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Need Some Advice (long)

Discussion in 'Business Fundamentals' started by cold_and_tired, Sep 16, 2009.

  1. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    Well guys, for the past few months, I have been considering moving the business into a shop.

    Here is a little history on myself and the business.

    I worked as an estimator for an excavating company until I was laid off in June of 2008. Once that happened, I started a small welding business out of my garage. I focused mainly on building window well covers. I found myself branching out to landscaping to make ends meet. I have made a living doing both but I wont be a millionaire anytime soon. This is going to be my 4th season plowing snow, I started doing it to make ends meet in the winter while I was working as an estimator.

    As of 3:00 today, I have 17 contracts for snow removal. 13 of them are gas stations and the other 4 are all commercial buildings.

    Right now, my business is being ran out of my garage. We do all vehicle maintenance in the driveway and I do all of the welding inside. This wouldnt bother me too much except for the fact that I have neighbors 10 feet to the left and right of me. They are all good friends and very understanding but I'm sure I am getting on their nerves. Not to mention the fact that I run a big risk of burning down the house.

    I currently have two plow trucks and a gooseneck trailer, I am leasing a skid for the winter.

    Here is where I need some advice. I ran across a shop for rent today and stopped in to find out how much the rent was. The owner wanted $1,100 a month. I told him that was out of my price range. He asked if I could afford $700 and I said I would sleep on it.

    After I crunched some numbers, I came to the conclusion that $700 is only 10 hrs of plow time in one truck, and that is per month.

    I am 99.9% certain that I could afford the rent but I just need that extra little bit of reassurance to push me past my hesitation.

    This shop is located in the heart of my contracts. Currently, live 20 miles away from them. I want to use the shop to store all of my equipment and salt and have a warm dry place to work on equipment when it breaks. It will also be used as my welding shop in the summer and a place to store my landscaping tools and materials. The shop also has a yard big enough to fit my trailer and a few other things in. If push came to shove, I guess I could put a cot in there and get a few hours sleep during a big event.

    On the other hand, if this winter is as slow as last winter, I will be up the creek without a paddle. As much as I would desperately like to move into the shop, the worry of not knowing if I will survive the season is scaring the heck out of me.

    What do you guys think?

    Any advice or opinions would be appreciated.

    Thanks
     
  2. Camden

    Camden PlowSite Fanatic
    Messages: 6,598

    Would you say that you're able to differentiate between a "want" and a "need"? It sounds to me like this shop is something you want and instead of something you need.

    And who cares what your neighbors think of you working out of your home? I'm sure my neighbors hate some of the things I do but until they start paying my mortgage they need to keep their opinions to themselves.

    If I was in your situation I'd pass.
     
  3. JohnnyRoyale

    JohnnyRoyale 2000 Club Member
    Messages: 2,935

    Could you share the location with someone else in your situation?
     
  4. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    You've gotten some great advise.
    I was in your position 5 years ago, business was established & growing, unfortunatly my neighbor (1 out of however many) was not as understanding & took it upon herself to watch, photograph, etc my every move, call the town code enforcement, etc. I had two choices move, or like your looking at buy/rent a shop.
    We (wife & I) looked at both options, almost bought a shop in the "ghetto" that would've been $ 80,000 + $ 8,000/yr in taxes. We ended up moving instead, we found a 250 acre farm that had been sold off, except the house, 36X80 pole barn (200 amp service, con. floor, 1/3 heated/insulated, water & toilet), with 9 acres remaining, no neighbors (in middle of 250 acres of fields & orchard), better schools once kids started (which they now have). It was a tough decision because other than that one neighbor I considered a couple of neighbors good friends, we were very close to wifes work, my accounts, kids friends. However I didn't want to live with someone watching my every move. In the end it has worked out very well for us.
    Since we moved the econmy craped out, which hit the landscape side of my business very hard, but snow has continued to grow. Because of that decision to move vs. buy a shop I will be able to go snow only very soon, if we had gone the other way I would've been a slave to that shop.
    As a bonus, when we sold our house to an immigrant family that have let the extrior deterioate, bushes have gone years between trimmings, neighbors now have rodent, problems, took an hatchet & gridled two 75 ft trees, etc.
     
  5. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    It's unbiased opinions like yours that I need to hear. I am really trying to differentiate between need and want. My arguments for "need" are: I will have my tools and a place to work on equipment. If I break down in my current situation, a very large portion of my tools will be 20 miles away. I have very limited area in which to store anything. The shop will alleviate that problem. I have been slowly but surely increasing my production of my window well covers. The garage seems like it is getting very small. Trying to move around 20' pieces of angle iron and 6'X10' sheets of expanded metal in there is getting harder and harder.

    While the problem is not with the neighbors, the HOA has sent me a few letters kindly reminding that home based businesses are a no-no. I have also been fined for having my older plow truck on the street for too long. I am keeping my trailer at a friend of my fathers and he keeps asking when I am going to move it. I am trying to be a good neighbor by doing a majority of my welding and grinding with the garage door down. I have spent a lot of money insulating my garage to reduce noise and also building a fume extraction system to get the welding fumes and smoke inconspicuosly out of the garage.

    I spent the day racking my brain trying to think of guys that I could call that could help share the cost with me. I have two guys that are interested but I never got a solid answer.
     
  6. dfdsuperduty

    dfdsuperduty Senior Member
    Messages: 597

    if you were in NW Indiana i would split it with ya.... how much are the fines and what is the end results for gross negligence with the truck eventually the fines will either get larger or problem will escalate to court cost etc....
     
  7. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    I think you have to decide if you want to move, but it's a big step.
    Couple things I think that you aren't thinking about.

    1. all partnerships end badly, do not go in with someone.
    2. You aren't thinking about double utilities. Now you'll need another phone (unless you're a cell only person), trash pickup, electric, gas, water, sewer, insurance coverage, etc. All this is going to add significantly to the cost.
    3. I really like the other guys' post. Move your house to something that supports your business. (that's what we have now til we get significantly bigger). a 1 acre plot easily supports a good sized business without any impact on neighbors and they are usually zoned that way. In the long run this is probably much cheaper.
    4. I think you need to decide what you are going to do. Welding? landscaping? snow? window well covers? what is it that gives you your competitive advantage? The others are just side shows and soon you'll realize you aren't really making money at some things, only others. And those are the things you should concentrate on. Once you know the answer to that question, then you'll know where to look for a shop and what types of things you need. (do you need a storefront or retail access for your welding for example)
     
  8. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    Thanks for the posts everyone, you are really helping to get my thoughts straight on this one.
     
  9. 2COR517

    2COR517 PlowSite Fanatic
    Messages: 7,115

    Is the shop you are considering renting in a good commercial/retail type location? Is there opportunity to really grow the welding business? Maybe a snow plow dealership? I am serious about this. While $700 is nothing to sneeze at, it's pretty reasonable. Does the property owner want a full year lease? If you're willing to gamble, maybe he is too.

    Sounds like the workshop at home situation is really going to explode on you soon. You might find six months rent is less than attorney fees.

    Good luck, keep us posted.
     
  10. terrapro

    terrapro PlowSite Veteran
    from MI
    Messages: 3,879

    Shop rent plus your current mortage payment in my opinion would completely justify moving to a different location. Plus your wife being mad because your ALWAYS at the shop is a big drag, trust me on that one :rolleyes:
     
  11. Top Dog

    Top Dog Member
    Messages: 83

    i hope things have worked out but as i read your post made me think why not offer to look at the owners current landscaping contract and snow contract and offer your services in exchange or even a deeper discount off the rent that would be a win win

    JUST A THOUGHT
     
  12. PPMan

    PPMan Member
    from Va.
    Messages: 48

    For $700/mth and a secure yard? Sounds like a killer deal, you wouldn't find something like that so cheap here. I ended up buying a shop and it's a big tamale to pay but it's worth it in every way to have a legal spot and be able to lock everything up and a place to work on eqpt. inside and and and ........ $700.mth, I wish, I wouldn't have bought, I'd be a renter forever.
     
  13. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    I have talked to the landlord a few times and he has reduced the term to 9 months at $700. We struck a deal that allows me to move snow for him so that should knock a few hundred off in the winter.

    He doesnt have any landscaping that needs done right now but he says next summer is a whole new deal.

    The other thing that is relevant which I didnt think about is the fact that the shop is located on the main drag in a town of 20,000. I asked about the signage out front and the landlord said that if I provide the sign he will put it up. That might be some of the best free advertising I have ever had.

    I am going to sleep on it through the weekend and will hopefully be giving and answer to him on Monday.

    Thanks for all of the input gents.
     
  14. Top Dog

    Top Dog Member
    Messages: 83


    sign the deal thats a home run
     
  15. BigLou80

    BigLou80 Senior Member
    Messages: 558

    With the HOA sending you letters it sounds like what you need/want doesnt matter. It sounds like you HAVE to do some thing. $700/month with a 9 month lease is a whole lot cheaper then legal fees and ill will with your neighbors.

    In the long run I would look at moving
     
  16. BMWSTUD25

    BMWSTUD25 Senior Member
    Messages: 630

    9 months at 700 isnt too bad. I think I'd go for it and just be conservative with your other spending for the first few months until you know how its gonna effect you. Best of luck and I hope you post some pics of the new shop when you move in.
     
  17. hunting white

    hunting white Junior Member
    Messages: 16

    Bottom line.

    I rent storage at a local yard for 8 truck and two trailers for less than $200 a month. It is fenced and secured. The guy who owns the shop allows me to work on my stuff in one of his bay, in exchange for plowing the lot with in 36 hours of the end of the storm. I do the front on my way out

    Looking at Denver Craigslist, There seems to be similar deals out there(don't know where you are in CO) however a little leg work could save you 3-400. If you have to have office space it become a no brainier. Remember Real estate is in the hole right now. I own a couple business right now and just moved my office. The commercial Space I am renting I got for less than 1/2 the asking price. I am alone in a 45k square foot building. In 9 months no one else has looked at the other 30k worth of space. It is a Nicer building, Every time the owner stops in he offers to sell the whole thing for 20k less than the time before.....

    Lastly $6300 is a large additional expense. Looking at your list of accounts, I would have concerns. Ask your self is it worth 20,25,30,35,40% of my business to have this spot.
    One question you state that $700 is only 7 hours of work for one truck. Don't mean to be rude but that means you are making between 140 and 150 an hour with that truck right? Other wise if you are at 100 an hour you are looking at closer to 10-12 hours to pay. Remember if it is slow you also have the payment on the skid....
     
  18. 2COR517

    2COR517 PlowSite Fanatic
    Messages: 7,115

    Does that mean no one else can post here now?
     
  19. snowman55

    snowman55 PlowSite.com Addict
    Messages: 1,071

    if you plan on continuing and growing the bus i say go for it this is a tough decision that you will look back on and wonder how you could have not done it. pluses include:
    1) no employees at your house - after you fire some loser do you want him to know where your wife and kids live?
    2) following your assoc codes - be a good neighbor
    3) professionalism- people view you as a business when your located in a comm building
    4) you get your garage back for the wife car and your other sh!t
    5) plus all the other things you mentioned
     
  20. Nascar24

    Nascar24 Senior Member
    Messages: 645

    Hi

    After owning a business with partners for nearly 15 years, I'd recommend going it alone. It is hard to keep a long term friend if he's your partner, there is always some differences of opinion, or worse, no one is willing to say there is to keep harmony, it only gets worse!

    At $700 per month it doesn't sound bad ,especially if it has a good location with a lot of traffic. It sounds like you have a pretty diverse approach to your business, which is better than putting everything into one basket. With a welding background , maybe you might want to do what I do, refirb plows in the off season. "Build them and they will come" lol. Over the past three years I had several requests to ship plows out to Colorado, problem was costs was prohibitive, so there has to be a market? If there aren't enough used ones around maybe get a plow line, have a small store with high demand parts, sell a few plow packages and take trades on older rebuild able units. I have been able to work out of my 26x 30 garage, but I send all my dirty work out , sand blasting, painting and plow pump rebuilds. I never do outside repairs. I own every plow on site, that way no one can say I'm doing repairs , I say they are mine and that ends it all. If I start working on other people's plows then I am providing a business service, so I stick to buy, refirb and sell so I don't deal with local regulations or BS. I keep very busy during the summer, chasing, buying and rebuilding, which will keep going until early December.From late August to mid January they roll out, one sometimes two at a time. Believe me I couldn't survive if this was my only gig, just something to keep the wolves away from my door and have a small amount left over to enjoy with my kids. I think I keep doing it to actually save my marriage, I'm not chasing woman , wasting what little money I have at the local watering hole, or sitting with the DW listening to complaints. She knows where I am, knows what I'm doing and she likes that up not up here behind 24-7, lol