad. Nevermind....









I still think you're headed for a train wreck....

 

[darkstar]

?

Man with all the equipment you have, i just dont see why you need to go buy anything on loan right now. You can make the cash for a great truck and chipper in less than a year by just using what you have now .
Why not just go out and find enough jobs and buy you what you want ? If you really look hard for jobs i think you could raise close to 7000- 10,000 a month but you are gonna have to really bust your butt finding them . That is perhaps the only easy thing aboout owning and starting a tree buisness . You dont have to have hardly any cash on hand to quickly be on your way .
It would be eaiser to make the cash with a new truck and chipper but you might like it better knowing you are actually owning and earning your stuff as you go . Most guys ive known only borrowed money when they were finally losing so much work they have to buy more equipment to get the jobs done . This, ive seen mostly when large ROW contracts were involved .
With what youve got right now [the knowledge to take down trees] and the tools , by the end of next month you could already own a darn nice chipper . Another month and youve got a pretty decent chip truck . Think about it . All you really need is jobs .. get the jobs and get them done anyway you can, youll very soon have the cash. Thats when its kinda tuff cause its your hard earned cash and youll be buying huge chunks of metal ie chipper etc. . Then youll need more jobs ...and on an on an on .....seriously just give yourself one month to find and accopmplish as many jobs as you can ..... Its fun

 

[Kneejerk Bombas]

That's very good advice. The best way to wreck a friendship or a family is to start loaning money.

If you absolutely MUST do this, do it in a completely businesslike fashion. Written contract, everything spelled out.

But only AFTER making sure that MENTALLY your parents are counting this as a gift. The ATTITUDE says "gift", the contract should say "hard-hearted, cold-blooded business".

The best way to keep friendships friendly is to keep business businesslike.

You seem to be contradicting yourself here, pretend like it's a gift but have a lawyer draw up a contract.
This first clause of the contract should be what happens when (if) the loan defaults. It should read something like, "If I mess up, you won't be getting your money back."
Then have a seperate little line where they have to initial it, so they understand there is a good chance they won't be getting the money back.

 

[BlueRidgeMark]

I'm talking about two different things. The ATTITUDE on the part of the parents ought to be, "Kiss this money goodbye. It's a gift and it's not coming back."

So when it doesn't, no hard feelings. They've already let go of it.

On HIS part, it's a cold-blooded business deal. Everything documented, every angle covered, just as with any business deal. This reduces misunderstandings to a minimum, and gives a basis for reaching common ground if there IS a misunderstanding.


So the parents sign the papers with the ATTITUDE that they are GIVING this money, and Davey signs the papers with the ATTITUDE that this is a business loan.

In BOTH cases, they are signing business documents. Everything spelled out. Nothing left to assumption.

What usually happens in these situation is the opposite. Nothing is put in writing. Children treat it as a gift - after all, it's from Mom & Dad, right? Parents think it's a loan.

The result is ugly.

 

[ABOVE & BEYOND]

DaveyClimber, I too am starting my own business in the northeast and taking out a loan for a little more than what you plan to take out. All of these people have made some great suggestions to both you and I. As you can see, I do not disagree with taking out a loan, but I do disagree with taking a loan from family members. That is a sure way to end a relationship if your business does not survive. Also, it is absolutely critical that you develop a business plan and model to determine your breakeven points and revenue margin. If you do this properly, you will not have to worry about miss quoting and losing money. Taking in $800 a day may sound great, but it will never cover your loan or future expensese. Like I said, build a model and work your model. For the last several months, I have been crunching numbers and models to start my business. I have been in touch with accountants that have access to other tree service's income statements, (all of the info. was confidential so I have no clue who the companies were) which have helped me tremdously in terms of expense planning and business forecasting. When you build your model, always lean towards the high side of expenses because no matter how much you work the info. you will miss some expenses.
My only other advice is this......if you are taking out a loan to buy the right equipment, make sure you market yourself as a professional with the right equipment. In other words, don't buy expensive equipment and run the business like a "one truck wonder". Good luck to you and thank you to all who have had some insight in this thread.

Geoff

 

[okietreedude1]

Davey,,

I too have recently started out on my own. I came from a co. that had multiple buckets, chippers, stumpers etc. Since I just have my truck and trailer and a sm stumper, work has taken a lot longer. It is really hard to resist the temptation to go buy that chip truck and chipper, but im trying to wait till spring when business picks back up. Its hard too since I KNOW how much faster work goes w/ the right equip.

I noticed someone said buying a chipper first, well hogwash, buy the truck first w/o a top. at least youll have a truck that can dump brush untill the chipper comes in.

As for the loan, Ive considered going and getting one too. But Id go to a bank instead. Ive had too much experience loaning money to 'relatives' and never seeing a dime of it back. Maybe use them as a co-signer if you need the financial backing.

My thanks too for all the positive imput from others.

 

[Koa Man]

If you already have at least a 3/4 ton truck, you might consider getting a dump trailer if you decide to start real small to test the waters. Even a 6X10 trailer with 5-6 ft. high sides will hold a considerable amount of brush if you mulch it up with a chain saw. If you can get a bigger trailer, even better. You pick up bed can carry all the gear you need. This way, for an investment of about $6000, you have something to start with and that will also be easy to sell if you decide it won't work out after a couple of months.

 

[a_lopa]

making money is a good way to start

 

[Pollock777]

Daveyclimber I Just work on weekends for other tree services mostly just 1 the 1 I helped my old boss start. But I do alot of grinding and I started with a 1 ton chevy truck and a homelite XL2,C-72,and a 2900farmboss. Now I own 4grinders 2 chippers and 18 chain saws plus 1ton dully dump and all of my gear and I just work on weekends. Just work hard and be far and the WORK WILL find YOU. P.S. I had to do this Because of my ex-wife N.J.sucks when it comes to Giving the ex-wife everything they get everything!!!

 

[daveyclimber]

Thanks Guys , You are a wealth of knowledge. How large are the areas that some of you cover .I am planning of covering three counties , I'd sayabout 60sq miles , the town I live in is about 13,500 people with two larger 75,000ish towns thirty miles to either side. Of course I will try to stay as local as I can but I feel I will need to broaden my area for a while

 

[BlueRidgeMark]

How large are the areas that some of you cover .I am planning of covering three counties , I'd sayabout 60sq miles , the town I live in is about 13,500 people with two larger 75,000ish towns thirty miles to either side. Of course I will try to stay as local as I can but I feel I will need to broaden my area for a while

Davey, take a look at TreeCo's comments on this, starting with this post.



Follow it through - there's some food for thought there.



Oh, did I mention that you should start small and NOT borrow from your parents?