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starting a business

mattyc
mattyc Member Posts: 20
Good morning, I've been seriously contemplating starting my own plumbing and heating business for many years now. Working for a company and doing side work all night and weekend long have started taking a toll on me and my family. I have some money stored away in savings for emergencies, but still, the thought of quitting my job scares the crap out of me. I have fairly steady work flow now and I know I could be much busier if I had the time not working my day job. How have any of you business owners dealt with the first months of opening up shop. I would like to hear the success stories and even if there were any stories that didn't work out? Thanks for the help

Comments

  • PC7060
    PC7060 Member Posts: 274
    edited January 17
    I’m not in the same business but can offer one piece of advice.  If you want to be a owner operator that stays hand on, find a niche area to specialize in (preferably one that is technically complex).
    If you are offering the same services as all of your competitors your only  discriminator is price.  And that is a race to the bottom. 
    The folks on this site are great examples of individuals with deep knowledge of complex systems. Their skills cannot be easily replaced and certainly not by competitors offering 50% off coupons. 
    mattycZmanEdTheHeaterMangennady
  • Zman
    Zman Member Posts: 6,466
    Go on the store here and pick up a few books. I enjoyed Ellen Rohr's "How much should I charge" and Ray book on selling service.
    When you are starting out, it is tempting to try to wear all the hats to "save money". My suggestion would be to hire a book keeper, likely on a subcontractor basis right out of the gate. A good bookkeeper can handle all your bills and invoices and let you know how your business is doing real time.
    I wholeheartedly agree with @PC7060, when your business looks like everyone else's, folks try to to beat you up on price. Do something to set yourself apart, go after the jobs where the owner has gone through several contractors with no luck and are frustrated. That owner will pay you top dollar to remove the pain...
    "If you can't explain it simply, you don't understand it well enough"
    Albert Einstein
    mattyc
  • GW
    GW Member Posts: 4,019
    Fixing stuff is tangible. Business acumen isn’t. If the thought scares you, it may not be time. I had little to no pressure to succeed in my early years, hence I took the (very) slow road to climb the proverbial ladder. Most of the lessons come by trial and error. If my 2021 self told my 1989 self what to do, the 1989 self would have said “you’re nuts, beat it old guy”  
    Best of luck if you make the break! 
    Gary Wilson
    Wilson Services, Inc
    Northampton, MA
    [email protected]
    STEVEusaPAZman
  • Tom_133
    Tom_133 Member Posts: 722
    If I could know then what I know now I am honestly not sure I would make the leap again. I hear you with the side work, its exhausting burning the candle at both ends. For me I should've done a lot more prioritizing of my outgoing expenses back then and worked a bit less. But, I was hungry and young and trying to stop me would've been tough. My success came from having 1 really good customer that assured me that with just with their service calls I could pay my bills. Then word of mouth grew the business.
    I could not agree more with getting a bookkeeper early, and knowing your costs. The freedom of self employment is somewhat real, though it can also be a hindrance for those who are not disciplined enough to stay after it!

    I wish you success (unless you are in my backyard- J/K)

    Tom
    Tom
    Montpelier Vt
    Zmanluketheplumber
  • clammy
    clammy Member Posts: 2,637
    The only thing I would comment on is most of the guys who I ve known who work on the side is exactly that on the side making cash . unless your charging real rates and are carrying the necessary Workman comp If not it’s Still just side work . The most common thing I ve seen is that when side jobber goes in businesses is he finds out he s got to charge way more to keep his head above water and pay all those business expensive .your general contractors and customers are paying those side job rates and cash I highly doubt they’ll pay the real rates and you will be working for nothing ,the contractor will find some one else to work the side .why do you think they had a side jobber doing it in the first place ? . I ve seen this many times over there way busy but in reality making no money just paying supply house bills and business expenses and paying them selfs peanuts and there side jobbers he pays in cash and takes the income beating in the end having nothing . Working for yourself as everything has it ups and down and you ride the waves and go w the flow and do what you want when you want . You also have the opportunity to work as much as you want or as little as you want which means make as much as you want or maybe just as much as you need . It s a different path which one takes and you take it alone , remember that . The most important is to find what in the business you do that you are both great at and enjoy doing and find satisfaction in if so then stick to that and become the best at that ,the rest will fall in place and be patient . That s the hardest part
    Peace and good luck clammy
    R.A. Calmbacher L.L.C. HVAC
    NJ Master HVAC Lic.
    Mahwah, NJ
    Specializing in steam and hydronic heating
    ethicalpaul
  • HomerJSmith
    HomerJSmith Member Posts: 1,199
    edited January 17
    Are you a masochist? Plan to work 70+ hrs a week. Look at your competition. You have to offer something that your competition doesn't and advertise the "hell" out of it.

    You would be entering an economy that's in a depression, not the best time to start a business. Your competition is well established, an advantage for them, not for you. The best time to start a business is in a booming economy. Do things seem to be booming now? I didn't think so.

    You probably have debts that need to be paid, are you going to be able to pay them? Most businesses operate at a loss for a while, eventually establishing themselves. Are you prepared for that?

    Working for a business, you don't see the quagmire that the owner goes thru trying to make payroll and keeping the business afloat and possibly late hrs and sleepless nites.
    The great 1800 French economist, Frédéric Bastiat's essay on "What is Seen and What is Not Seen" reminds me what a worker sees and what he does not see as he just picks up his pay check.

    In the "30", the era of the "Great Depression", having a job that paid a living wage was the most significant goal of 25% of the population that moved across the nation on freight trains entertaining the hope for something better. It was a terrible time, forgotten by most.

    Today, called by many, we are living thru "The Greater Depression" that the "30's" will pale in comparison brought on by our misadventures, bad decisions and a diminishing energy-resource base, a future that may be difficult to bear and test the mettle of our family, friends and neighbors. I pray not, but I fear the die is cast.

    This is something that you need to discuss with your family, most earnestly. They are riding on your coat tails and dependent on you, an awesome responsibility.

    I tell my daughters how important it is to have a job, in these times, even tho it may not be enjoyable as they would like. I tell them, "that's why they call it work". The temporal discomfort you feel in your present job may be out weighed by future benefits of being employed.

    I don't want to rain on your parade, I wish you good luck with your decision.

  • pecmsg
    pecmsg Member Posts: 1,911
    not all great tech make good business owners. 

    Find a mentor to help you. Older owner that’s been there done that. 

    One thing you “Will “ loose is time with the family 
    HomerJSmith
  • Larry Weingarten
    Larry Weingarten Member Posts: 2,087
    Hi, I've been self employed since my early twenties and now my hair is white. My short list is:
    Know a little of everything, but specialize. This way you can refer work you don't want to your "competition" and they ultimately will send you your kind of work.
    Get so good at your work that others can confidently refer you. I had a guy call me up after the gas company, water company and his plumber told him to call me.
    Know the business and money sides of things. SCORE https://www.score.org/ could be a good step for guidance, in addition to Ellen Rohr's books.
    Know how you can help people out of their problems. Have that as an elevator speech. When you can fix their problems, your phone will ring. Also hand out cards! New customers get a few cards .. for them and their friends.
    Figure out "passive income". For me, that meant fixing up wrecked homes and renting them out. Selling them after some years creates chunks of cash. Mobile homes could be a relatively inexpensive way to get into passive income.
    I think with the experience here on "The Wall" many books on success in business could be written.

    Yours, Larry
    GroundUpSTEVEusaPAMike_Sheppard
  • hot_rod
    hot_rod Member Posts: 14,561
    Maybe start out with how much do you want to make a year. Assume 150K before taxes divided by the number of hours you want to work, call it 1500 hours per year $150,000/1500 hours
    (30 hours per week billable, a big number to hit) so you need 100 bucks per hour to cover your salary. Now add truck, insurance, fuel, etc, etc.
    I'd suggest you end up around $150- 200 bucks per hour for a one man shop. $300.00/ hr. isn't unheard of these days. I would not consider the change unless you make it worth your while $$wise. It's no fun being self employed and broke, or working for minimum wages.

    Start with a business plan, doesn't cost much more than your time to crunch some numbers. A plug for my wife's books :) Find them in the bookstore here at heatinghelp.

    https://ellenrohr.com/the-bare-bones-biz-plan/
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
    Zmanrick in AlaskaMacro
  • GroundUp
    GroundUp Member Posts: 1,139
    I've been a pipefitter for someone else since right out of high school in 2007. The pay as an apprentice sucked, so there were side jobs of many sorts for a long time but the true passion was in-floor radiant which I did a lot of with minimal overhead and without any sort of protection. In 2016 I took out an LLC and started a licensed/bonded/insured hydronics business specializing in in-floor radiant, which started as the occasional Saturday but has grown into every Saturday while still working my 40 hour pipefitter gig and turning down more work than I take by sending it to other local contractors. Now, my pipefitter union wage is one of the highest in the country and has yielded very comfortable incomes but the past couple years my "side business" has actually made more than my fulltime gig by working 1-2 days a week versus 5. There is no doubt in my mind that I'd be able to make a killing by taking off on my own, but that's just not my thing. I get burned out having to organize everything every day and keep everything intact so I don't look like every other contractor around here that takes 3 days to do an 8 hour job due to being unprepared. I like to show up with everything I need, bang it out, and go home. Scheduling things in advance like I do now allows me to have everything I need in hand right away so there's no wasted trips to the hardware store, no jury-rigging parts to make what I have work, it's just done and done right. The ability to show up and work my 40 with a guaranteed check every week and turning the phone off every afternoon at quitting time means a lot more to me than the extra money I could be making on my own. The fringe benefits and free truck they buy me are worth a lot as well. Obviously this is not the case for everybody, so only you can say what's best for you, but being on your own definitely has a LOT of hidden costs (not always financial) and those need to be considered and weighed with your decision. As I grow older and more things start to hurt every day, the more I see small businesses being intentionally destroyed by our government, the less interested I become in being completely on my own.

    As Larry mentioned above, passive income is definitely something to look into as well. Working with your hands is never going to make anybody truly wealthy on its own without rolling that money into a passive stream to let your money make you money instead of your blood and sweat. A good financial advisor is worth its weight in gold and may be able to shed some light on the subject. Personally, I took the real estate route and made enough profit doing a couple flips in my early years to fund a pretty decent rental portfolio now which yields enough profit to buy another house every year with essentially zero out of pocket. 25-35% ROI is very common and will allow a very comfortable retirement at 40 years old with very little actual work. Passive income builds whether you're on the job or asleep, that's the beauty of it.
    HomerJSmithLarry Weingarten
  • EBEBRATT-Ed
    EBEBRATT-Ed Member Posts: 8,581
    I agree with all the above excellent advise:

    1. Know you costs and charge enough
    2. Find a niche. What @Steamhead has done is a perfect example

    If you think your working too many hours you may not want to try it

    You won't collect a dime until you send out the bills.
    Your supply house has to be paid
    Taxes, liability insurance, workmen's comp, payroll,auto insurance and auto repairs The list goes on forever.

    I did it for 7 years until a recession hit. I got out of it and never looked back. Paid all my bills and didn't owe anyone a dime.

    It's not an easy road and if you try to compete with everyone else in town you will have to have a low price to get started. That get's you no where. The world if full of people who have tried to work faster and better for less money....you can't

    A niche is the only way. You have to have something people wan't and Have to have.
    PC7060
  • HomerJSmith
    HomerJSmith Member Posts: 1,199
    edited January 18
    "...the thought of quitting my job scares the crap out of me."

    mattyc, I don't know if you're a praying man, but it might be a good time to entertain the idea.

    Major decisions should be prayed upon. Nobody told me that when I was a dumb kid. Hell, I wouldn't have recognized a major decision, then, if it smacked me in the face. But, I'm two days older than Moses and now realize how subtle major decisions sometimes are and you only recognized them in reflection and hindsight.

    Nobody knows you better than yourself, your limitations, talents, perseverance, and other personality traits that would lead you to success. I wish the best for you.

  • Zman
    Zman Member Posts: 6,466
    edited January 18
    I am going to respectfully disagree with @HomerJSmith.

    First, we are not presently in a depression or recession. I personally think we will be soon, but it sure has not happened yet.
    If we were in a recession, as long as you don't take on massive debt to start a business, I think down time can be a good time to go out on your own. Just ask Bill Gates.

    For years, we considered my wife's job to to be the safe recession proof job. She was laid off a year ago and my business just had the strongest year ever. Go figure!

    As long as you are comfortable selling yourself and can get someone to help with the books, go for it.

    I do remember what a crusty old timer (he was probably younger than I am now :/ )said when I started my first business 24 years ago , "you're always working for someone.."
    He was absolutely right, however, now I choose who I work for and have no one to blame but myself when it goes poorly.
    "If you can't explain it simply, you don't understand it well enough"
    Albert Einstein
    Larry WeingartenRobert_25
  • HomerJSmith
    HomerJSmith Member Posts: 1,199
    edited January 18
    Zman, "your(sic) always working for someone.." so true. Some say you are working for yourself, others, that you're working for your customers. While both are true, I believe one is truly working for one's self. To be the best that you can be, to grow knowledgeably and morally in your relationship with others, to be helpful not hurtful, to become a better person. A difficult struggle, indeed.

    Zman, in 1929, people were dancing in the street. The stock market was at an all time high. Shoeshine boys were giving stock advice. To quote another in such situations,
    "It was the best of times, it was the worst of times." It wasn't until 1933, the bottom of the depression, that people were fully aware of the troubling times that befell them.

    Such is the case, now. But one sees what one sees or wants to see, one believe what one wants to believe. I'm guilty of that, too. But, I spend a good part of my day for the last 50 yrs trying to understand economics and looking at economic trends. As Alan says, "Often wrong, but never in doubt." Sometimes I feel that way.

    Someone once said, "A recession is when my neighbor loses his job, a depression is when I lose my job." What ever one calls it, it's a tragedy for someone.

    Boy, do I hope I'm wrong.

    P.S. Bill Gates had his start in really good times in a new evolving field, information sourcing.




  • Zman
    Zman Member Posts: 6,466
    @HomerJSmith
    I don't disagree with your concerns about the economy and unfortunately, the Fed has already played all of it's cards.
    Kind of like buying Dutch tulips in 1637.
    https://en.wikipedia.org/wiki/Tulip_mania
    "If you can't explain it simply, you don't understand it well enough"
    Albert Einstein
  • EdTheHeaterMan
    EdTheHeaterMan Member Posts: 1,832
    edited January 18
    I attended a business college and proposed to my then future wife. Quit the family business and took a job selling lift insurance. A year later I quit the insurance business a week before the wedding. Came home from the honeymoon unemployed. Took a job working for a plumber who did not appreciate my talents. Then went on unemployment and had some free time to start installing and servicing heaters.  

    After 6 weeks of unemployment I had too much work to waste a day standing in the line at the unemployment office. Yea in the olden days we would stand in line at the unemployment office to pick up our check. Then I was dumb enough to tell the government clerk that it would take 6 weeks to get my new business up and running.  I was released from showing up in person and the sent me 6 more checks by mail.  

    After I was discharged from the government payroll I was successful in paying my bills and also working crazy hours for several years.  After my second child was born, it became apparent that my competitive hourly rate was not going to cut it.  I have a story I tell about Flat Rate pricing but let’s just say that it was a deciding factor in me staying in business for myself.  I was able to charge what I’m really worth and the customers don’t question my invoice because they agreed to the price before I start the work.  

    My specialty was oil heat with a side of Hydronics. My competition was interested in Gas Warm Air and Air Conditioning and I got them to refer their oil heat calls to me and I gave them installs I did not want.  I also helped them with complicated and difficult service call issues. I also had several fuel oil dealers that recommended me to their customers.   I was the go to guy for a lot of my friendly competitors.  

    I spent too much time at work and not enough time with the family.  Now I’m a widower with a disability that prevents me from working and retired with enough to get by on.  Think hard about this choice. 

    Yours truly,
    Mr.Ed

    PS 
    Im spending lots of time with my grandson 
    Edward Young
    Retired HVAC Contractor from So. Jersey Shore.
    Cleaned & services first oil heating system at age 16
    ZmanLarry WeingartenGroundUpluketheplumber
  • HomerJSmith
    HomerJSmith Member Posts: 1,199
    edited January 18
    Ed, thank you for your story, sorry about you losing your helpmate. I appreciate personal stories about other people's struggles. It makes my struggles seem less important.

    Zman, Ahh, the tulip bulb mania. It has been said, "People go mad in crowds and regain their sanity one by one." ...and then one day it's over, just like that. When I think the Fed has played all its cards, they pull another one out of their sleeve. The next one may be the Joker.

    As Al Holtmann said to me as a young lad, "Man's capacity for stupidity is unlimited." and I say if that's true, there is always someone standing next to you that would be willing to take advantage of it.
  • hot_rod
    hot_rod Member Posts: 14,561
    Get paid at time of service, you don't want to be in the finance business. It's rare to find anyone that doesn't have a credit card.
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
    PC7060
  • GW
    GW Member Posts: 4,019
    edited January 18
    hot_rod said:
    Get paid at time of service, you don't want to be in the finance business. It's rare to find anyone that doesn't have a credit card.


    no truer words ever spoken, I wager half of the trades guys out there are too embarrassed to ask for money at the end of the service call or install. Somebody prove me wrong.😃
    Gary Wilson
    Wilson Services, Inc
    Northampton, MA
    [email protected]
    GroundUpluketheplumber
  • GroundUp
    GroundUp Member Posts: 1,139
    GW said:


    hot_rod said:

    Get paid at time of service, you don't want to be in the finance business. It's rare to find anyone that doesn't have a credit card.



    no truer words ever spoken, I wager half of the trades guys out there are too embarrassed to ask for money at the end of the service call or install. Somebody prove me wrong.😃

    This tends to land me in some hot water on occasion. Most I will tell that I aim to be paid in full on the day of completion, but that slips the discussion sometimes. Some will dispute that theory upfront before the work is started, and for that I'm gracious because it seems most of those folks have no intention of paying at all so it's easy to pass on the job. Some think I'm kidding though, and I will stand in their kitchen and watch them eat dinner if that's what it takes to get paid before I leave. Some will conveniently "step out for a minute" when they see I'm 5 minutes from done, thinking I'll send them a bill they don't have to pay. Kindness is all too often portrayed as weakness and while I really hate to be "that guy", I will not be taken advantage of anymore. Sometimes reasonable folks are driven to do unreasonable things. Just yesterday I blocked someone's driveway for almost 2 hours to collect on a bill I sent in July, knowing he had to be somewhere with the vehicle I had blocked in. Of course he acted like he'd never gotten any of the 7 invoices I'd sent, even though I can clearly see when they're read online and 2 of which were sent certified mail. Some people...

    luketheplumber
  • GW
    GW Member Posts: 4,019
    @GroundUp yes now we’re taking! 
    Gary Wilson
    Wilson Services, Inc
    Northampton, MA
    [email protected]
    luketheplumber
  • gennady
    gennady Member Posts: 807
    edited January 20
    Everyone is scared of the unknown. Don't worry. Follow your instincts. Read Ellen Rohr. Great reading. Read some other books on the subject as well. Find your niche. Set your prices. Be ready to sacrifices. If you persist, you will succeed. And remember, frustration is the key to success.
    Larry Weingarten
  • Andruid_2
    Andruid_2 Member Posts: 41
    In two weeks, it will have been one year since I gave two weeks notice at the company I used to work for, doing hydronic heat. Eleven years ago is when I first considered going out on my own, but things didn't really fall into place then, so I backed off. Some would say I was "quitting". I would say I was paying attention. A few more times in the following years, I explored the idea, and then backed off. Then, about a year and a half ago when I explored the idea again, everything just 'clicked'...fell right into place. It turns out, I wasn't in charge of when the right timing was, I was just in charge of paying attention to when the right timing was.

    Over the years, I've asked LOTS of self-employed tradesmen, what is it like...what does it take (just like you're doing here)? I would call that essential preparation. Of all those conversations, two things stand out most: 1) Learn to balance work and family. The business will absolutely consume you if you let it. 2) Cash flow can kill your business. One year in and I'm still not paying myself more than I used to. I sometimes see $40K swings that I didn't see coming. It's best to save up and be prepared for times like those.

    I remember twenty years ago, I asked my then-boss if he'd teach me what it'd take to go out on my own. He only shared one thing with me, but I'd consider it to be one of the most important things...he said, "Running a business is all about relationships with people." Knowing how to engage with and really connect well with everyone you encounter is a required skill.

    I've heard some say, it takes a special kind of crazy to start your own business. I can now say I see the truth in that, but I'd put it another way...either you're made for it, or you're not. I've known some super-savvy people take the leap, and fail. It's not because they had inadequate intelligence, I think they just weren't 'geared' for it.

    Take care. If you take the leap, I pray your experience is great.

  • GW
    GW Member Posts: 4,019
    Good luck!
    Gary Wilson
    Wilson Services, Inc
    Northampton, MA
    [email protected]
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