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Starting a Woodworking Business #5: Got some advice & help today

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Blog entry by Sam Yerardi posted 1764 days ago 1065 reads 0 times favorited 8 comments Add to Favorites Watch
« Part 4: Home Alone Part 5 of Starting a Woodworking Business series Part 6: Kitchen remodel prospect »

I met with the SBA (Small Business Administration) this morning and discussed my business startup. She gave me a lot of good advice and is going to help me with my business plan. She looked over everything I had put together so far and the direction I told her I am planning to go in. She said I was doing things the right way and suggested at first finding either a bookkeeper or an accountant and let them take care of what they’re good at, and me take care of what I’m good at. In the meantime, she gave me a spreadsheet for calculating cash flow, profit, and other business details. She told me her uncle got laid off from the same place I did. I asked her what his name was and it turns out he is my best friend! Small world….

So based on what I have learned so far, I will probably structure my business as what is known as an LLC rather than a sole proprietorship since I will be doing remodeling as well as producing salable items. She recommended making the business license the last thing on the list because the monthly reporting is enforced for each month thereafter even if I don’t sell anything applicable. She said a lot of people make the mistake of getting a vendor’s license first, and then not filing until they’ve sold something that is applicable. Unfortunately the state of Ohio sees it a bit different… so I will wait.

My next step is to register the business name I am going to use. I won’t say what it is until it’s registered since it’s still unused at this time, and the web site I will get will use the name as well. I will then talk to my attorney to set up the LLC properly. There will be a state of Ohio fee as well as the attorney fee.

One thing I definitely won’t be doing is borrowing money to start my business… Sam Maloof gave good advice and the lady at the SBA said the same thing. A business does take cash to run but if you don’t need to borrow at first – don’t. I’ll use funds from my severance, buit I will be very cautious.

I also picked up a schedule of business seminars and classes that the SBA will be offering throughout the rest of the year. I will try to go to them as much as I can..

Thanks for reading…

-- Sam



8 comments so far

View reggiek's profile

reggiek

2240 posts in 1872 days


#1 posted 1764 days ago

Sounds like you are well on your way. If you are doing remodeling…check on your states law regarding obtaining a contractors license. In CA you cannot sue a non payer on a contract over $500.00 if you do not have a license. You will also need to check on Workers Comp Ins…...some states require it even for the owner.

Also, with a contractor license, you will have much more leverage to collect on your jobs…i.e. filing mechanic liens…etc….In this economy collections is a task that comes up more often then not…

There are typically very good study courses for passing the contractors license exam….I would highly recommend such if you intend to do work on other folks homes….it gives you credibility… the collection tools…and will assist you in obtaining commercial accounts with material suppliers…a must since contractors don’t get paid up front and sometimes for 30+ days after a job is complete.

Good luck on your endeavor….if you are diligent and your work is done well you should be able to obtain jobs. Make sure you cost your jobs properly….nothing is worse then ending a job and finding there was not enough money in there…..also…be aware that when a customer changes his mind…you must re-negotiate a change order…all contracts regarding real estate (home remodeling is considered under this) should be in writing…and all change orders must be in the same form as the original agreement. There are good home improvement contract templates under the AIA (American Institute of Architects)....make sure you have a good boilerplate to work from (you can have your attorney help you draft one too).

Whew…sorry to throw so much at you…but running your own business is not a simple endeavor..

-- Woodworking.....My small slice of heaven!

View Todd A. Clippinger's profile

Todd A. Clippinger

8720 posts in 2702 days


#2 posted 1763 days ago

It is a relief to see you starting out the right way. My advice was based on the fact that I did not start this way but I had to straighten myself out.

The goal is to set yourself up for the best chance of success.

One of the good things about remodel and home repair, you will bid against others, but it can’t be outsourced to another country.

-- Todd A. Clippinger, Montana, http://americancraftsmanworkshop.com

View Sam Yerardi's profile

Sam Yerardi

244 posts in 2498 days


#3 posted 1763 days ago

Thanks guys! Both of you have been very helpful and I will be picking your brains in the coming days & weeks… Thanks again!

-- Sam

View Grumpy's profile

Grumpy

19322 posts in 2453 days


#4 posted 1763 days ago

Good luck & best wishes Sam.

-- Grumpy - "Always look on the bright side of life"- Monty Python

View reggiek's profile

reggiek

2240 posts in 1872 days


#5 posted 1763 days ago

No problem…pick away…LOL As Todd indicated above…it is better to hear about the mistakes from others…then to make them yourself….some mistakes can be very costly to fix…

Also, Todd is correct about the bidding process….I have done a tremendous amount of estimating…(On average you may find yourself bidding around 4-5 jobs for every 1 you obtain – sometimes more…sometimes less). I enjoy the competition…and also that the majority of time when I bid those kinds of jobs…I was bidding based on my skills and experience….so when I got the job it was because I could do it quicker and more cost effective then the other guy….I still was able to get a lot of jobs due to repeat business or referral.

All in all I enjoy what I do…even now that I am involved only in commercial/municipal work…..This has helped to keep me going in times that were tough….contracting can be a feast and famine type of industry…sometimes you have more work then you can handle…sometimes you are begging for the smallest job.

-- Woodworking.....My small slice of heaven!

View Todd A. Clippinger's profile

Todd A. Clippinger

8720 posts in 2702 days


#6 posted 1763 days ago

Yeah, feast and famine it is.

This last year has been rough and I don’t see work as far down the road as I used to. But something always seems to come through just in time and I always survive.

-- Todd A. Clippinger, Montana, http://americancraftsmanworkshop.com

View Innovator's profile

Innovator

3584 posts in 2016 days


#7 posted 1763 days ago

Sam it sounds like you are getting off to a good start. I have worked with SBA before and they are fantastic.

Good Luck
Rob

-- Whether You Think You Can or You Think You Can't, YOU ARE RIGHT!!!

View SteveMI's profile

SteveMI

845 posts in 1897 days


#8 posted 1762 days ago

Sam,

Changes are inevitable, so make sure the original estimate/agreement is specific in the materials and extent of work. Name the brands and grade of material, note the square footage or number of items, state who is to dispose of the debris and put timing by date. Worst thing is when both sides actiaually understood it differently and what was written down isn’t clear enough to defend your side.

Oh, and the very best of experience.

Steve.

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