Welcome, intro....

thatchmo
By thatchmo on Thu, Sep 13, 2012 - 11:34pm

Hi all.  It's said that small business- usually defined as those employing less that 500 souls, I believe- is the lifeblood of the American economy.  I'm an inhabitant of one of the smallest capilaries, with a business of 6 employees.  Been at it for 26 years.  I sell and service lawn and garden power equipment and marine supplies.  As an entrepreneur, I've always been willing to look at the positive aspects of the future, you know- "glass half full".  But since the events of the last 4 years, and my understanding of such, it's been hard to maintain a long-term positive outlook.  I feel that I've put my business on hold and let it just drift a bit with the current, rather that pro-actively paddling upstream.  Business has slowed some the last few years, and I've put off some rather large decisions whose long-term outlook were just too hard to confidently predict.  Being extremely financially conservative, sometimes to my detriment, can help cause decision lock-up.   Hate to think that I'm just waiting for the SHTF,  but that would probably be an accurate assessment of my current forward-thought, though I know it may be years away.  How are you guys doing?   Aloha, Steve.

5 Comments

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1982
make your own opportunity

thachmo, if you are a capillary, I am a red blood cell: a self-employed sole proprietor.

And whereas you've been at this a while it is all new to me. I'd been what is called a "wage slave" up until I moved to SC from NY. I quit my engineering job to marry a Southerner and moved to a new area at the worst time to find a new position: mid 2009. Not only were jobs were scarce in general, but my industry (construction) was decimated. Then I discovered that my specialty, safety engineering, was mostly based in the manufacturing industry, and that SC had a state OSHA - which meant both my industry experience and my specialty experience were defficient. I'm in my mid-fifties so the whole "overqualified" (read: too old) bit was a factor but the final nail in my employability coffin was a congenital hip malformation that chose 2009 to manifest, causing a 1.5 gap in my resume.

So I made my own position. In my case I called my former employer and asked what I could do remotely. He pays me as an independent contractor, with a 1099 form instead of a W-2 at the end of the year. S.C.O.R.E. was a big help: the Senior Corps. of Retired Entrepreneurs is a free resource in the USA and helped me with a business plan. I became licensed by the state of South Carlolina, which was way easier than I expected: two hours online doing a questionaire to see which business format was best for me (LLC), $170 via debit card, and in two days a PDF of my business license was emailed to me.

I learned what an Opertional Agreement was and where to get professional liability insurance. My accountant explained that since we are married filing jointly that my business income gets rolled into our joint income. Since my husband pays half his take-home pay in tax-credited alimony we kept every penny I made last year. It was not a lot but it was pretty cool to be bringing in an income again, and making a profit my first year!

thatchmo's picture
thatchmo
Status: Gold Member (Offline)
Joined: Dec 14 2008
Posts: 432
skills=opportunity

Thanks for sharing your story safewrite.  I think there will "always" be opportunity for those with marketable skills and the desire to work.  Thats where I started many years ago, as a one-man auto repair business.  I often long for those days of total control and simple overhead.  I was a mechanic, now I'm a paper-shuffling, computer-stareing, phone wrangler.  And part-time psychologist and fireman- both unpaid positions benefiting employees and customers. 

One of my challenges of owning an "old-school" bricks and motar service business is my physical facility.  It is leased, built in the '30's, inefficient, too small, and- depending on your outlook- is character-rich, or a dump.  There is a newer, vacant building down the street that was once used for a similar business.  It would be a big improvement over my current location, though not perfect.  The asking price is $1.4 mil.  though that is quite high in the current market, I believe.  Even a lease arrangement would increase my monthly costs several thousand dollars.  Just the move and refurbishment of the new place would probably cost $50-100K. Huge savings hit. 

I'll turn 60 next week, and truthfully, I don't feel compelled to saddle myself with hugh debt at this point in my life- though the upcomming inflation might ease that pain some.  Though 18 hour days were no sweat 20 years ago, not sure I have the personal energy to do such a project.  Business has been slow the last few years (my fault, or the economy?) so will my business support the increased debt load?  I guess as a corporation, I could load up on debt, roll the dice, and if it doesn't work out, so be it. 

Anybody taking their business up to the next level, confidently or otherwise?  Aloha, Steve.

 

wmarsden's picture
wmarsden
Status: Bronze Member (Offline)
Joined: Apr 6 2008
Posts: 38
I'm not sure I can keep this

I'm not sure I can keep this analogy going; I'm a sole proprietor who hires staff seasonally.  Bigger than a red blood cell, smaller than a capillary.  Perhaps I'm a clot.

 

But, yeah, I'm thinking of taking it to the next level.  I'm thinking of relaunching a revamped version of my business in a new location with more products and - big shudder - full-time employees.   It's not the debt load that I'm worried about; the debt would be self-liquidating, i.e., I'd make more money so the debt would be killed off by that income.  (If I didn't think this was true I wouldn't do the jump.) 

 

My problem is the horrors of hiring employees.  I live in Massachusetts where hiring someone is about as serious as marrying them and I'm running numbers over and over again trying to determine if I can make enough money to be worth the aggravation.  Short answer?  Maybe not.  It's starting to look like the only way to create jobs is to do it as a charitable act, i.e., not make any profit on it.  I'm not sure I wish to pledge myself that way.  Frankly, I work for the money, not for the prestige of being a business owner of the power of having minons.  If I can't make money by hiring, training, and supervising them than I'd rather find another hobby.

 

Meanwhile, I've got an underserved client base who are doing without a service I could provide.  The pie grows larger if I do this.  The whole community is better off; people without jobs get jobs.  Clients without services they want get the services they want.  Theoretically I make money.

 

So I am tossing the idea around.  I just keep getting stuck on the whipping boy aspect of being an employer.  I'm not even sure I can manage employees with employee mindsets after 15 years of never getting paid for a day I didn't work.  

 

So, to relate this all back to this forum, I'm wondering how it is possible to create a resilient, sustainable business when employees don't GET it.  They just want a "living wage for all Starbucks Baristas" (a recent rallying cry around here) without ANY thought to just how many Starbucks will exist if every barista makes $40K.  Honestly, we just don't bother to open the Starbucks in those situations!  (Not my actual business, just an analogy.)  Point is, how do we get people to realize that a good job isn't necessarily one that rakes in big bucks, but is one that improves your community, provides a good or service that people want that wasn't there before, that is a safe and friendly and meaningful place to go to work each day?  

 

Oh, another gripe: my office is frequently as cold as 62 in winter and as hot as 80 in the summer.  I wear sweaters in the winter and tank tops and capris in the summer.  But employees seem to expect that the climate will be controlled to 72 degrees both winter and summer.  I'm sitting here living in the real world and they're insisting that the artificial world continue.  I just don't want to marry these people!

 

So, yeah, I'm thinking about how to be an employer in a transitioning world.

thatchmo's picture
thatchmo
Status: Gold Member (Offline)
Joined: Dec 14 2008
Posts: 432
wmarsden,Thanks for joining

wmarsden,

 Thanks for joining in.  I feel your fears- let me show you my scars!  When it comes to business, I could have just as well titled this Group "On Dealing with Employees".  I have a pretty good crew now, but I've had some bad actors.  There are a million books on hiring and firing and employee relations out there.  My suggestion: don't just hire a pulse and 98.6.  Hold out for a person your gut says is good.  This will probably work for you about half the time.  When it doesn't, you will probably know about it in the first month.  I've often wished I was much tougher initially on new employees who tried to see what they could get away with.  The worst is when there is just a personality conflict between you two.  Most will be sweet-as-can-be to get the job- then things mysteriously change....Document any issues you have with a problem employee!  I always eventually have a formal meeting with a problem employee, but by then it's usually too late.  Hawaii allows an initial 90 day period where an employer can dismiss a new employee for any reason- no harm, no foul.

  As the poster child for the Peter Principle (rising to the level of your incompetence), "proper" employer relations with my employees comes hardest for me.  As an entrepreneur, I understand what it takes to make things happen in business.  I'm amazed at times how some employees just don't get the idea of Work, Provide Good Service, Watch Your Overhead, Make a Profit, Get Paid.  But I do strive to diligently educate my employees to these ideas.  I think it is beneficial to let employees know where and how they fit into the picture to get to that Get Paid part.  If they're building widgets, they need to know how many they have to build to be valuable to the company.  Service jobs are a little tougher to define, but certainly possible.   I'm working on this with some employees now.

I've read it a dozen times in polls that making money is way down the list of most employees desired job benefits.  Most want respect, a chance to advance, comfortable working environment, acknowledgement of a job well done- stuff like that.  Stuff that is sometimes easy to overlook as an employer in the busy-ness of the working day. 

As our economy moves forward (sideways, down?), and jobs become more dear, as long as you can maintain your customer base, you may find good people will be coming to you for employment.  Then you get to chose the plums.

If you expand and hire, there WILL be days when you long for the simplicity of that long-lost sole proprietorship.  But as you've indicated, there are benefits to creating a "bigger pie" and it's neat and rewarding if you can pull that off, without pulling all your hair out.  Sounds to me like you have a good grasp on what you need to do.  Best wishes and good luck.  Oh, and regarding the 62 degree days- buy your employees sweaters with your logo on them.  Inexpensive, and shows you care...  ;^)  Aloha, Steve.

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1982
expanding and hiring - and taxes

Young people are hurting even if they "get" what it takes to get ahead. One of my sons can only get part-time work until the next election, because employers do not want to deal with a healthcare system in a state of flux. Still, he has a job. Demographically, you'd think younger people would have an easier time getting hired. I wonder if part of the reason that older people are keeping theor jobs and younger ones are having a hard time is not just the fact of inflation and ruined retirement accounts. Are older people more likely to understand how profit runs businesses? Or is it their skills?

It's kinda scary that so many young people (and politicians, and governement workers) don't seem to get the obvious fact that if a business is not making at least enough to cover all the expenses of a new  employee , they will not hire. You want jobs as a "right?" Look at the old Soviet Union: it imploded to a large extent because of that. The same thing is happening in China via bad debts over workers building the ghost cities. No profit there.

I did my best to raise three sons who understand that unless they make a company money, their employment is at risk. And they've all run a small business as preteens - I made sure of that. In NY, on Long Island, the public schools were not doing the job of teaching young people to suceed except for an extracurricular club dedicated to entrepreneurs. But teaching how the real world works should not be an afterthought!

In my case, as a consulting engineer, I have all sorts of opportunities coming up to expand and hire, but I will only be hiring independent contractors - fellow consultants who already have their acts together, and their average age is 60. The only person I am not planning to hire via a 1099 is my husband.

According to my lawyer and my accountant, I can sell my husband part of my "membership" (if I understood them correctly an LLC has members, not shares, and right now I have 100% of my LLC's memberships) and since we are married filing jointly any profit would still get rolled into our personal income taxes. Since he pays half his take-home pay in alimony, and that's tax-deuctible, so far I have not had to pay taxes on my start-up earnings. When he retires from a Fortune 50 company (at a grey collar job where he is both a technician and programmer)  I will fold his continuing work for his clients into my business. Hiring a young person with no skills full time could never happen for my business: there is no brick-and-mortar store to clean or staff with even a receptionist - it's just me and my laptop and very specialized skills, working from home. I wonder if that's the wave of the hiring future for a lot of businesses. If so, it does not bode well for the future.

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