Start-Up Help...

[phil d]

Doc makes some good points about family and friends wanting cheap jobs done, I hadn't had my business long and I took on one of my old apprentices, he'd been finished from the company I used to work for. He was a nice young lad and he'd just moved in with his girlfriend and had a lot going on in his life, I took him on as I thought I knew him and he'd be an asset to my new firm, how wrong I was. We'd had a fairly quiet month and hadn't spent much at the wholesalers, at least that's what the job sheets said, I went to the wholesalers to pick up a couple of small bits and decided to pay the months bill while I was there. To my amazement there was some equipment on the list that we had not had, I knew it because obviously I was getting the jobs in, There was a roll of cable, a couple of pir fittings and a few other bits and bobs. It turned out that this equipment had been booked out by the young lad, I asked him about it and he said he'd booked the gear out to do a couple of cash jobs for relations, he told me he'd fitted a couple of outside lights and charged £25 each, the kit cost more than that!

We had a chat about it and I told him that he couldn't do with me what he did with a large company, for a start I always checked the invoices, something a lot of big companies don't do. He apologized and swore blind he wouldn't do it again, I rang the wholesaler and told them that nobody except me was to be given things on my account, a couple of months later he did the same thing again. I got rid of him and refused to pay the supplier for the parts he'd had, after all they were told not to let anyone book anything on my account, the next thing he's slagging me off for getting rid of him and for giving his address to the supplier, he was lucky I didn't send the police round.  

 

[binky]

 Most businesses begin as family-run firms or friendly partnerships. If you rule out working with family and friends who is left? Strangers and enemies? I'm not sure I'd want to go into business with either of them. 

It's atually about working relationships, families naturally have a 'leader'. Friends, well, that's another thing. I actually find it easier to do business with people I don't like but can work with - it tends to keep the relationship more professional.

 

[SPECIAL LOCATION]

Hey Everyone (sorry if this isn't the correct place to post in. I did have a good look down the list and didn't see a relevant forum and so  figured this was the best one to post in. But excuse me if it is not).

I'm an electrician based in London and me and two mates (electricians also) want to make a go of going it on our own. We've not yet registered our business name (are still fighting over who has the best idea!) but will do so within the next fortnight. We also need to set up a website but are not able to do it ourself (we're all a little backwards and english isnt our strength). Can anyone who is already in business please recommend a good site that will take care of everything for me and not too pricey. Also, if anyone can advise on any pitfalls i must look out for, red flags or companies not to use I'd be especially grateful.

Any responses will be really appreciated - JT

There are a few personal circumstances that can make the rough ride of starting a business a bit smoother...

(oh YES it will be rough and a struggle, hard work and graft, if you are expecting an easy ride you better stop now.)

Are you single or in a relationship?

do you have dependents (children)?

are you paying mortgage/rent on your own home, or do you still squat with parents/relatives?

e.g. if single, no dependents and no mortgage or rent, then that drastically reduces how much you need to be earning in those early start-up years.

Also...  if in a relationship where your partner is in work and can cover most of the household bills, food/heating/home that also reduces your initial liabilities..

However... if you have a partner who is not earning much and have two kids and a roof over the head to support the demands can become a major problem.

Are you still in employment, can you continue employed whilst getting the business established.. 

(HMRC don't mind how many jobs or sources of income you have...)

But.. Some employers have strict rules about outside activities and any potential conflict of interests.

Have you had to borrow money to start your business, Beware of terms of finance agreements and potential increases if interest rates change.

What is your current standard of living, if starting a new business this may need to drop for a few years whilst you maintain a good buffer of funds to cover for lean times.

Every time you get some money off a customer remember some of it will belong to the Tax Man!! 

Start a separate account to put a bit into off every job so when HMRC start saying you owe this and that you have a pool to dip into.

If you forget about HMRC and you then get a big bill you weren't ready for...  HMRC tend not to be too lenient toward lame excuses!

Decide what your payment terms are, make sure all of your customers know how quickly you expect payment for your work once complete.

Building a good customer base takes time,  which is why a lot of business start ups fail in the early years.

Cash flow and reserves to fall back on:-

At some point you will have jobs delayed, payments delayed or held back.. but you still have to pay your suppliers and other overheads..

This is where you need some reserves to fall back on.

They used to say (when I was starting up) that ideally you need 3months of reserves to keep you going in case of a significant cash flow problem.. 

(or unexpected bills, vehicle breakdowns, tools lost damaged stolen, customer grievance)

Lots of companies have gone into liquidation with full order books....  But no cash to pay their bills and creditors!

Guinness

 

[Evans Electric]

As Spec. Loc says ,  the secret is  cash flow,  cash flow , cash flowcashflow cashflow cashflowcashflowcashflow  and then even more cash flow and then you need to keep the cash flowing  or you will drown .

It is so so so so easy to suddenly find you are subsidising some builder or other.     He will pull up in his brand new Strange Drover  5 wheel drive motor  or the proverbial set of  shiny German wheels  to tell you that he still can't possibly pay you for all that work you rushed through for him  but he'll see what he can do when he gets back from his cruise.   

Fear not my friend ...I too have disturbed a few stones in the past to find one of these creatures is holding us to ransom .....they lurk everywhere .

 

[SPECIAL LOCATION]

Also.... Don't fall into the trap of doing a job cheap as the customer has 'promised' some other work later once that job is done...

'Promised' work is often not real work and quite often never materialises....

If you haven't started a job or got any agreement in writing then don't bank on the work ever starting..

So make sure you get your full value for the jobs you do do..

You can do reductions or discounts, (if worth while), on later work if it does actually happen... 

Don't give any reduction up front.

opcorn  

 

[steptoe]

Also.... Don't fall into the trap of doing a job cheap as the customer has 'promised' some other work later once that job is done...

'Promised' work is often not real work and quite often never materialises....

If you haven't started a job or got any agreement in writing then don't bank on the work ever starting..

So make sure you get your full value for the jobs you do do..

You can do reductions or discounts, (if worth while), on later work if it does actually happen... 

Don't give any reduction up front.

opcorn  

Totally agree with that,

They will earn more discount the more work they give you, not on the promise.

 

[kerching]

Also.... Don't fall into the trap of doing a job cheap as the customer has 'promised' some other work later once that job is done...

'Promised' work is often not real work and quite often never materialises....

If you haven't started a job or got any agreement in writing then don't bank on the work ever starting..

So make sure you get your full value for the jobs you do do..

You can do reductions or discounts, (if worth while), on later work if it does actually happen... 

Don't give any reduction up front.

opcorn  

EXACTLY What he said?

discount the next but one/two job NEVER the current one

prepare a quote, sleep on it....sleepless night, look at quote again!

if it looks like Tastes like Smells like I can almost guarantee that it ain't Creme Brûlée 

 

[Evans Electric]

I'll stick my neck out here and say I think  three sparks setting up on their own is a recipe for disaster , doom & gloom , backbiting ,  petty jealouslys , back sliding,  separate factions formed  and the falling out of former friends.  

 

[johnnythunders]

How will you be at writing up any quotes, contracts, payment terms, letters chasing late payments, or is it just around producing websites you feel weak. Any significant work involving large quantities of materials will need some form of written agreement to ensure any alterations during the work are accounted for, suitable interim part payments are built in, contingency for delays due to other trades and circumstances beyond your control are agreed. Otherwise it will be cash flow that kills you not the lack of orders on the books. 

Doc H.




 

Hey Doc... yes, it's really only the website stuff that is a worry. I mean, it's not a worry, but it's something I know nothing about and is important and is nowadays an important part of business. We carried out some preliminary market reports (from a firm who do not sell the solutions nor suggest third parties) and their figure show that over 60% of new service calls (it's more complicated than that but too long to type up) are now found through the internet. So people have a problem and 60% now go online to find an electrician, repairman, plumber etc. Someone up top said web presence isn't important, maybe not for an established local  firm, but it's very important in large cities where people use the internet for everything. Jesus, they run out of toilet paper halfway through their business and they'll email their mother from the bog and ask her to hand a new one in!  I've experience in all other aspects of business (have a degree in public relations, business management and corporate law). That means nothing, many people with much higher degrees that that have failed, but I am at least confident in that area and have clear ideas and a proper business structure worked out over 18 months. We carried out a survey of our local area and statistically there could function at least four more small firms without oversaturating the market. We're starting out with our own cash float too, and an amount that is sufficient but that we can all afford to lose if we don't take off. So it was more the internet side of things I wanted help with (but did say that any advice would be appreciated so am taking it all in.)

 

[johnnythunders]

I'll stick my neck out here and say I think  three sparks setting up on their own is a recipe for disaster , doom & gloom , backbiting ,  petty jealouslys , back sliding,  separate factions formed  and the falling out of former friends.  




 

Hey again Evans... it's not been a recipe for disaster for many. My old man's firm started out as a three man unit and they did very well and remained lifelong friends. Just looking through Company House there are thousands of successful three  men teams. Just look at PLCs, there are sometimes up to 40 directors and they do very well. It's just a c ase of having clearly defined roles and clearly defined outlines of responsibility. Usually when a firm falls to pieces it was going that way anyway and it was the stress of everything going tit's up that put them at loggerheads. But I don't see why three people will be a problem when many firms have more than three directors and do well enough. If people are just interested in money and profit and getting fat then maybe they should go it alone, but sometimes we do things for other reasons and other challenges than the filthy dollar, and it's often the dollar and the pressures of earning them that makes for a toxic mix. 

 

[steptoe]

Not all directors have any form of control over the business, or any financial interest in it either.

I'd hazard a guess (and it is only a guess) that at least 3 times more businesses with more than one stakeholder in it fail over sole owners.

 

[johnnythunders]

Not all directors have any form of control over the business, or any financial interest in it either.

I'd hazard a guess (and it is only a guess) that at least 3 times more businesses with more than one stakeholder in it fail over sole owners.




 




 

I'd suspect that that isn't the case at all. We can't just guess these things. And one statistic that isn't a guess is that the more money you have to invest the better chance the business will have of taking off. Usually a business with multiple directors starts off with a much bigger cash float and more opportunity to get off the ground. While one is working on marketing, the other can be doing the work and the other can be sourcing clients. One person alone cannot do all of that - rarely financially and never physically. So, just on that basis it's much harder to take off as a sole trader. Every other person I know has gone into business alone and they've mostly all pulled out. But whatever the reality we can't just guess at things and worse, guess a number. I remember a friend telling me years ago that people will always try to scare you out of business. There's a good psychological reason why as well. But I prefer to think positively. One sure recipe for disaster is going into something with negative thoughts, thinking "This will never work!"  That's not how I live or see the world. 

 

[Kurt]

where there's a will there's a way. Good luck for future. My business model is very different, I have a small set of clients and cover more than electrical. my website is pants but I don't advertise and as such its only there as a marker. I still think the best business is repeat. For this you need to build up a client base, this takes time for me it was 3 years before I could feel comfortable about future work. If a website is important, then you will be getting enquiries from people/ organisations you do not know, so be careful and get proper software to check out a clients credit risk. I used a free one from the bank until they wanted to charge, by then I got to know the clients business well enough to know how they were doing. Today I have enough work and look very closely before accepting work from people / orgs I do not know.. Very often the referals work the other way, i.e. people I trust in business tell me if they are good people to work with. Otherwise I decline.

 

[Doc Hudson]

As long as you go into it with your eyes open having done as much homework and research before hand as possible and you give it 100% then if it does fail you can honestly say you gave it your best shot. Problems come when people try to start a business with a blinkered approach and miss out glaringly obvious basics that they should have covered at the start. Whatever you try whether sole trader or  partnership or Ltd company, it is still in the first five years that more business startups fail. But a lot of those who do fail have no regrets in trying. It can be better to have a go and fail, (and learn from your mistakes), rather than never try at all. If you feel reasonably confident that your business plan is viable then go for it. You don't want to be thinking in a few years time, "I wish we'd tried to set up that company in 2017".  In principle its no different than investing some money in the stock market, It may make you a modest or good return, or it may make you a loss, or it may sit stagnant for a few years. Providing you can ride any potential financially loss then you haven't really got much to lose. Nobody ever achieved anything without taking a few risks. I wish you well in your project.  Back to your website question and your research about what percentage of people find trades via the internet, those type of search results need a lot more work (and money) to get up the search engine rankings than just a nice website. From you comment in the original question asking for recommendations that are "not to pricey" this may not be feasible to get to where potential customer can find you easily.

Doc H.      

 

[johnnythunders]

where there's a will there's a way. Good luck for future. My business model is very different, I have a small set of clients and cover more than electrical. my website is pants but I don't advertise and as such its only there as a marker. I still think the best business is repeat. For this you need to build up a client base, this takes time for me it was 3 years before I could feel comfortable about future work. If a website is important, then you will be getting enquiries from people/ organisations you do not know, so be careful and get proper software to check out a clients credit risk. I used a free one from the bank until they wanted to charge, by then I got to know the clients business well enough to know how they were doing. Today I have enough work and look very closely before accepting work from people / orgs I do not know.. Very often the referals work the other way, i.e. people I trust in business tell me if they are good people to work with. Otherwise I decline.




 

Thanks Kurt, that's great advice. I agree about the referrals. Most companies I know get between 50 - 75% work through customer referrals and recommendations. I hope I can eventually get to somewhere near to where you guys are.

 

[johnnythunders]

if it looks like Tastes like Smells like I can almost guarantee that it ain't Creme Brûlée 





 

Well it may be Mor**sons creme brulee... some of their stuff  tastes worse than how it comes out 8hrs later (not that I eat my own cr*p, of course). 

 

[johnnythunders]

Thanks Doc. Will have to look into the online thing much more I guess. The chances are if you trust someone they'll do as little as they can for as much as they can. And you can watch someone as closely as you like, but if you don't know what the hell they're  doing it's not close at all. It's how magicians get away with their sleight of hand: you're listening to the patter and over to where they point. And just under your nose all sorts is going on.

 

[user 28595]

Using one or more of the trade referral sites, My Builder, Check a Trade etc, may be more powerful lead generators than a flashy web site.

cheers, Paul

 

[Murdoch]

Expecting too much from a website is a common error in a trade, sure it will bring in enquiries BUT I can assure you, from years of personal experience, that the majority of "wasted time" I have, talking and visiting clients, comes directly from internet based enquiries.....

 

[binky]

better off advertising in a local rag, the sort that gets pushed through your door. You will get lots of crappy little jobs, and customers like to see an advert in these for a few months before they phone, but from these little jobs will come referrals.