Starting a business

[Khancart]

I am new to business ownership but not to business itself. I am 23 years old and am wondering what the basics are? Any helpful knowledge I would love. I would like it if people wouldn't say "it's too hard" "don't try it". I'm also new to forums in general. So please keep that in mind as well. All help would be appreciated.

 

[Shenandoah]

Starting a business is a lot like climbing a ladder. You don't necessarily want to jump to the top rung when using the lower rungs works to your advantage. You do, however, want to know what the next rung up entails as you will need a firm grasp of that rung to move up.

One of the first decisions you may make is to determine if you want to be a administrator or an operator. One gets to sit in an office and grow fat and the other gets to live outside, stay in shape, and get the chicks...

What form of business person do you see yourself as?

 

[Khancart]

I see myself as a do it all. I want a small business...me and my wife are in school right now learning heavy equipment. We graduate in November and we are learning everyday. The purpose of my thread is to get as much info as possible before I go to the banks. I learn things everyday at school but nothin from the business side. I want a pickup and a trailer. I have been eyeballing a Chevy 3500 with a dump bed and a 10 ton eager beaver. I want it to be just me and her. I don't want it to expand unless necessary, but am open to the idea. I think I have a great vision in mind. I also have been in sales for about a decade now. I understand the fundamentals of business just not from the ownership side. I am trying to figure out what I need to do from getting the funds (seeing a how I am broke and have no credit....i know it might be impossible to get a loan) but yea, I wanna learn tips and tricks from everywhere to getting a business license to how to get clients and everything in between.

 

[grandpa]

Well, you better have a good relationship with a banker. My suggestion would be to pick a bank, don't hop from one bank looking for the greatest deal. The chief lending officer of your bank is the person to get to know on a first hand basis. A good banker will help you with decisions and also assist you in writing your business plan. A good banker really come's into play after your somewhat established, ie, bonding, equipment aquistion, and the like.

I guess you never said exactly what field of business your leaning towards so without knowing that I couldn't responsibly give you much more advise...and my advise is strictly my own opinion's on the subject, but on the other side it's the only job I've ever had so I must not have made too many bad decision's..... in a row anyways.....lol..... Grandpa

 

[Khancart]

I wanna do any kid of business I can handle. I want me and my wife to start renting a skid steer and a mini excavator...and do any kind of work we can with those. Demo...septic...water and gas lines...stump removal...preparing driveways for concrete jobs and then actually pour and finish the concrete. I'd like a loan that can cover my truck and trailer and six months of ongoing expenses. I'm beginning to wonder if its even possible considering I have nothing to offer the bank

 

[grandpa]

You never know if its possible or not until you try. Go to your bank and set a meeting.... there free, lol... then go from there.

 

[Khancart]

Why would a bank give me 75k with bad credit and no collateral

 

[Shenandoah]

Couple of thoughts...first, put the horse before the cart. If you approach a banker and say, "Look Mr. Banker, I'm broke, I have no credit, but I have this great idea about getting into debt and I'd like to use your money to try it out..." you're going to be wasting everyone's time. Unless you have photographs of that banker doing something he wouldn't want his mother to find out about you're not going to get a loan.

Here's a better plan...take your new found knowledge and put it to work getting PRACTICAL experience. You're going to need a track record in the real world and a good way to get that is by working in the field of your choice for someone who is a pro and can show you the REAL ins and outs of the business. In other words, the doors you should be knocking on won't be mahogany.

I know you don't want to hear that, but the truth is unless you can pay the cost to be the boss having your own business will remain a fantasy until such time as you can actually start, maintain, and grow a business.

Anytime a banker or other business folks hear a wannabe business owner start off the conversation with anything other than "I've got more customers than I can handle working on the side..." the conversation will not lead to them loaning you money. Unless you have overwhelming collateral (which means you aren't broke), getting someone else to pay the cost of your dream is simply another dream, as well.

And just so you don't feel like the Lone Ranger, there are thousands of guys just like you with ambitions who eventually learn to refocus their energies in the right direction and become monster successes. That 'success' thing is still in your future as long as you strive daily to make it happen, btw. I'm not writing this to discourage you, only to give you a nudge in a more productive direction.

 

[Khancart]

So would you think putting some advertising out there and rent my equipment and have it delivered to the job site as well would be a better idea Shenandoah? That would mean I'd need little to none start up and little to none ongoing expenses? Is that a little bit better of a idea to run with?

 

[Shenandoah]

Customers are the life blood of any business. Your entire focus needs to be on producing results that brings money in the door. Anything along the lines of what you just proposed is light years ahead of where you started this thread.

 

[grandpa]

Well you never said you had "bad credit" in the beginning... now you get to be held accountable for letting you credit turn bad.

 

[Khancart]

I know it's my fault for my credit. I'm just wanting input on whether or not its even reachable to open my own business without working for another heavy equipment company first. And ideas on how to go about it.

 

[Shenandoah]

Let me ask you question..."How many mistakes are you going to make?" I've asked this question to almost everyone I've ever hired over the last 35+ years. They always give me that WTF? look.

Then I tell them they're going to make "all of them". The reason I say that is because good judgment comes from experience, and experience comes from bad judgment. So even the best of the bunch has a lifetime of screw-ups that led them to be leaders in their field.

Now here's another question... "Do you want to make those first massive mistakes on your dime or someone else's?" I know that sounds strange, but the reality is a newbie in business who takes on the financial burden of paying for all their mistakes when they first start out is at a considerable disadvantage to someone who made their initial blunders while associated (working for) someone who could bail them out at a fraction of the cost through experience and staying power. When you're working along side someone who knows the ropes life is a lot easier in most trades. When you're by yourself and something drastic goes wrong you won't have the resources to cover your butt and that's when things permanently unwind for a lot of entrepreneurs. Many of them dig such a deep hole they can never recover. Don't be one of those guys...

 

[Khancart]

I see where your coming from there. But if I make a lifetime of mistakes working FOR someone wouldn't that lead me to the unemployment line?

 

[Shenandoah]

I see where your coming from there. But if I make a lifetime of mistakes working FOR someone wouldn't that lead me to the unemployment line?

The trick is to learn from your early mistakes so that doesn't happen. And you won't be making a 'lifetime's' worth of mistakes working for someone else, what you'll be doing is making a 'lifeline's" worth of mistakes. In other words, you'll be using your boss'/mentor's experience as a springboard to growth.

 

[Khancart]

I understand. Maybe I'm just expecting to much or something.

 

[Shenandoah]

Ok, let's start planning for the future. Job #1 - rebuild your credit.

The cost of your insurance is tied to your credit rating. Unless you actively work at rebuilding your credit rating the cost of insurance may be so high you won't be able to afford it, assuming you can even get it in the first place. And having a business where 'stuff happens' without insurance to cover those pesky D'oh! moments is suicidal to your future.

Job #2 - work on Job #1. I can't stress this enough.

 

[CM1995]

Welcome to the Forums Khancart!:drinkup

You've gotten some really good advice in this thread.

The last thing you want to do starting out is be saddled with debt you have to pay. It doesn't matter if the work is not there, the bank will send you a monthly "love note" and expect it to be paid with no excuses.

First of all you need to do some local market research if you want to start your own business. Find out what aspects of the construction market are flooded and where there is a demand. Talk to local GC's and ask them what subs they are lacking in, you might be surprised by what they tell you.

In my area, there is no money in renting a skid steer or mini-ex and working them. There are plenty of very experienced operators/business people out there that are running skids and minis that are paid for - already they have an advantage over you that makes it very hard to compete. In this economy I know of many people that had large companies when times were good that are pulling an old skid steer around doing hourly work.

You stated that ultimately you would like to get into placing and finishing concrete, that may be where you need to start. If I wasn't in the site work business I would be in the concrete business. The upfront capital to get into basic flatwork is much, much less than an excavation business. Learn the ropes of how to form, pour and finish drives and slabs and progress from there. If you need any equipment then rental fits nicely into this type of business. There is good money (relatively speaking in this economy ) in concrete, especially commercial and industrial.

Just my $.02 and where I would be looking if I was just starting out - of course this is in retrospect using the knowledge I have gained over 20 years in the construction business.

Tell us a little more about yourself and your capabilities.

 

[Khancart]

I have a business degree so I understand big business and the money aspect. I just don't understand the small details that go into starting SMALL business. I can do anything and everything when it comes to concrete. Have been doing it for a while. Why do people have a advantage when they own equipment? Wouldn't rental be cheaper? No maintence...no monthly payment. Just figure the rental cost into the estimate you give your customer...or at least that's what I'd think would be cheaper. I can do a good bit of stuff with a skid and excavator....reg or mini. I'm not the greatest of bulldozers. But I'm really good at shooting grade with a laser. I've put in a few ponds helping my neighbor run a backhoe. I don't have many connects tho. Just don't know who to talk to or how to go about it.

 

[HammerCon]

The reason you will not be able to compete with companies who have there equipment paid for and you renting is because they charge a foolish rate which would not be substainable(if they had a payment) otherwise.basically they are working for less than you can rent the equipment for.you could be competitive renting if you line up a good amount of work and then rent the equipment and go straight from job to job,reason being (I am using local rental rates)a mini ex (8500 lbs. machine) rents for $219 for 24 hrs. 8 hrs. meter time,or for $700 for 7 days 40 hrs. meter time. And if you can line up for a month solid you can cut rental cost again by roughly 30%.Best of luck.It can be done but you will need enough capital for insurance,fuel,business license,contractors license,first several rental fees,any tools needed you dont already have(shovels ,rakes,laser level,etc.etc.).It would be beneficial to learn on the other mans dime but if you just half to do it buckle down and dig hard.