By Tom Grandy, Founder
“Look before you leap” is a pretty common phrase. Translated, it means count the cost before moving forward. Here is a quick question. “What do most new trades company owners do before they start their own company?” Obviously, within the trades industry at least, most current company owners used to be a tech working for someone else. Many reading this article will make that transition, from tech to entrepreneur, over the next several years. Below are just a few things to think about BEFORE you make that final decision.
- Business Expenses – It costs a lot of money to run a company. Those costs are called business expenses or overhead. Basic costs include vehicle loans, insurance (liability, Workers’ Compensation, health, etc.) office expenses, office staff, and vehicle gas and maintenance, just to list a few.
- Hours Worked – As a technician, most work 40+ hours a week and some on-call time. As an owner, you best be prepared to physically work 60+ hours a week. Mentally, there will be no breaks. You will be thinking about the business 24/7/365. Vacations and family time will be limited at best, and non-existent for most, for at least the first few years.
- Cash Flow – It takes a lot of “cash” to run a business. You will need cash for payroll, to buy parts and equipment, to fund inventory, and yes, receivables. Wakeup call! Everyone will not pay on time but you will still need to meet payroll and pay your suppliers. How much cash does the average company typically start off with? Normally, somewhere between zero and being in debt for the initial needed vehicle.
The above items are literally just the tip of the iceberg. You will be responsible for taxes (company matching taxes, employee withholding taxes and your personal taxes), hiring and firing, keeping customers happy, and creating sales to keep the techs busy, just to mention a few. That new boat you envisioned at the weekend cabin at the lake may come but likely it won’t happen nearly as quickly as you might have imagined. Oh, one last thing to keep in the back of your mind. Statistically, 50% of all new business fail the first year!
With all that said, being an entrepreneur has lots of benefits. The point is simple. Count the cost before you move forward. The grass may seem greener on the other side of the road…but it still needs to be mowed.
As a new entrepreneur you will also need to create company policies and convey them to your employees. The good news is that this month’s Website Special features our industry acclaimed, Company Policy Manual. It is very specific in terms of company policies. The great news in that it comes as a Microsoft Word document which allows the user to add, change, modify or delete anything they wish. This customizable Company Policy Manual is normally $134.95 but this month you can purchase it for only $99.95. Order today!
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