New Adventure Advice

Hello all. For many years now, I am hired by a company only to be let go as soon as everything is running smoothly. I realize keeping an engineer on staff is costly and it makes economic sense to the employer however, it leaves me pursuing another employer. I am getting close to retirement age and decided to try starting my own business. My environment has a lot of opportunities so I believe it to be a wise decision and it actually sounds like a fun new adventure....something I have wanted to try for a while now. I realize there will be some not-so-fun times ahead and, as the book of Proverbs says, a wise man seeks good counsel, so that's why I am here asking for any and all advice that you business owners may have for me. No piece of advice is too small for me as this is coming with a bit of fear as well, since my livelihood will depend upon it. Thanks much for anything you can contribute. If someone has already posted a thread similar to this and I just didn't find it, a link to that thread would be awesome also.

I would also like to add; I have already decided to form an LLC and am on step 1. Select a name for the company. Since I believe this to be a critical part of the process, I would like to hear advice you experienced business owners may have regarding this. Thanks again.

get with a cpa and or attorney that has alot of experience with new startups so that they can steer you in the right direction on how you want to classify the business.


next find a insurance agent that you trust and has multiple clients in the same space as you. make sure you have an insurance agent that will go to bat for you. a insurance agent that pushes back against things like workers comp rates etc can save you a ton of money.


One other thing we have done is try and stay out of debt as much as possible. some people use debt to grow, and thats fine. we always felt like we wanted to stay out of debt that way we can better handle downturns. we have had loans for stuff but always pay them out quick.

diat150 said:

One other thing we have done is try and stay out of debt as much as possible. some people use debt to grow, and thats fine. we always felt like we wanted to stay out of debt that way we can better handle downturns. we have had loans for stuff but always pay them out quick.

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Being in debt is never a good thing in and of itself. It can be worth it if what you do with the borrowed money brings in enough, but you'll always be at risk of defaulting if your incoming cashflow is interrupted.

Diat150 hit my first 3
How many month of expenses do you have in the bank for your personal life?
How many month of expenses do you have in the bank for your business life? Insurance, insurance ,insurance, software, pc, cables, fuel, oil,tires ,maintenance, etc.


How long can you wait for customers to pay you on work that you have done? Do you already have customers that will go with you? What is your pricing structure? Are you going to be the lowest priced or the most expensive in your area? Are you going to build panels or farm them out? Who is paying for your parts customer up front or you? What are your terms for payment? How will you handle customers that dont pay?

These are just a few to get you started

Congratulations!

When giving up the security of a regular paycheck for the satisfaction of self employment, the most important thing to do is make sure your family is on board with your decision. It's a lot harder to find a new family than to find a new job.

Jeff's comments are all about cash flow. That's the most important factor you need to watch. When you're having cash flow problems, you tend to make bad financial decisions.

ceilingwalker said:

I would also like to add; I have already decided to form an LLC and am on step 1. Select a name for the company. Since I believe this to be a critical part of the process, I would like to hear advice you experienced business owners may have regarding this.

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"It's A Mechanical Problem Automation"

mylespetro said:

"It's A Mechanical Problem Automation"

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“It’s Always Been Like That, Inc.”

SWAG

Service With A Grin :-0



(Not sure how much the name really matters, a friend named his business JAM LLC, JAM stood for Jim's Airplane Money. )

always do a credit check on your customers first before taking the job.
i failed to do that one time, never again.

There is a lot of good advice above. I like the checking the credit score of the customers the best. Delta got screwed once by a distributor that default on $100K.

The key is to be special and be able to do what others can't. In our case it was high end systems. You must be special.

This is not the best of time to start a business. Many of my sources are predicting a rough end of year and 2023. Usually there will be little demand for new systems. These require huge capital expenditures.However, there will be opportunities to keep machinery running and to do upgrades.

I also remember the early days of Delta. I took a 25% pay cut when I joined Delta. I just want to have control of my destiny. The advantage I had was I was young and had enough cash so joining a startup. That was a risk I could easily take at the time. If you are about to retire you don't have that luxury. The questions above about how much reservers you have is a good one.

The government LIES big time about whether we are in a recession. If you take into account inflation, the fall in GDP is MUCH WORSE. It is amazing that the media is too stupid to ask what the GDP is if inflation is taken into account.

There is a lot of good information posted for you to think about but I would disagree about the credit scores I have found that they are pretty much worthless in this industry. The credit score thing is rigged going in. I have been through this myself
Consider that most of your clients will be businesses. They usually have a team of accountants and lawyers to insure that their credit scores are in the range they want. That same team will find ways to delay payments or to not even pay you at all. I have had several that would never pay an invoice for at least 120 days I even had one after he was well over the 120 day mark when I pressed him he said I would get paid when he was good and ready to pay me and if I pressed him I would not get paid at all.
Always use a contract. A contract does not have to be a large complicated document. The best contract is a simple Purchase Order. With a PO you need not just the number but the actual client PO with their name on it. Without at least a PO you could end up doing $100K worth work and never get a dime for it
I have had a few try even with a PO. I have even had clients deny the PO was issued after job was complete and they received the invoice. I could tell you a lot of stories both good and bad just be careful
And document everything.

I had a long time client where they would generate a new standing PO for service work every year.
They went bankrupt owing me a big chunk of money. I never got paid any of that, in fact in their bankruptcy court settlement I was required to repay them / their bank and large chunk that I was already paid for previous work while the CEO walked away with a new $4,000,000 home free and clear.
I know that’s hard to believe but I still have the documents as a reminder. And before anybody asks I did contact a good lawyer early on his advice was that there was nothing he could do and getting him involved would just increase my debt and bankruptcy was not an option for my.

Make sure you keep copies of all emails, text messages and documents for at least 10 years
It pays to contact both a good lawyer and a good accountant early and head their advice.
Make sure you have a good client base inline before you start. And be prepared for bad days

mylespetro said:

"It's A Mechanical Problem Automation"

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I love it! Lol

Thank you everyone for your experiences/advice. I knew you folks would come through!

Shop around with some automation/controls companies and just do some work for them as a contractor.