ECN Forum
Posted By: wraiths Starting up ? - 10/09/05 11:55 PM
Hello, Need some of your experience please.Going to start my own company an to start its going to be just part time till I see how everything goes. But my question is what do I need to do as far as the business side of it. I know the question is broad but just don't know where to start. thanks in advance...
Posted By: renosteinke Re: Starting up ? - 10/10/05 01:23 AM
The first rule is: play by the rules. If you need a license and bond- get them. Make sure all the paperwork is in order. There are legions of sharks out there, looking for those they can exploit- and sometimes these sharks look very respectable, are pillars of the community, etc.

The second is to have a few good customers lined up. "Good customer" is defines as someone who can be counted upon for regular (repeat) business, and who pay their bills promptly. The "80/20 rule" applies here; 80% of your business will come from 20% of your customers.

Avoid the "big jobs" that will tie up large amounts of your time and money....you really don't want to be placing all your eggs in one basket. This is one fo the shark's favorite ploys...they know you've put yourself over a barrel, and will then expect you to accepts a reduced payment for the work you've already done!
Posted By: Electric Eagle Re: Starting up ? - 10/10/05 02:38 AM
One of the biggest tips I can give you is a lesson most of us learn the hard way:

Never give a low price based on a promise of future work. Usually these future jobs never materialize. An alarm goes off when a customer says something like "I've got a bigger/more project(s) I'll give if you give me a good deal on this one." These are leaches. They probably won't ever call you again or they always want a special low price for all their crappy little projects.

I also second doing everything above board. And don't undersell yourself, you'll just become known as the guy to go to for the cheap price. You have to make a profit. Profit is not your income, it is money above your pay that is to be used to help you grow and get through the rough spots. Speaking of money, you have to have some working capital unless you want to struggle for years just getting by.

If this is going to be more than just a hobby, I recommend reading a book called "The E Myth - Revisited".
Posted By: Dnkldorf Re: Starting up ? - 10/10/05 01:03 PM
Wraiths,

***DEFINE YOURSELF.*****
What makes you different from the other guys.

KNOW YOU CUSTOMERS.
Know what they want, and why.

CUSTOMER SERVICE
Self explanitory, no one wants to do business with a jerk.

PROFIT
Don't sell yourself short, you are doing this to make money. Remember that....

TAKE IT SLOW
Slow and steady wins the race, too big too fast and you might sink.

Repeat reading all the posts above, these guys have posted some great advise.

Dnk.....
Posted By: Pat@Amber Re: Starting up ? - 10/10/05 10:16 PM
Decide NOW where you want to be in 4-5 years and plan for the future. Figure out all of your costs and charge accordingly.
You will find that doing things properly (to code, paying taxes and insurance, proper licensing, paying yourself and planning for your family's future) is very costly.
Avoid the promises of future work mentioned above like the Black Death!
Strive to let the customer know up front what the costs will be for you to do the work they want. If it is out of their budget, give them cheaper options.
Use a payroll service even if it is just you working for now. They will file all the forms and pay all the taxes for you for a nominal fee (and keep you out of trouble with the government).
Search the archives here for many great ideas and opinions on just about every business topic.

Pat
Posted By: wraiths Re: Starting up ? - 10/10/05 11:35 PM
Hey thats some great advice you have given. Yes I have gotten my license an am in the process of checking on insurance an other stuff. Still don't know about doing the articles of incorporation or what else is required to start a business. I want to start out right if you know what I mean don't want any regrets later on . Any more help would be greatly appreciated all of you have already crossed this bridge an know the up ands downs.Thanks again.
Posted By: wilkie Re: Starting up ? - 10/11/05 10:16 AM
I would encourage you to invest in an accountant and an attorney. They will be able to help guide you through the process of creating your new business. You can always read and study up on any business topic that arises, but it is a step in the right direction to surround yourself with qualified , professionals whom you can rely on. There are varying opinions here as to the need to incorporate. I wouldn't run one service call, or wire one new outlet without being incorporated.
Seriously consider determining your own rates. Meaning, I can tell how many new contractors are entering our market because they all call asking the same questions. "How much do you charge to come out? How much do you charge an hour? How much do you charge per sq. foot or per drop?" Theres nothing wrong with researching the market. I just don't understand why it matters what everyone else charges. Its a dangerous game of who's leading who? I'm sure I'll take a lashing here for this statement, but it's true. It doesn't really matter what everyone else's rates are. If I priced our services based off of what the other 398 ECs in our area charged, I'd be out of business. I would strongly encourage you to set your rates off of your business, regardless of what everybody else charges.
Posted By: Dnkldorf Re: Starting up ? - 10/11/05 10:33 AM
wilkie, I doubt you'll take a lashing, BUT, you can't price yourself out of a given market.

There is a reason you don't see gas at one station for $5 a gallon and see gas at 398 others for $2.50.

You can be higher or lower than everyone else, depending upon your overhead. Keeping overhead down keeps you competitive.


Dnk.....
Posted By: wilkie Re: Starting up ? - 10/11/05 10:54 AM
I assure you that the 399 of us are not selling the same commodity.
Posted By: Dnkldorf Re: Starting up ? - 10/11/05 11:16 AM
I think in a way we are. At least that is the customers interpratation. Most believe all Ec are the same, they need something, we provide it.

That's where the DEFINE YOURSELF comes in.

What makes you different from the other guys.If it was just price, your doomed.

You have to provide a better service, better materials, better workmanship, ect. than the other guys.

Going back to the gas example, some people go into a full service bays, rather than the self service bays where gas is cheaper. Some people are paying 10-20% more for the same fuel.
Why?
They don't want to pump it themselves or They like the service, they like the greetings, they like their windows cleaned ect.

And they are willing to pay more for it.


Dnk.......
Posted By: copper Re: Starting up ? - 10/11/05 10:46 PM
I recomend the book E-myth revisted. although i'm not to trilled about the staff at e-myth. I would only buy tools until you need them that will cut back and unnessary expenses. I have a credit card with no interest for a year that helps some to. I also purchases Mike Holts estimating book and video I recomend that to. Good luck This takes time. Somtimes i have to listen to a motivational tape so i don't lose track on what im doing.
Posted By: teraohm1 Re: Starting up ? - 10/11/05 11:06 PM
yeah you are right
All thatis essential to stay in business,but besides the knowledge and all the businessstuff you will need $$$$$$$$$$$$$$$.
The more money you have the faster you will move.
That attorney and that accountant needs to be paid,, that truck needs to be paid, that insurance needs to be paid and and and.
So if you are thrown in a situation to go on your own but you are financially not prepared for it,it can be hard and you might have to stretch.
At this point you might have to improvise.
When there is no money for the truck shelving,use cardboard boxes or nut and bolt a shelve together yourself.
And all that effort is nothing if you do not-as they said above-have customers lined up or have the money to get your name out there.And that is a long way to go.
Not to pop soapbubbles here but beeing realistic if you have to start from scratch it is not easy.
Posted By: Tesla Re: Starting up ? - 10/13/05 01:06 AM
Working capital is almost always the killer.

Extending any significant customer credit increases your working capital need, directly.

Finding a patron, or two, or three who can keep the wolf from the door is what makes or breaks most start-ups.

Other than that, a red hot market can do wonders.

Jumping in because of a need for income usually ends up badly. In most areas there are more journeymen willing to take the plunge than the market can ever satisfy.

It may be worth your trouble to sound out retiring age electricians. They may be very happy to sell out. Such transitions can work well for everybody.

The alternative is for the new guy to drive someone else out of business, or for the market to grow. Growth is usually flat and established players are usually too much competition. Under pricing them just sends you to the poorhouse.
Posted By: LK Re: Starting up ? - 10/14/05 12:17 AM
Over the past 20 years i noticed in my area, 20 or so new EC's give it a try, some lasted as long as 7 years, others went out after the first year, the established players were too much competition, and the new guys on the block, tried to under price jobs, which lead to there undoing, they became known for cheap work, and got stuck with that label, it appears the ones that worked for GC's went under first, i know of a few that made it more then the 7 years and are still around, with the help of a working wife with benies, the grass always looks greener from the other side, so as Tulsa said " There are more journeymen willing to take the plunge than the market can ever satisfy."
Posted By: Pat@Amber Re: Starting up ? - 10/15/05 10:46 AM
You might want to try this link, http://www.score.org/template_gallery.html There are many useful things here for a new business.

Pat
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