natenaaron Posted February 26, 2016 Share Posted February 26, 2016 We have had some beginning business questions lately that I am afraid show how little folks know. I mean no disrespect. Unless you went to college for a business degree and have an MBA there is a lot we as normal folks have no idea about and don't know where to begin. This leads to questions being asked here that are vague, and ultimately unanswerable. In the last 8 years I have learned a heck of a lot and baptism by fire would be a gentle description of what I went through. If it were not for a few really rotten people I would have given up. I hope my experience will help folks starting a business. Let me preface this by stating that I am not a professional blacksmith. I own a business that I was thrown into, that I knew nothing about, that was struggling, and this was all at the beginning of the recent global financial unpleasantness. I am a teacher. I had no plans to ever work outside education. I was on my way to a PhD and had my eyes set on being a superintendent. I never made it. I never stopped being a teacher but I had to take over my father-in-law's business after he suddenly passed away. The manager did his best to run the place into the ground by telling customers the new owners, me and my wife, did not want them as customers. Customers will believe what they are told. He tried to sell part of the property without our knowing and was a general jerk. He quit with no notice leaving us having to uproot our lives and move to where the business was. We were obviously glad he left after we found out what was going on. The business I took over was a boat repair and storage business. I knew nothing about boats besides they were supposed to float. Flash forward 8 years. We are still in business, and I am still teaching. We closed the repair business after three years and are busier than ever in the storage area. Am I rich, no. Am I in love with my business? God no. Do I wish everyday that it would blow up and I could collect the insurance money? Yep. Alas, we do what we have to do and I refuse to fail. Several folks said I would not last that first summer. Their words will keep me going until we sell this albatross. I'm a stubborn SOB. If I can stay in business with my attitude you surely can, because you want to be in your business. You need to do the work though. This is where you need to start. Make a PLAN. The Small Business Administration, is a great place to start, especially the section about business plans. Write one. Sit down at the computer or the table with a pencil and notebook and go through the process. The whole process. Not just the parts you think you need. Don't rush and don't try to do it in one sitting. It took me a month and my business was already running. This is where you think about your business. As an SBA counselor told me, if you are not willing to do the plan you are not willing to be in business. This plan will force you to think about all those things you folks are asking about: Cost, price, market, all of it. No one can answer these questions for you because they are not you, and are not in your market. Talk There are lots of people who work with the SBA and they are a wealth of information. It does not matter that they are not blacksmiths. There are fundamentals to running a business that are the same in every business. I did not talk to anyone who had a boat business. Use these people. They like talking about business. Take notes, ask questions, clarify what you do not understand, If you don't like what one person says go talk to another. Treat them with respect they DO know more than you. I know someone who decided he knew more than the people he talked to. He is no longer in business. Total failure. Lost everything including his house, and ultimately his family. If there is an SBA class being held in your area ATTEND IT! Be a good student, sit at the front, take notes and do your homework. I wish there was one here when I going through this. The Tax Man is not on your side. Under the table is not an option. File your business with the state. invest in a book keeping program and hire an accountant. Mine is worth everything I pay him and more Suck it up You cannot neglect any part of your business just because it is not fun, or it is boring, or you do not see the purpose, and my favorite excuse "I don't have time". That one has bit me in the butt way to often. Your business is a living breathing entity that will consume a lot more of your time than you want it to, especially in the beginning. Closing shop at 5:00pm just means you have a couple hours more work nurturing the business, instead of the customer. Insurance is necessary if you value your quality of life Finally Employees are a pain in the *** I hope this helps people and steers folks to the right place to begin building their business properly. It is tough, a lot of it sucks, but, as much as I dislike my business, there are rewarding moments If this is not appropriate please delete Anyone want to buy a boat storage business? Quote Link to comment Share on other sites More sharing options...
ThomasPowers Posted February 26, 2016 Share Posted February 26, 2016 When I was apprenticed to a swordmaker he told me that some years his total profit was in how he depreciated his tools. If you are not nodding your head and thinking, yup I can see how that would help---you are not up on the business side of your business. Quote Link to comment Share on other sites More sharing options...
natenaaron Posted February 26, 2016 Author Share Posted February 26, 2016 Dude, I LOVE depreciation. Depreciation on the buildings is Awesome. Quote Link to comment Share on other sites More sharing options...
Frosty Posted February 27, 2016 Share Posted February 27, 2016 Dad used to take me to bankruptcy auctions of metal spinning businesses who weren't prepared to consider methods of benefiting from a depreciation year as part of the business plan. Frosty The Lucky. Quote Link to comment Share on other sites More sharing options...
natenaaron Posted February 27, 2016 Author Share Posted February 27, 2016 This is all stuff no one knows about. In the unexperienced mind you hang out the shingle or set up the website and that is all you need to do. My first two years as an unprepared business owner just about killed me. Imagine my shock when the tax man said all of my inventory, sitting on the shelf, not making any money, needed to have taxes paid on it. Quote Link to comment Share on other sites More sharing options...
JHCC Posted February 27, 2016 Share Posted February 27, 2016 I'm reminded of something a successful entrepreneur I know said about his first business: "We called the Small Business Administration and said we needed legal and accounting advice. The guy there said, 'Hire a lawyer and an accountant.' Best advice we ever got." Quote Link to comment Share on other sites More sharing options...
notownkid Posted February 27, 2016 Share Posted February 27, 2016 18 minutes ago, JHCC said: , 'Hire a lawyer and an accountant.' Best advice we ever got." Yup and be sure the accountant isn't a creative one. Keep the books and returns 100% correct saves a lot of headaches. Quote Link to comment Share on other sites More sharing options...
rockstar.esq Posted March 1, 2016 Share Posted March 1, 2016 Nateaaron, There's a lot of good advice in your post. I think an awful lot of business plans are made on supposition rather than research. The point you made about how each plan is unique to the business is particularly insightful. There's no universal format or even a universal set of requirements to have a complete business plan. It's kind of like a resume in that it communicates more than the sum of it's parts to people with applicable experience. Your suggestion of working with the SBA to get input and advice on your business plan is spot-on. It's been my experience that few experienced business people really understand how to successfully launch a start-up. Lots of folks are successful when the economy is booming. It's a whole different struggle to get a business off the ground when times are hard. I've talked to second generation entrepreneurs who can't get traction in a down market because they're following their parents boom-time market advice. I encounter people who haven't got the most basic clue about how their target market is doing. Unless there are layoffs in their line of work, most folks assume everything is fine. Non-political trade publications and media are very reluctant to admit when things are down because bad news doesn't sell. I see articles all the time with headlines boasting some predicted increase in this or that part of the market. Several paragraphs in, they're explaining how bad the market really was not too long ago. If you went back in their archives to that down period, all you'd find is an article just like today's. Accurate market information is almost always old news, being used to prop up a current opinion. If trends don't support the current opinion, the trends won't be spelled out for you. As for employee's, I have tremendous sympathy for your struggle. I think business textbooks should have a different definition for management. I suggest, Management: The repetitive process of getting people to do their jobs, without hitting them! Quote Link to comment Share on other sites More sharing options...
Buzzkill Posted March 1, 2016 Share Posted March 1, 2016 10 minutes ago, rockstar.esq said: As for employee's, I have tremendous sympathy for your struggle. I think business textbooks should have a different definition for management. I suggest, Management: The repetitive process of getting people to do their jobs, without hitting them! If it weren't for customers and employees running a business would be fun. One of my dad's favorite sayings, passed on from an unknown source, is "People will do what you inspect, not what you expect." Quote Link to comment Share on other sites More sharing options...
JHCC Posted March 1, 2016 Share Posted March 1, 2016 1 minute ago, Buzzkill said: One of my dad's favorite sayings, passed on from an unknown source, is "People will do what you inspect, not what you expect." Or to quote Peter Drucker, "That which is not measured will not improve." Quote Link to comment Share on other sites More sharing options...
notownkid Posted March 2, 2016 Share Posted March 2, 2016 15 hours ago, rockstar.esq said: I've talked to second generation entrepreneurs who can't get traction in a down market because they're following their parents boom-time market advice. Bingo! Business and the economy is like a Big Pogo stick that has gone A Mock and you are trying to stay on. If your training is/was from people who were riding the boom you may not see the bust until too late. If the business was going great and the owners were able to do it in 40-50 hrs a week they better be ready and able to step up to 80-100 hrs a week and take over jobs they had hired done before to cut expenses. The owner needs to be looking far beyond his own frt door as to what is going on at his customers & suppliers locations esp. if it is a ways away. Planning is only as good as the people doing the plans, if the boat/business gets a hole in it there needs to be a plan to find the hole, get material to patch it, do the patching and start the pumps, too often now it is "Whoa is Me" who put the hole in the boat/business, I'm going to get wet and who is going to fix it, where is the life boat? Having a Magic Wand helps as well preferably with good batteries as mine have died and they are a special size. My Dad's saying was "It costs money to go to school & school keeps every day" Quote Link to comment Share on other sites More sharing options...
natenaaron Posted March 2, 2016 Author Share Posted March 2, 2016 17 hours ago, rockstar.esq said: Non-political trade publications and media are very reluctant to admit when things are down because bad news doesn't sell. I see articles all the time with headlines boasting some predicted increase in this or that part of the market. Several paragraphs in, they're explaining how bad the market really was not too long ago. If you went back in their archives to that down period, all you'd find is an article just like today's. Accurate market information is almost always old news, being used to prop up a current opinion. If trends don't support the current opinion, the trends won't be spelled out for you. As for employee's, I have tremendous sympathy for your struggle. I think business textbooks should have a different definition for management. I suggest, Management: The repetitive process of getting people to do their jobs, without hitting them! I was very impressed with the way the Marine industry trade publication, I used to get, handled the down turn. Yes they tried to put a happy face on it but they reported on the real struggles people were going through. They also showcased business that were making it and what they were doing. I learned quite a bit. We shut down the Marine Service section of the business because I could not find employees who would take pride in their work. and it was dragging us down. As a teacher I was not there all the time and our shop managers were as bad as the mechanics. I had no idea it was acceptable to call in "Too drunk to come to work". Every business person I talked to here said it was very common. The price of being in a place with a limited workforce, and an even more limited skilled workforce. My favorite call in will always be "I'll be really late because I'm ******* my old lady". Something to be said for honesty I guess. Quote Link to comment Share on other sites More sharing options...
JHCC Posted March 2, 2016 Share Posted March 2, 2016 Just now, natenaaron said: I had no idea it was acceptable to call in "Too drunk to come to work". Every business person I talked to here said it was very common. The price of being in a place with a limited workforce, and an even more limited skilled workforce. My favorite call in will always be "I'll be really late because I'm ******* my old lady". Something to be said for honesty I guess. The Truth will set you free, but sometimes a lie will save your butt. Quote Link to comment Share on other sites More sharing options...
rockstar.esq Posted March 2, 2016 Share Posted March 2, 2016 Nateaaron, I'm glad to hear there's a trade publication out there that's actually reporting the truth on market conditions. When you mentioned they shared what was working for some folks, a recent publication came to mind. The article was about how this local General Contractor was riding high on strong growth. I've been bidding to and working for that GC for five years now so it was interesting to correlate my experience against what the article had to say. The GC in the article had a three year span where they couldn't win a profitable job to save their lives. Staff were quitting or getting laid off, it was bleak times. Somehow they managed to land an exclusive contract to build a couple of strip malls for a pair of developers. That work lasted precisely one and three-quarter years which is where the article framed their noteworthy growth. I'll conceded that it's super impressive sounding to say you increased your workforce by 90%. However they lost half their workforce every fiscal quarter for three years, until they were maybe 5% of their pre-decline headcount. The 90% growth from that point actually means they're still a shadow of their former operation. Taking that and acknowledging that all their recovery came from a couple of developers, you really have a situation where two customers provided a little breathing room for a failing contractor. The article was actually published four months after their 1-3/4 years of good times. So right when last years 4th quarter earnings were in the toilet for everyone, this article is claiming this GC has the solution. The truth is that both developers were halting new starts because they had crushing vacancy rates in their newly built strip-malls. Some new spaces were into their 18th month of continuous vacancy! Developers were literally telling us they were stalling projects because they couldn't afford to heat the vacant spaces. Every GC I spoke to said all their 4th quarter work was canceled or postponed, including the GC from the article. There's been a little up-tick in 1st quarter, mostly for the summer-rush. But the fact remains, the strip-mall segment isn't going to come back until vacancies go down. That article's advice was already provably false by the publishing date. The GC in that article was back to chasing ugly stuff for insincere clients, I haven't seen a good job invite from them in almost a year. Hopefully they'll find a way to keep busy, but I'm fairly certain that they'll have to change their "solution" to do so. Quote Link to comment Share on other sites More sharing options...
natenaaron Posted March 3, 2016 Author Share Posted March 3, 2016 Good points. I had several GCs as customers when I took over. They road the boom well. Big houses, big trucks, even bigger boats. None of them made it out anywhere near successful. I talked to one a few weeks ago and he said he was probably 10 percent of where he was. He said it was rough winter though. I don't think the recreational marine industry had any illusions about success during that time. Those portraits of success never said things were great. Down sizing seemed to be the way it was handled. Unfortunately workers lost their jobs but a business owner's first responsibility is the business. That is what feeds their families. On a side note I found it interesting that during this time shops around here saw an increase in very high end boats coming in for repairs and looking for high end storage. Lake Powell also saw increase in the number of million dollar boats. Not every one suffered Quote Link to comment Share on other sites More sharing options...
ThomasPowers Posted March 3, 2016 Share Posted March 3, 2016 I grew up hearing boom/bust stories from the oilpatch; when I was employed there I saved like heck and lived cheap during the boom and bought equipment and smithing stuff at all the bankruptcy auctions during the bust. Had a lot of coworkers with the big house and fast cars who lost it all later. Quote Link to comment Share on other sites More sharing options...
rockstar.esq Posted March 3, 2016 Share Posted March 3, 2016 Nateaaron, that's interesting that there was an uptick in high end boat storage and repair when the construction market was down. I know two fairly well-off people who were shopping for a new car and both of them discovered that there really isn't a used car market for unusual (but modern) sports cars. One bought a Tesla and the other bought some kind of fire-breathing Mercedes roadster (it has the master mechanics signature cast into the engine block). New, these cars are really expensive but used, neither one cost as much as a new Ford Mustang! Apparently the folks who can afford a new model, aren't interested in buying second-hand and they definitely don't care about depreciation. They're just specialized enough that there's limited appeal to wealthy buyers who could spend a little more to have exactly what they wanted. I'm sure the insurance, maintenance and repair costs scare off a lot of buyers so the dealers cut the price until the cars start selling. I really don't know anything about the boat market, but I'm curious if there are similarities. Quote Link to comment Share on other sites More sharing options...
natenaaron Posted March 29, 2016 Author Share Posted March 29, 2016 Sounds like there are quite a few similarities. Boats depreciate much faster than cars, and those with money buy new. Quote Link to comment Share on other sites More sharing options...
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