OK! How long till you paid yourself?!

[cwsolo]

Ok! So work is booming down here and I'm getting my name out there, reinvesting moneys made in tools and materials that I had no need for as a journeyman but now have need for as a contractor. I'm not booked every day yet but the jobs I am getting seem to be profitable... Now how long til I can pay myself?
Does any of this sound familiar? or am I the only one to start a business with very little capitol to get going, struggling for the day when I can start paying myself?

 

[jimwalker]

Re: OK! How long till you paid yourself?!

Work as much OT as you can.1 1/2 times nothing adds up. Simply do not buy things that you only need once.Rent when it makes since.First year is the hardest

 

[aline]

Re: OK! How long till you paid yourself?!

You should be getting paid from day one. Your salary should be included in your overhead expenses and figured into your prices or estimates. After including all of your expenses including your salary then you should add some profit to the job. Profit is for the company to grow and prosper not for your salary. Your jobs may seem profitable but will they be after you start paying yourself. If you are including pay for yourself into your job prices plus a profit for the company you should have no problem paying yourself some amount from every job.
This should be factored into the job like materials or anything else. You have to pay for your materials don't you? You should also have to pay yourself for your work. Don't work for free.

 

[tx2step]

Re: OK! How long till you paid yourself?!

Originally posted by cwsolo:

Does any of this sound familiar? or am I the only one to start a business with very little capitol to get going, struggling for the day when I can start paying myself?

I'm sure you aren't the first or the last. It probably happens a lot. It's also one of the main reasons why there is such a high failure rate in the first couple of years.

I'm not knocking what you're doing, just trying to warn you to keep your priorities straight.

Your first priority should be to build up operating capital to a safe level. Try to save every $$$ possible and put it into a separate account where you keep your capital.

Cash flow hiccups are inevitable (slow pay, bounced check, etc). Without some capital available to cover your bills, you can go under before you know it.

When deciding where to put your $$$, make saving capital your highest priority -- ahead of stuff that you can do without, can rent, can borrow, etc.

I'm sure you've probably already read it, but see this thread for more suggestions:
http://www.mikeholt.com/codeforum/ultimatebb.php?ubb=get_topic;f=4;t=000818

Edited because I couldn't spell "safe" and left out a word

[ August 02, 2005, 06:07 PM: Message edited by: tx2step ]

 

[bphgravity]

Re: OK! How long till you paid yourself?!

I would suggest you read the book, "The Richest Man In Babylon" by, George S. Clason

 

[apauling]

Re: OK! How long till you paid yourself?!

It's called "lifting yourself up by your bootstraps". fairly old saying. There is probably a version of a needs hierarchy for starting with nothing. A. Maslow did one for psychology that started, death, breath, pulse, blood, clothing/shelter, food...love...expression...self fulfillment...

We could probanbly argue forever the fine points, but local circumstance, luck, grace, perserverance, good looks, talent all play a part, and don't forget the trickest truck if working for contractors. it's why all the realtors drive nice cars. It's proof that they are successful, and that they may be wasteful is ignored.

So, from nothing

1.get work and collect pay.
2.with each job, advertise, new contacts, generate new work.
3.balance between presentable basic tools and saving what can be saved.
4. be clean, sober (on job, at least, best for all phone calls as well), trustable, and clean up after yourself ( and others if necessary)
5. get all the work you can do. get paid
6. get better quality work, better paying work, eliminate losers, extremely slow payers, nit-pickers, etc.
7.when a little ahead use capital to save money, like buying bulk, or buying common rented tools
8. if you save at least what you fear you might owe Uncle Sam, you will at least have some decent working capital in an emergrency.
9. may be cheaper to lease truck than buy, as all lease expenses are deductable. BUT sometimes the gov lets you spend a big one time outlay and write it off the top. Nedd a good tax guy.
9. if you send Uncle Sam some each quarter, even if extremely way below what you owe, and pay the balance at tax time, that little bit (the rest is in savings account) really adds up, and helps keep the auditor away.
10. when you get to asking yourself if you need to hire another guy, you are past the bootstrapping phase.

please feel free to insert actual needs.

There are plenty of great ideas, good ideas, and some scams, but it really takes diligence, likability, good quality work, AND did I say persistence. I've seen the gamut from bad luck and failure to easy-as-pie success.

There are probably a few thousand guys on this site that did just what you are doing. Don't think that the ones that didn't make a bundle are either inept or lazy.

Good luck

paul

 

[jeff43222]

Re: OK! How long till you paid yourself?!

I'm in the same boat, solo. I went independent in November with not a whole lot of start-up capital. I kept my overhead low (working from home, using my personal truck as my work truck, etc.), but tool purchases have eaten up a lot of revenue. I waited until I really needed each tool I bought to avoid taking too big of a financial hit too soon. I think I'm getting to the point where I pretty much have all the tools I need. Good thing, since there's no room left in the truck.

Work has gotten steadily busier; right now I'm working seven days a week. But things were a little lean at first. Tx2step is right -- gotta make sure you have enough cash on hand to cover expenses. That being said, I didn't pay off all my business credit card bills right away for the first few months. I figured it was a better idea to be able to make my mortgage payment than it would be to save a few bucks in finance charges.

Yeah, in theory you should be paying yourself from day one, but sometimes you have to make a choice between paying yourself and investing in the business. I've been living pretty lean since I started (including losing about 35 pounds), but my business is in the black, and my bills are getting paid. I have a feeling things will be better after the first year, and things are already moving in that direction. All you can do is keep on plugging away at it!

Good luck!

 

[bradleyelectric]

Re: OK! How long till you paid yourself?!

Originally posted by jeff43222:
I'm in the same boat, solo. I went independent in November with not a whole lot of start-up capital. I kept my overhead low (working from home, using my personal truck as my work truck, etc.), but tool purchases have eaten up a lot of revenue. I waited until I really needed each tool I bought to avoid taking too big of a financial hit too soon. I think I'm getting to the point where I pretty much have all the tools I need. Good thing, since there's no room left in the truck.

Work has gotten steadily busier; right now I'm working seven days a week. But things were a little lean at first. Tx2step is right -- gotta make sure you have enough cash on hand to cover expenses. That being said, I didn't pay off all my business credit card bills right away for the first few months. I figured it was a better idea to be able to make my mortgage payment than it would be to save a few bucks in finance charges.

Yeah, in theory you should be paying yourself from day one, but sometimes you have to make a choice between paying yourself and investing in the business. I've been living pretty lean since I started (including losing about 35 pounds), but my business is in the black, and my bills are getting paid. I have a feeling things will be better after the first year, and things are already moving in that direction. All you can do is keep on plugging away at it!

Good luck!

If your working 7 days a week, you should be making plenty of money. Been there, had to relook at how much I was charging. If your not making plenty of money on 5 days a week, than you need to charge more. I just got a call from the guy working on 1 of my trucks. 2 tires brakes all the way around, 1 tie rod and a front end alignment close to $900. If he can charge that, I have to make sure that I make enough money that that is not a problem. A friend of mine wanted me to go to a concert with him. The ticket was $100 a seat. ounds high. He told me that is why I charge what I do and its about an hour and a half for me. Got to look at it that way. If I can't be in business and have the money to do what I need and occationally want to, why be in business? got to charge enough to make money.