Need Some Advice (long)

[lone_star_dsl]

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 steer for the winter as well.

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

[Believer45]

Possibly see if the landlord will agree to a shorter lease with a renewal option - say three months with a 9 month renewal. If needed, you can offer to take out a three month lease at the $700 and make the renewal $800 for the final 9 months to give him incentive to take your deal. I would hesitate to run month to month, especially with the rate he is offering. If you take it without a lease you can get out with a 30 day notice (or whatever you two agree to in writing) but if he gets a better tenant he can toss you under the same conditions.

There really is no good way to secure your position in the building without leaving you open to having it rented out from under you unless he is desperate to rent it.

[Believer45]

I certainly understand your situation as well, I am in similar straights except I do have some ground and can keep my business where it is with some expansion. Zoning will allow me to put up a shop building for my business (handyman / auto repair / etc) with nothing required except zoning and building permits for the structure. My expense would be the building and complicated ownership of the property that I will not go into makes it impossible for me to recover more than a very small portion of the cost at sale of the property.

[Going_Going_Gone]

It only takes one obnoxious neighbor to report you for running a business out of your home, especially if it is against the zoning rules. Growing a successful business means you eventually will have to move to an expanded work space. For now, just make sure that the hidden costs like insurance, utilities, security system (?) etc. won't make this an unaffordable option.

Q: Does the owner of the building have other properties that he already pays to have plowed and might he/she be interested in barter-type contract where you contract to plow those properties in lieu of partial payment of rent (at least for the winter months)? That way, if you actually end up plowing those properties often, you get a greater dollar amount credited against the rent than your actual expenses to do the plowing. On the other hand, if the snow season is light, the contracted reduction in your rental charges will help offset your lowered plowing revenues. Either way, the guy rents out his property and, even if you don't plow much snow for him; at least he'll be bringing in some rental money which sure beats the heck out of no rent payments; and you have lowered your expenses until your fabrication work picks back up again.

Good luck, these are tough times to strike out on your own but at least you'll control your own destiny.

[LMJD]

That's a tough one. I hate making those kinds of decisions. Sounded good up until your last paragraph. We didn't have much snowfall at all last year either so who knows? If the rental is by the month I think I'd go for it. Nothing like working in a nice roomy shop compared to your present situation. Plus you've got a gooseneck for moving all your tools, equipment, etc.

[drcampbell]

I suppose the first question to answer is whether you want to be self-employed or you're only doing so out of desperation, and whether you actually want to grow the business or keep it a home-based sideline.

Then I'd call the city (zoning board, code inspection, whatever) to make sure that you can open a welding business in that building, and even if it is permitted, what it'll cost you to bring the building up to spec. You might need a fire alarm, fire walls, built-in fire extinguishers, ...

Then there's all the little stuff which comes with stepping up from a casual business to a formal one - commercial insurance, business license, and I don't know what all else. The rent may be the least of your expenses.

Then there's the all-but-certain possibility that you'll be facing either increased rent or unplanned relocation whenever the economy picks back up.

[lone_star_dsl]

Originally Posted by drcampbell

I suppose the first question to answer is whether you want to be self-employed or you're only doing so out of desperation, and whether you actually want to grow the business or keep it a home-based sideline.

Then I'd call the city (zoning board, code inspection, whatever) to make sure that you can open a welding business in that building, and even if it is permitted, what it'll cost you to bring the building up to spec. You might need a fire alarm, fire walls, built-in fire extinguishers, ...

Then there's all the little stuff which comes with stepping up from a casual business to a formal one - commercial insurance, business license, and I don't know what all else. The rent may be the least of your expenses.

Then there's the all-but-certain possibility that you'll be facing either increased rent or unplanned relocation whenever the economy picks back up.

At first, I didnt want to be self employed, but now, I am loving it and hope I never have to work for a boss again. I really want to grow the business. I have my sights set on 10 employees. I currently have two.

As far as I know about the building, it is already up to fire code standards as there was a welder in the location prior to me.

As far as insurance goes, I have had a commercial policy since day one. Its too much risk to do any business without it. I have had my garage insured commercially and my insurance guy tells me that he just has to re-write it for the new location. I checked on a business license and the town wants $50 a year for it. I can handle that.

[SIC-E]

its like drcambell said, its up to what you want. or should i say, if you want it, its up to you! are you up to the grind to find the work?
if so, the rent is cheap, go for it! i'd plan for success myself and nail down a year lease at the $700/mnth before he changes his mind. he's not gonna get blood out of the proverbial turnip if you have to close the doors. you need an exit strategy but dont plan for failure. i too was an estimator, for large masonry contractors, and left it 10 years ago. not as driven as i prolly should be, gettin old. gave my best, hungry years to others' pockets. i wouldn't so much as look back for any amount of money. but its up to your personality. i've always leaned toward self direction, even as a youngin.
not getting rich but remember your background and that cost is more than employees hrly wage and the total of your material receipts. foster a friendly approachable personality, remember you dont make a profit until the guys DO the work (so keep them in mind as appropriate$) and maintain integrity and quality and be greatful for all that you receive...you'll enjoy your life and be fine. best of luck!

[checkthisout]

At 8 MPG in your plow trucks, you will probably save 10 bucks a day in fuel not having to drive so far to your job sites.

That's 3 hundies a month right there. Maybe you can also write-off the Lease fee as a business expense? Theres another 30 bucks a month.

Piece of mind not having all that crap around your house to trip over, being able to keep work at work etc.......

I bet you will wonder why you did it any other way to begin with.

[AK_Gandy]

You need a business plan.

Sit down and write out all of the drawbacks and all of the advantages.

Assign a monetary figure where applicable (+'s and -'s).

Don't forget to take into account those things that may not have a monetary impact but, have a quality of life impact.

The answer will be looking at you when you're done.

.

[444-4D]

Originally Posted by lone_star_dsl

What do you guys think?

Bottom line, rent the building.

[Kanman]

He asked if I could afford $700 and I said I would sleep on it.

That's dirt cheap for ANY type of commercial property. Just wait till you find out what internet and phone service costs for business LOL, its way higher than residential.