How do I attract investors?

What are the first steps?

How do I avoid the loan trap?

How do I get my business from "barely making it with lots of time invested" to "making a decent living, with or without lots of time invested"...?

I'd consider $35K net a pretty good living.

http://www.score.org/
Virgil, this is a worthy link, with some good people who could answer some of your Q's.
The one thing i have found out for sure is that my apprenticeship taught me nothing about running a biz. So anything i would have to offer would be a 'fly-by-the-seat-of-my-pants' perspective.

I had replied before reading GJ & Geralds replies. I am the 'one man show' , but only because of lack of options. That's the way it is in the sticks. I trade notes with my Bro, who in the Boston area makes prevailing wage, makes me green, but opportunities like those simply do not exist for a sparky out here.

Better the rednecks in the woods than the homies in the hood I say.

How do I attract investors?
Are your sure that you want investors??
I had the opportunity to buy into the company last year. I decided to leave my money in the stock market, HAH!!
But really, investors make life much more difficult. They have every right to expect a return on their investment. You are no longer working for yourself.

How do I avoid the loan trap?

don't borrow money! For years we drove 20 year old service vehicles. Only in the past two years have we been upgrading trucks. We have no investment in buildings or other overhead. Our office is a closet in the boss's basement. We have two rental storage units that hold materials. There is no shop. We do $600,000 gross sales/ year with this.

How do I get my business from "barely making it with lots of time invested" to "making a decent living, with or without lots of time invested"...?

Look at the most successful contractors in your area. That is about the best you can expect to achieve. If you live in a poor rural area, then you may be limited to being a poor rural contractor. Are you willing to move??
I live in a rural area, but it is fairly wealthy by agri standards.

I'd consider $35K net a pretty good living.
Our apprentices do that. Really man, you should consider moving and working for someone else until you get established.

I have never made $35K, but then again I owe nothing living very unamerican , as one banker told me. So there is some relative perspective to rolling ### around.

In balancing assetts againt liabilities, by far and large Health insurance is the killer for any small biz. The fact that it IS NOT a write off is hotly debated, and has been brought before congress many time
any Donahue Report readers here?

Does anyone write off part of the house for business expenses? Home office, storage, etc.?

The statements I made in the "Anyone want to play?" Thread really applied to me and what my desires would be as a business owner in the area of the country where I now live (Dallas, TX). Having grown up in a small South Carolina town and still in touch with family and friends back there I know that $50 K here relates to around $30K there. Another thing to think about is the labor pool in the area. Dallas has a lot of Mexicans who will work for cheap. It is hard to compete in the residential new construction arena here if you are legal, insured and try to pay people decent wages and give them any benefits. I know a guy who set up business as an electrical contractor in Dallas using someone else's master license, subbed all the work out to individuals with no license at all and had more work in apartment building than he could find people to do. He did okay until the Feds caught up to him for his use of "contract labor." But while he was in business he took work away from the legitimate companies and the general contractors used him because of his price, probably knowing he would not last. I'm sure they found someone like him to finish his uncompleted contracts.

No matter what the income level where you are in business, don't be the low man in price. Even if you think you are doing okay, you are bringing the prices down for everybody and not maximizing your earning potential. In addition to covering all the apparent overhead costs you need to have allowance in for rainy days, vacations and retirement. Set a reasonable time you are willing to struggle to get the business doing well and if the business and you are not both doing well then, make extreme changes. If you realize your prices are too low and go up, you may lose some longtime customers. Also you may look at the customers who stay with you differently. If you figure you have saved one of them enough over the years to afford his nice boat, you will realize that boat could have been yours. Or the hard times you and your family went through could have been avoided.

The link to SCORE is a good one. SCORE (Service Corps of Retired Executives) is composed of volunteers that were in business for themselves or ran other peoples' companies. They know what the actual costs of business are and give their knowledge away for free. Don't think they don't know what they are talking about if their background is not electrical. Their background is BUSINESS and that is where the majority of electricians are weak.

[This message has been edited by gpowellpec (edited 07-16-2001).]

Good Message for us all, Thanks!

Bill

Be careful about raising the prices to your best and continued customers. I work for a large engineering/procurement/construction company. We have lost two good long time customers recently. I believe those losses were because we raised our rates. Now we have to bid to these same companies, whereas before it was just gravy in the door. The profits weren't big but, bread and butter on the table is worth something compared to an empty table.
But then maybe the other post are correct in that you may have to move in order to make more, but moving may also cost you more to provide for your family in increased housing and other cost. Consider all your options carefully.

Good Advice.

I would have to summarize by emphasizing the need to be competitive. My Bro and I partnered 15 yrs ago, he would call up the local competition and ask for a ph quote on a 100A service, price per stop, that sort of thing.
All those adolescent prank calls to the general store about Sir Walter Riley in a can paid off..

yes Bill, i write off a home office, despite the statistical potential for the IRS investigating...

In reference to losing customers when you raise your prices: If there was a longstanding relationship that was lost because the price went up, either the price went up too much for the market in general or price was the only reason you were getting the jobs. If you are still getting and satisfying customers your prices are not out of line. Quit wasting time on the ones who look primarily at price. Let the people who will be out of business in 4 or 5 years because they are not factoring a reasonable profit in their prices take care of those customers. The company has to make a reasonable return on its time and other resources to survive in the long run. Like the cowboys that went into business selling hay. After a couple of weeks buying hay at $1 a bale and selling it for $1 a bale they realized they would need a bigger truck to make any profit. Or a friend of mine who told me when he first went into business he was successful on all his bids. He was working 60 hours a week and almost starving. Spend time where the best profit is, whether that is specialized work or best paying customers. And don't feel guilty about leaving a longtime customer; he can replace a low price contractor easier than you can replace him, but your reward will be better in the long run.

A good place to find out about what should be included in a good estimate can be found in Mike Holts estimating course or Neil McCain's course at http://trades.net/discus/messages/board-topics.html

So True.
I raised my rates after my 3rd yr, lost a few customers, don't miss 'em at all!

I just figured up that business expenses are in the $1200 per month range counting vehicle (100K miles in five years) fuel, maintenance, insurance, tools, licensing, liability, phone, cell, electricty, computer and office supplies, etc...

I'd like to make $20 per hour at least for now free and clear (except taxes). This comes to about the $28 range that alot have suggested, but does not allow for health and life insurance or a retirement plan.

I hope to slowly increase my rates over the next few months to achieve this figure by the end of the year.

This is all based on 40 hour weeks and steady work... Which may offset some.

I guess its a plan(?)

Have a plan, that's what they told me, sit down an do 1yr, 3 yr, 5yr speculations. Worked fine until the bear ate wall st.

Me too, things were going strong all Y2K until Gore freaked out and the people lost "consumer confidence", then all heck broke loose on wall st.

I sort of say tongue in cheek that to any Venture Capitalists out there... I won't squander like the dot coms did...

I'm reading this thread and I wish some of you would give me a chance to help! How much business do you loose because no-one answers your phone? Or because the machine picks up and they call the next guy in the book? I started my business just because I had friends in the same place you guys are in. Well I really can help.

Insurance is the big problem, you guy's need to get together and form your own. That will beat down your cost. It has been done in Nj for auto ins. A lawyer formed a group of low risk drivers at first and the company grew very large now.
It can be done. If you cut that rate in half you would be living large!

Beth,

Are you talkin' health and life or liability?


This thread was about various liability premiumns, most, myself included were less than $400 per year, which incidentally is 1/12 of what you charge for your services. How do you suppose that me saving $275 per year but spending $400 per month is going to improve my cash flow?

Please be careful.. You are among wolves...

I do admire your perserverance Beth, it in itself should constitute marketability.

Contractors liabilty insurance can be had in a group rate through local contractors associations, even national orginizations like the NASE. The catch is, ya gotta join, but hey go crunch the ####'s..

Life insurance is a thread in itself, it really only costs 3K or less to put my A** in a pretty urn for the mantle, headstone , empty casket, limo, and maybe a keg or two afterwards. Big deal!, your much better off to gamble a lame mutual fund in a tax shelter SEP , even in a bear market.

Health Insurance far outwieghs both in $$$$, it is a necessary evil that comes as close to extortion as you can get.
Ask any senior citizen livin' on purina about the pharmacutical cartel they dish out for...
talk about wolves!

[This message has been edited by sparky (edited 07-28-2001).]