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

 

[BIG JOE]

From $1100 to $700 (?) sounds like the Landlord is a person you could work with. Maybe talk with him/her and see if you could work out a rental agreement from, say.. October through March (?) with a renewal agreement option ? Give it a 1 Winter, 6 month shot ?

Goes without saying but, What ever you deside.. keep yer Family interests.. First & Formost.

Mul it around for a week or so. TIME fixes things ?

Joe

 

[NevrKnow]

Is the landlord local? Maybe they could use some of your skills? Fix something here or there for a deep discount. Might be willing to help you out on reducing rent even further, then when ( and I hope it does ) you get more steady business you could bump up the rent payments a little more. Make it a lifelong thing. Maybe sound strange but it worked for me. My landlord basically carried me for 3 months. But he liked my idea and I helped him out. In the end he wound up getting more rent from me than the original contract called for. I just considered it goodwill for helping me out. Worked well for us. FWIW.

 

[Scooter]

I am currently looking for a shop, as well. Run a plan, and estimate your revenues on a monthly basis, based on your regular income. Figure out all your associated costs for the business, then take out 20%. 10% for savings and 10% as the cost of being a human being, or charity. See how much you have left over to play with and put into the shop, and that should tell you if you can justify it.

 

[dpantazis]

i think that its a good step up.

recheck your math though- rent + INSURANCE! there are write offs to take too.

there is a quality of life upgrade too- nothing like going home from work every day. and the postive effects of your neighbors.

who does the landlord's plowing? i would not trade rent, but get a contract with him and trade checks. makes the book keeping easier.

 

[lone_star_dsl]

Is the landlord local? Maybe they could use some of your skills? Fix something here or there for a deep discount. Might be willing to help you out on reducing rent even further, then when ( and I hope it does ) you get more steady business you could bump up the rent payments a little more. Make it a lifelong thing. Maybe sound strange but it worked for me. My landlord basically carried me for 3 months. But he liked my idea and I helped him out. In the end he wound up getting more rent from me than the original contract called for. I just considered it goodwill for helping me out. Worked well for us. FWIW.

The plan we talked about for a 1 year lease was to start the rent at $700 for the first 6 months then go to $800 for the remainder. After the first year, he said we could take a look and negotiate.

i think that its a good step up.

recheck your math though- rent + INSURANCE! there are write offs to take too.

there is a quality of life upgrade too- nothing like going home from work every day. and the postive effects of your neighbors.

who does the landlord's plowing? i would not trade rent, but get a contract with him and trade checks. makes the book keeping easier.

As far as insurance goes, I have had a commercial policy since day one. My garage is insured under a commercial policy right now and my insurance guy said he would just have to re-write the papers for the new address. For my vehicles, trailers and 2 million in general liability, I pay $160 per month.

I just called the landlord and we worked a deal for snow removal. He wants an invoice from me when I plow and he will write a check. On the first of the month, he expects a check from me for rent. That decision really makes a difference.

As far as working out of the house is concerned, I dont think I have been less productive in my life. It is so easy to come inside for lunch and find yourself planted in the recliner for 2 hours. There truly is nothing like getting up and leaving for work.