business

kinda of a strange question for here but here it goes. I am plc/scada tech with over ten years in the business and a friend and I are thinking of starting our own integration company, just wondering if anyone has had any experience with the market recently and what it is like? Thanks

RY_Guthrie said:

kinda of a strange question for here but here it goes. I am plc/scada tech with over ten years in the business and a friend and I are thinking of starting our own integration company, just wondering if anyone has had any experience with the market recently and what it is like? Thanks

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Depends on the industry.

Automotive is feast or famine.
Food,Beverage and Dairy, virtually recession proof, but capital projects go with the economy. Maintenance is constant.

Pharma, unless you know someone , forget it.

We are in food and beverage and capital projects are on hold for now because CFOs have the jitters about the upcoming "Fiscal Cliff"

thank you I appreciate the info

RY_Guthrie said:

a friend and I are thinking of starting our own integration company

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Go for it... but loose the friend, just have them work for you when you need help and start small (part time)

Start up business are hard to do... even harder if they are partnerships

I started small (still small) and LOVE IT, in 06 I started doing my own on the side (had a real job) took about two years to build it into a business that I could do it full time

Most of the companies fail because they try and grow to fast, try to pay cash for everything you do and find a niche market that needs integrators I found chicken farms and peaches here I was making printed circuit boards so it was a big change (so I thought) but automation is the same

If you can find one customer they will lead into more....

Best of luck!!

Thanks,, and that is my plan, work for a company now doing plc/hmi controls, keep working, find that first customer and take care of them. Fortunately I work a 14 day on and 14 day off schedule so it gives me a lot of spare time to work on the side. Thanks again

The conventional wisdom is that if you start a business with a friend you loose the friend and the business both.

There are exceptions. However, think twice about this. No matter what incorporate or go LLC so your personal assets and your friend's and the business are all separate. Get everything in writing - sharing work, sharing ownership, sharing profits, wages, responsibilities ..... Nothing is too trivial.

Most important is making sure your spouse, if you have one, is on board and supportive. Without that you cannot succeed, or will succeed at too high a personal price.

Profit and loss is not a problem for a new business. Cash flow is. Make sure you have that worked out before you begin.

Don't be afraid to turn down work because it isn't your area of expertise or you don't have time. A lost project is less of a problem than a lost reputation.

KEEP GOOD RECORDS. Every penny, every transaction, every proposal, etc. Software makes it easy, discipline is required.

Tom makes some great points... record keep is one, I just finished a IRS audit that lasted 7 months, if I would of keep better records I would not be typing this from jail (joke) but it would of made it a faster audit, that was a nightmare I shut down my business for 2 days as they came to my shop and we went over everything, they were very nice but it was still a big hassle

There are A LOT of things you should do... here are a few, these are all free, just takes a little time

1) Form a LLC (check with your state website)
2) Get a EIN http://www.irs.gov/Businesses/Small...n-Employer-Identification-Number-(EIN)-Online
3) Open a business bank account
4) Find a CPA
5) Accounting software (see below)
6) Wait until after Jan 1, this way you will not have anything to file for this year
7) Insurance (up for debate)

I do a lot of retail sales now so I have a lot of records, when I first started I was only doing integration so I only have a few transactions a month so it should not be to bad for you get a good accounting software and enter everything

Get an accountant , you do engineering after all and trying to the accounting is a massive waist of time i found. Doing the proposals, documentation and the engineering there is no time for this.

Also before you even start try and have 6 months Salary in the business for the lean months that any startup company has. Make sure your documentation is in place and ensure your terms and conditions are in place. Be aware that most big companies can take anything from 60 - 150 days to pay...

Say goodbye to a social life. You will be working 14 hours a day.

Good luck

A supportive spouse!!! Don't be afraid to ask for help. The guys on this site are top notch. I have done work with several of these guys. Talk to many of them.

Jeep records, keep records, keep records. I hope this hits home. I am in the middle of my 3rd year being on my own. It is fun sometimes. The not fun times are wheb you have $50k owed to you and you owe and 20k owed to others and the checking account us low then you get burned for $20k.

I am starting to only book 3 days a week now. Being a small shop I do a lot of service. When you book 5 days a week you don't have any time for service or office work. Add 3 days to any job that will take you over 3 days. If it can go wrong it will customers will expect you to do a lot of extras for free. This goes back to your documentation and records. I do very little free work now.

Read Tom's suggestions at least three times.

Then ask yourself very honestly WHY you ware considering going out on your own. The WHY part of all the other things will be possibly the biggest reason whether you suceed or fail. And success is NOT only measured by what is in your wallet.

You will spend a lot of time doing work for which you will never see a dime.

You will spend countless hours quoting that will never materialize into anything. However, if you don't give a detailed quote that explicitly states exactly what you are and are not providing, your customer will bleed you death.

You will spend countless hours working on stuff that has nothing to do with what you actually want to be doing.

Everyone will always want expedited deliveries and a discount.

You need to have a plan in place for when you don't get paid. Trust me, there will be jobs that you won't get paid for. They will always happen at the worst possible time and will usually be on a job that you probably were not going to make very much money on anyway.

Even when you do get paid, expect to get strung out often. Don't be suprised if you have to call up 2 or 3 times before someone cuts you a check. My favorite is "(insert name here) has not signed off on the invoice yet and he is on vacation". Often you won't even know who this guy is that is supposed to sign off on the invoice.

You will have to be very dilligent keeping records for the IRS.

You will have to take your customers out to lunch now and them. You will have to pick up the tab.

If you work 40 hours a week now, you will work 60. If you work 60 hours a week now, you will work 80. Kiss your weekends goodbye. Or at least half of them.

Your customers will always try to schedule your installations during a time that is convenient for them. You know, days like Thanksgiving or Christmas or Easter.

If a job starts to go bad, the really nice fellow that awarded you the work will become a prick in very short time. You will be amazed at how gutless and dishonest most project managers are and many will stop at nothing to protect themselves. They will sell you out in a heartbeat. You will get blamed for things you were not even invloved with.

Even if your spouse is supportive or helpful they still won't like it. It is even worse if you have kids. You will have to find some way to separate your personal life from your business life.

You will have expenses you never know existed. You will pay taxes you were not aware of.

Forget about getting a business loan of any amount that is usefull.

If you have any thoughts whatsoever about buying a house or moving in the next decade, don't. As soon as a bank finds out you are self employed or that you own your own company guess what. They don't just need to see all your records and finances, they will want to see the companies as well. You will be scrutinized by a much higher degree. It took us over 4 months to close on a mortgage we were pre-qualified for. It took 3 months on the re-fi.

You will have to keep your equipment and software up to date. It will constantly break on you. You will have to be your own IT guy. You will go to print off a quote and spend the next 4 hours trying to figure out why your printer doesn't work.

You will get calls at all hours of the day, and most usually on a friday evening with a customer expecting you to drop everything you are now doing to come fix their problem immediately (even if they had known about it since monday or a couple weeks ago).

They will all need a quote immediately. They will always ask for something budgetary, will later change the scope of the project, and then try to hold you to that price. They will always think the price is too high. They will complain that your delivery is not good enough, and then they will wait 6 months before they order it. They will still want it delivered just as fast 6 months later.

If you are with a large company right now with big pocket books and used to getting really good treatment from your vensors, expect that to change once they realize you are now less than 1 tenth of 1 percent of their business. You will not be their priority. Expect you prices not to be as good. Expect them to take longer to get back to you. They may be the same people, but you will have to build new relationships with them. It will take time.

Who will your customers be? Are you sure about that? Developing customer is very difficult. It is extremely difficult just to get on a bid list. It is a who knows who and a timing thing. You will find it very difficult to get companies to take a chance on you. The project manager might be on board, but wait until pruchasing gets involved. You will need to provide proof of insurance. Insurance is very expensive at first because until you have established yourself you are considered a high risk.

I can go on and on but I will spare you. Most tend to accentuate the positives when these questions pop up so I wanted to balance it out a bit with the darker side. No, it isn't all bad. It isn't all roses either. It is something that needs to be really though out though. And if you do decide to, it's got to be all in. If you half-a$$ it you will fail.

Wow Damian. I have customers that want me to go out on my own. i however do not want to do so, at least not any time soon. My family is more important to me, that is why i chose not to start my own company up. at least not any time soon. plus i learned from my dads business ventures alot.

For example, current customers of yours at a big company, want you to go on your own, so they can save money. but as Damian mentioned, you wont get good deals on equipment, and you will always get told you cost too much.
everyone wants you to go out on your own thinking you will be way cheaper, but in the end, you wind up marginally cheaper, and they dont understand why.

DwSoFt said:

...... everyone wants you to go out on your own thinking you will be way cheaper, but in the end, you wind up marginally cheaper, and they dont understand why.

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A wise man told me many years ago "Barring radically new technology, it costs about the same amount of money to do a given job at a given level of quality, no matter how you do it."

And daddy always said "You get what you pay for, or less."

I've yet to see them proven wrong.

...I just finished a IRS audit that lasted 7 months, if I would of keep better records I would not be typing this from jail (joke) but it would of made it a faster audit,...

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The IRS can tie you up on income taxes for months when all the time they were wrong. I just finished a round with them about 2010 income taxes, receiving threatening letters in the mail, sending replys that seemed to go into a bottomless hole, finally receiving a letter saying they owed me a $26.10 refund for 2010, instead of me owing them $2,610. Of course under the laws they can change their opinion for up to 10 years after a return is filed and come after you again. On your tax return, you are assumed guilty until you manage to prove your innocence.

Our income tax system here in the US is a pathetic joke. There is no way you can predict how much taxes you will owe on April 15 (15 months in the future), yet under the laws you are REQUIRED to start in January of the previous year pre-paying 90% of what you WILL owe up to 15 months in the future, or to pre-pay in at least as much as you paid last year. Otherwise you will owe a penalty, plus interest.

As you get older, more and more of your income will (or should) come from retirement, savings, and investment income. These are totally unpredictable and depend on the state of the economy and other outside factors completely out of your control. Yet the IRS laws passed by Congress were written as if this type of income is predictable a year in advance, and you are held accountable if you guess wrong on your withholding amount. What a screwed-up system!

It helps to learn about the tax rules. I have been volunteering with AARP as a Tax-Aid Preparer to do tax returns for several years now. I have learned enough to know that the system is unfair, unworkable, and a jumbled mess created from political lobbying by various groups.

WARNING: Many of us are going to be hit by extra taxes in the 2013 tax year, due to the Alternative Minimum Tax (AMT) rules, among other increases. The AMT rates will cut into your bank account. If you haven't paid in in advance starting January 2013 enough to cover the AMT, you could be scrambling in April 2014 to come up with the unpaid tax (unless Congress passes the usual "fix" to doctor up the AMT rules to raise the AMT kick-in income level).

The AMT tax rates will only kick in 2013 for "millionares and billionares" making $75,000 Gross Income for filing status Married filing Separately, $112,500 for Single, and $150,000 for Married Filing Jointly - unless Congress does something about it.

Wow and i thought we were getting screwed up here in Canada...