Business Loan

Status
Not open for further replies.
S

sr20de92

Member
Location
manhattan,ks
Hey Everybody,

My name is Dustin and I own a small EC company in KS. I have been a member to the forum for a little while, but haven't posted anything due to the fact that there is a wealth of knowledge already on here, which reminds me; Thank You everyone for all the information, its been a great help :D! Anyways, my question is has anybody ever gotten or used a business loan for any reason? If so, was it through a local bank or online? Was it worth the risk?

The reason I am asking is because, I have been in business for about 3 yrs and about 10 months ago my previous employer approached me about helping out on a huge government historical building. Since when I worked for him I was kinda of the historical renovation know it all for our local military base so he asked if I would be willing to help and at first I was like NO!!, knowing it was going to be a giant PITA. Well a couple of weeks after we talked I get a call from a bill collector demanding payment in full or legal action will pursue; (Never get private student loans!!), and since my young company couldn't really absorb that debt, I decided to take him up on his offer. Well during the course of the job the two of us talked about just partnering up full time, this way we could split the responsibilities and make both our lives easier and I helped him start his business over 10yrs ago. So I pulled all my advertising and started directing my customers to him.

The job ended up taking up much more of our time and resource than we thought and in exchange we let our customers and jobs off base slip away. When the job was completed both of us had nothing else going on; piss poor planning on our part, so he basically laid me off and I had to pick up what was left of my company. So now I am basically struggling for work. I have been doing everything in my power that I can afford to get the phone to ring, most of which are ideas that I got from here, but its been slow going. So to help keep the lights on and the family feed I am thinking about taking out a business loan so I can be more aggressive with advertising and have a cushion for the slow times until things pick up in my area. I don't want to give up on my business, even though I kind of already did, but I have to figure something out and fast.

What do you guys/girls think?

Sorry if its a little long and confusing, I sucked at writing in school, that why I'm an electrician!

P.S. I was suppose to take over my previous employer company when he retired, but we had kind of a falling out. We have since reconciled our
differences and that were the partnership came from.
 
I would not do it.

I would not do it.

If I was in your shoes I would not do it. I am still paying off a loan for my company that closed 6 years ago.
As for bank or online I would go bank if you are going to do it. Online may give you money then take everything they can, a bank will just say no if they think it is a bad risk.
 
I would find a job where your expertise would be an asset to the contractor and then start your business on the side again.

Of course I do not know you and you may have the chops to go all in and know all that is missing is some capital but if you have a loan and still can't find work then you will be in a world of hurt for a few years.
 
sr20de92 said:
So to help keep the lights on and the family feed I am thinking about taking out a business loan so I can be more aggressive with advertising and have a cushion for the slow times until things pick up in my area. I don't want to give up on my business, even though I kind of already did, but I have to figure something out and fast.
Click to expand...

first principle:
you can't get out of debt by borrowing money.

go here, read this.... it costs $10 for the workbook
materials. it's the best $10 i ever spent. it'll take a
couple days to do the paperwork.

i can hardly think of a WORSE time to borrow money
without a GUARANTEED method to pay it back, than right now.
we are most likely due for some severe bumps in our
economy, starting now.

ellen rohr.

https://ellenrohr.com/the-bare-bones-biz-plan
 
Thank you everybody! This is the feedback I've been looking for.

Truthfully I don't want to get a loan. Ive been down that road many times and it never works in my favor and yes you can't pay debt with more debt, i completely understand that. I have already bought and paid for ellen rohr's business plans and etc., but unfortunately all the math in the world wont make the phone ring (no pun intended).

I have always known that I would not make a good a business owner, for the simple fact that I care to much. All of my customers are family to me, their problems are my problems. To be honest that's why I have such a hard time walking away from my company, because the customers I have rely on me in there time of need. I know this doesn't pay the bills, but I can sleep a little better knowing that their happy and safe in their home.

I have worked for both union, non-union, and temp agency before, and there all the same, no better no worse. In fact some of the companies I worked for, I still cant figure out how they made dime. I guess I need to catch up with times and be a little more aggressive.

Sorry for the tangent....Once again the information I have received from this forum has been amazing. In fact everybody who has posted here has contributed to my success at one point or another.

Thank You,
Dustin
 
Yep, do not borrow the money, take a payroll job instead. You can always keep your business footprint if the right bid job comes your way, but mentally it will be completely different. You will be able to bid at a level that has your necessary wage and profit, instead of necessarily having to bid and win everything at a lower level, just because you have to make this months interest payment.

It is a hard lesson to learn and it's something that is not taught, But the world does not work that way. Look at how each national federal government is run, not just this nation but all of them. Each year they all go deeper into debt. This is by design. The process results in each national government loaded up with so much debt that national income now equals just the nation's interest payment obligation.

You could possibly come by the understanding that this effect trickles down to each subject. You may think that the money will come to pay the debt, but that's not how governments or businesses run. They go deeper in the red every year. This is by design that the system creates this result, along with periodic episodes of actually threatening some government or other with some type of asset liquidation, foreclosure, default judgement.

There's a sharp hook attached to that bait.

If you want to be on the other side of that equation and benefit from that borrowing, the on base payroll job would be the place to be.
 
Fulthrotl said:
go here, read this.... it costs $10 for the workbook materials. it's the best $10 i ever spent. it'll take a couple days to do the paperwork.

...

https://ellenrohr.com/the-bare-bones-biz-plan
Click to expand...

Obviously, the best thing to do in his situation is to buy a new van, an office, a computer, uniforms, take two weeks paid off and charge $350 an hour. Nothing makes the phone ring faster.
 
George Stolz said:
Obviously, the best thing to do in his situation is to buy a new van, an office, a computer, uniforms, take two weeks paid off and charge $350 an hour. Nothing makes the phone ring faster.
Click to expand...

i disagree.... the best thing to do is find out how much it really costs to be in
business at his current level of operation, so he knows how much to sell his
soul for, to end up with an income.

first time i did one, i found i had to sell my billable hours for iirc $128 to
make a remotely decent income. gak. welcome to flat rate pricing. you
say $128 an hour, and your rapidly departing former customer spits up
a hairball. so, you give them a lump sum for work, and don't itemize.

but hell, if you can do all that up there, and get $350 an hour, with the
phone ringing faster and faster, please.... tell us how.
 
Fulthrotl said:
......
welcome to flat rate pricing. ..... you give them a lump sum for work, and don't itemize.....
Click to expand...

Maybe I'm misunderstanding you, but that's not what I consider flat rate pricing.

I itemize invoices using flat rate assembly pricing.

If the customer wants to add a switch, some can lights, and a couple receps, i will break it down for them as to what each item costs out of my flat-rate book. I'll even hand them the "book", which is now a PDF file on my iPad, and let them pick what they want. If they think the price is too high, I can show them exactly what each item costs so they can choose items to delete to lower the price.

But i absolutely agree don't show them an hourly rate.


Sent from my iPhone using Tapatalk
 
I don't flat rate price things, but for a few years now have been just invoicing labor as a single cost and not showing the hourly rate.

Amazing how customers will balk at an invoice item that is something like: "Labor ----- 5 hours ---@----$75.00 --------total $375.00".

But if for same project you just put "Labor-------$375.00" on the invoice they don't say a word.

I have been doing it that way for a while now and almost never get complaints on how much the labor is compared to before.
 
There is a big place that has massive debt and thinks they can borrow and spend their way out of it.




The Government, it doesn't work though.
 
kwired said:
I don't flat rate price things, but for a few years now have been just invoicing labor as a single cost and not showing the hourly rate.

Amazing how customers will balk at an invoice item that is something like: "Labor ----- 5 hours ---@----$75.00 --------total $375.00".

But if for same project you just put "Labor-------$375.00" on the invoice they don't say a word.

I have been doing it that way for a while now and almost never get complaints on how much the labor is compared to before.
Click to expand...

yeah. this is what i meant by "flat rate" pricing. quoting at so much per hour times the hours doesn't go well in my experience.

as was mentioned elsewhere, flat rate can be a list of services or installs
with a price per item. or, as you and i do it, lump sum for labor, and lump sum for materials.
i've found that to be better.

my quotes usually encompass the scope of work, and lump sums for materials and labor.
so, it's this much money for this being done.

recently, i sat down with an attorney and discussed some work i wished her to perform.
i asked for a lump sum. she said she'd cap it if it ran over, and keep it if it didn't.
fair 'nuff. that's how i bid stuff. my hope is that it only takes her a few hours, and
she makes a bucketload of money for her time. i looked at the cost, and what i was
going to get for it, and how she does it is none of my business as long as it's ethical
and legal, and well done.

i phrased it a bit more straightforwardly, however. after describing my situation, and what
i needed, i asked her "how much do you want in your pocket at the end of the day for
putting up with me, and fixing the broken parts?"

she laughed, said we'd get along fine, and she wanted $12,000. i blanched, and wrote a check
for half as a retainer to begin.

as Red Adair put it, if you think it's expensive hiring a professional, wait until you hire an amateur.
 
Last edited by a moderator:
When you in a bad financial situation you don't want to add debt.


For contracting loans that may be acceptable:
Short term such as credit card for ease of payment.
Or the same to get you past a cash flow problem. Such as your expecting a payment(s) soon but have an unexpected expense such as vehicle repair.
The business has the money but wants to keep a safe buffer of cash in the bank for payroll, materials, taxes, emergencies. But has a plan to pay back.
For equipment, vehicle, or real estate purchases. Something of value that can be later sold to recover at least part of the debt.
There is a contract in place and you need money to perform the work (labor, material, equipment, taxes, etc). Even that is risky.

I can speak from experience. Running a business that is about broke is a downward spiral.
It's hard to make good decisions when "we got no money" is part of it.
There will always be a point when it affects customers if you can't warranty something regardless of fault, can't fund a small project, can't show up due to vehicle problems, don't have the proper tool(s) in good condition, have to cut corners anywhere, are cut off at the supply house, go ballistic when payment is not received exactly when expected, or need to not show in order to get some faster pay job that day.
It will always be 1 failure such as a transmission from being tossed off a job and out of business.

Many when they go out of business it's not be cause they have $0.
It's because thousands are owed to supply houses, taxes, credit cards, etc and not able to get out of debt.

Too often people think of advertising for every dollar they spend they get X dollars back.
In electrical contracting it's not that simple. Part of it is you're targeting a small market, compared to the world.
To me most paid advertising was more for building the business reputation, recondition, and clientele.

Such as a person sees an ad many several times. They call. You do some small service. After the cost of advertising is factored in compared to sales generated you don't always make much. But you have 1 more client, their contact information, maybe their trust, perhaps your name on the panel for all the next homeowners, and hopefully they refer others to you. Some customers call an electrician very few times in their life. A good chance they're 1 time customers. Not because of the price or service. They just don't do much maintenance or upgrades to their residence.

If your broke then like others put the biz on hold and get a day job.
When you have some money in the bank you can pursue it more.

Many business owners don't know anything about sales.
They think if they pay an advertising company thousands the phone will ring off the hook.
And the only sales work is going on a free estimate.
Not true. Tons of used books about generating sales online that cost very little.
More specifically generating sales leads.
Phone calls cost almost nothing, business cards are cheap, you can do many sales visits with a tank of gas, and a letter costs $0.50 plus the envelope.

Finely when you described your past employer it didn't sound like he was in a good financial standing either.
Could it be what you learned about running a contracting business was not from a successful teacher?
If you get employment, try to seek out the most successful in you trade sector and area.
Then look at what they do that's different.
To take over his business, it doesn't sound like he has much business either.

At 3 years in business you should start to see some profitability and some clientele.
I've herd 5 years is the cutoff for profitability.
At some point you have to ask yourself how much is the struggle worth compared to employment and a regular check.
If you're not all in with the idea of being an owner you may be be better off out.
 
Last edited:
Status
Not open for further replies.
Top