Adventures with lyrical - buying a business
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People bag on lyrical for saying it"s tough to find good workers....he"s not wrong.
Much like common sense being not so common...funding even competent work is difficult.
Example.
There are three types of employees.
1. People who encounter a problem. In doing whatever it is they are supposed to be doing and just stop there. They don"t let anyone know that there"s a problem they don"t let anyone know they"re no longer doing whatever task they"ve been assigned and later when someone notices they just shrug.
2. People who encounter a problem and tell someone about it but it stops there because now that they e told someone else its no longer their responsibility to still deliver in their head. no introspections as yo what"s causing the problem or if they caused the problem, its now someone else"s problem.
3. People that encounter a problem, communicate the problem and let you know what their plans are to solving it.
Ratio of these types? 40/55/5.
And these are just employees. People that are upper level material see problems that may impact the company and take it upon themselves to get proactive about it. Those aren"t employees those are "future management/execs/successful business owners."
But here in America where people look down their noses at landscapers, everyone thinks that getting by is the same thing as doing a good job. Its not. Even doing a good job only lands you in that 5% and that"s not exceptional. That"s what you should be doing.
End rant.
Much like common sense being not so common...funding even competent work is difficult.
Example.
There are three types of employees.
1. People who encounter a problem. In doing whatever it is they are supposed to be doing and just stop there. They don"t let anyone know that there"s a problem they don"t let anyone know they"re no longer doing whatever task they"ve been assigned and later when someone notices they just shrug.
2. People who encounter a problem and tell someone about it but it stops there because now that they e told someone else its no longer their responsibility to still deliver in their head. no introspections as yo what"s causing the problem or if they caused the problem, its now someone else"s problem.
3. People that encounter a problem, communicate the problem and let you know what their plans are to solving it.
Ratio of these types? 40/55/5.
And these are just employees. People that are upper level material see problems that may impact the company and take it upon themselves to get proactive about it. Those aren"t employees those are "future management/execs/successful business owners."
But here in America where people look down their noses at landscapers, everyone thinks that getting by is the same thing as doing a good job. Its not. Even doing a good job only lands you in that 5% and that"s not exceptional. That"s what you should be doing.
End rant.
Blazin
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So how do I fix this? One of my entities has been doing rather well and I have a major tax nightmare baring down on me. I"ve been quite stressed lately because I"ve always followed pretty stringent financial rules for myself. I don"t borrow money I pay for everything in cash, but that sets you up in the worst possible way when it comes to taxes.
I have no interest in cheating my taxes, I just wish the government gave me more choices other than wasteful spending or just sending it to Washington. I keep feeling like I need to borrow money and buy real estate, but after living debt free for so long it"s hard to go that route.
I wouldn"t post this in any other thread besides this one because I know to others it may seem like a trivial issue, "Oh lordy day look at me, I made tons of money now have to pay taxes!" It"s just when I think of all the time put into it to make the money it"s very hard to just hand over half of it, but for some reason if I bought myself Class A office space with gold plated floors that"s A-Ok but if I don"t want to give it to Uncle Sam I"m a smuck
I have no interest in cheating my taxes, I just wish the government gave me more choices other than wasteful spending or just sending it to Washington. I keep feeling like I need to borrow money and buy real estate, but after living debt free for so long it"s hard to go that route.
I wouldn"t post this in any other thread besides this one because I know to others it may seem like a trivial issue, "Oh lordy day look at me, I made tons of money now have to pay taxes!" It"s just when I think of all the time put into it to make the money it"s very hard to just hand over half of it, but for some reason if I bought myself Class A office space with gold plated floors that"s A-Ok but if I don"t want to give it to Uncle Sam I"m a smuck
Blazin
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Lyrical I forget half of what I"ve read in this thread over the years, what type of retirement account are you using? Do you have enough guys that you do a 401(k)? SEP, or SIMPLE?
I"m looking at an Individual 401(k) which is new to me, but because this entity doesn"t have any common law employees, I"m trying to figure out the based way I can set money aside while reducing current tax load.
I"m looking at an Individual 401(k) which is new to me, but because this entity doesn"t have any common law employees, I"m trying to figure out the based way I can set money aside while reducing current tax load.
Shonuff
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Yeah, being totally debt free isn"t always good. I have about 75k a year in depreciation and amortization (from the goodwill of the company) as a tax shield, plus we are getting 25-30k a year in a tax shield from our vehicles that are getting the .55 a mile deduction. Think about it, I"m paying $300 a month to get 3k a month in writedowns, so at that rate, I need to keep some debt.Blazin said:
Maybe you could buy some equipment and do some sort of accelerated depreciation? Some of it could be written off 100% this year. You could also maybe prepay some advertising? Is there some way you could invest it in your business? Maybe retention or merit bonuses? You also mentioned retirement, I don"t believe the company pays on retirement payments.
I"m not the expert on this, you probably should schedule some time with your CPA.
Shonuff
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Has it really been years? Wow.Blazin said:
I"m not doing a 401k, for them, or me. I have too much money going out (some jobs are 100k and they take 90 days to pay), and if I"m making 20% profit before overhead, it"s way better than the market is doing. And I"m amazed how a single guy making $800 a week after taxes, with no kids and low rent, can blow all of his money at the casino. This is the midwest, mind you, it"s a lot lower than the coasts cost-of-living wise. Unfortunately, to the uninformed, it makes more sense to go play the slots.
I believe an IRA would be the way to go for yourself.
Shonuff
Mr. Poopybutthole
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And thankfully, we are patient enough to have all of our employees be closer to 3. That"s why we go through so many people. My profitability is much higher than my competition"s because we only take employees that give a damn.Etoille said:
P.S. Because we do work with the major cities and wealthiest clients, no one is looking down at me. I was recently accepted into the wealthiest country club in the state, and didn"t have to get approved through the board. Normal apps took 1.5 weeks, we were in within the hour. They knew we did work for CEO"s and Execs in the area, and that was all they needed to know. Do good work, and good things will happen to you.
A fuckload of employers are also in the cat 1 and 2 and fucking buttraping their companies, you"d be surprised how long a fool can stay with his money
just get an accountant and get some debt, 1st world corruption, but its how the game is playedBlazin said:
Paying taxes means you"re making money. When it comes down to it, it means your business is doing well and you"re contributing to society. People that get a raise at their job don"t go home thinking "Oh my god think of all the income tax I"m going to have to pay now", they think "Sweet, I"m making money and becoming more successful" and that"s how you should feel about your business having to pay taxes as well. Get a good CPA and follow his advice with regard to capital expenditures and depreciation and all that jazz, but don"t sweat it IMO, it"s really a good thing.
Blazin
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Not really what I was talking about most people making 300-400k have a schedule A of around 60-80k. I life relatively frugal for my income lvl and last year had to take the standard deduction. Our tax system penalizes any life style besides one steeped in debt. I dont have a 7000 sq ft house, i have no mortgage or any debt for that matter. Why does a person in a large house pay less tax than me even when we have same income. So if I consume more resources than any individual who cares about the world large, I"m penalized with a larger tax bill.
I know you guys are right with, get a CPA and get to spending but that is a shame.
I know you guys are right with, get a CPA and get to spending but that is a shame.
Shonuff
Mr. Poopybutthole
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Living too frugally and making too much don"t mix, you need more debt, deductions, equipment, and you could also trying paying bills ahead to get a discount. You don"t necessarily need to do it with debt, some equipment can be written off 100% in the first year.Blazin said:
It is what it is. Bitch all you want, but we all know you need to sit down with your CPA for two-three hours. And he"s going to bill you and grin, but you"ll save a ton more in the long run.
Shonuff
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I"m going to post more of what we do, since I get a lot of questions about labor and skills. I enjoy my anonymity, but it"s not hurting me to say what we do. None of these are my companies.
Getting a guy who is not afraid of heights is one thing, teaching him to climb up and not take all day takes one year. Then it take another year to learn what to cut, and then another year to get fast and good.
Like I said, I"m able to charge $80 an hour times four doing this, so $320 an hour. We used to run two crews and bring in almost $500 an hour, but I can"t find anyone who can do this, and have good work habits. The either have no skills, or all of the skills (but bad attitude). As we come into Fall, other companies start slowing down, so there will be more good employees that just get cut because of the time of year. With all of the advertising I"m doing, we are the only company that works all year round. My competitors just get business from word-of-mouth, but we get it from word-of-mouth, repeat biz, radio, billboards, yellow page ads, internet directories, google adwords, etc.
We do work for the local cities, CEO"s, and Execs. No bull, rich people have a lot of land, and they will spend $20k an acre making sure their tree work is perfect. Since this is dangerous work, we are fully insured, and it means a lot of times we are the only ones able to bid on big commercial jobs.
<iframe width="420" height="315" src="http://www.youtube.com/embed/_VLHd6FBBzE" frameborder="0" allowfullscreen></iframe>
And this would tell you all you need to know about equipment. My buckets cost up to $110k, we don"t buy the cheap ones.
<iframe width="560" height="315" src="http://www.youtube.com/embed/iv6xckm-oSY" frameborder="0" allowfullscreen></iframe>
Getting a guy who is not afraid of heights is one thing, teaching him to climb up and not take all day takes one year. Then it take another year to learn what to cut, and then another year to get fast and good.
Like I said, I"m able to charge $80 an hour times four doing this, so $320 an hour. We used to run two crews and bring in almost $500 an hour, but I can"t find anyone who can do this, and have good work habits. The either have no skills, or all of the skills (but bad attitude). As we come into Fall, other companies start slowing down, so there will be more good employees that just get cut because of the time of year. With all of the advertising I"m doing, we are the only company that works all year round. My competitors just get business from word-of-mouth, but we get it from word-of-mouth, repeat biz, radio, billboards, yellow page ads, internet directories, google adwords, etc.
We do work for the local cities, CEO"s, and Execs. No bull, rich people have a lot of land, and they will spend $20k an acre making sure their tree work is perfect. Since this is dangerous work, we are fully insured, and it means a lot of times we are the only ones able to bid on big commercial jobs.
<iframe width="420" height="315" src="http://www.youtube.com/embed/_VLHd6FBBzE" frameborder="0" allowfullscreen></iframe>
And this would tell you all you need to know about equipment. My buckets cost up to $110k, we don"t buy the cheap ones.
<iframe width="560" height="315" src="http://www.youtube.com/embed/iv6xckm-oSY" frameborder="0" allowfullscreen></iframe>
The other option and far better if possible is to move your business/assets offshore.Lyrical said:
Shonuff
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There is research behind the bolded part (in the book, the "Millionaire Next Door"). The more dull an industry is, the less likely there will be competition, and thus, there are higher profits. It is more interesting with us because we don"t do just residential work, we do huge jobs up to 100k for municipalities and corporations. Also, for someone who has full insurance, I"m the only guy left on large bids who can qualify. Boring or not, $320 an hour is a lot, if you are maintaining your equipment. Some days, like today, I"ve brought in 500 before I got out of bed. We average $1-1.2k in profit a day (after add-backs). That was what my two week check was for many years at a Fortune 10 company I worked at. So in a Spring month, I"ll make more in that month than I did in a year working for a corporation. I don"t need a bright spot, I make a lot of money, and if I want to take off, I can. I have a secretary, manager and crew leaders. If I wanted to take off this week and play the new WOW xpac, I could. Not only that, since my competitors don"t have a half a brain, because this is all they"ve done, it makes it easier to dominate.Brutul Tarew Marr said:
In general, tree trimmers do it because they are a tree trimming family, and that is all that they have done (and they know). Dad maybe didn"t talk about college, he talked about tree trimming. Right now, my laborers are split between two families. Invariably, they learn from Dad, Dad owns his own business, but Dad doesn"t pay half of what we do, so they come over here.
We look for this type of guy that is a 2nd, 3rd or 4th generation trimmer. They do love this, because it"s all they know. This is the type of guy that got into it because their first memory is of their Dad in a tree. We stay away from no shows, druggies and alcoholics; the ones that have to do it. Obviously, if you are roped in a tree 75 feet high, I don"t want you to be stoned or drunk, a claim could be a million dollars if someone dies. This is why any sign of erratic behavior and you are out of a job. I"ve seen so many guys on drugs, that I don"t have to test for it. I can see it.
Shonuff
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Ugh, my last two applicants that called looking for work are known drug abusers. The first guy worked for me in the past, and he"d come to work and lay down on the ground a lot. The guys sent his ass home. The second guy we called friends of our laborers who work at other tree companies asking about him, and the word is that he loves pills (which is why he can"t stay employed). He didn"t even show up for his interview.
I"m probably stretching throwing tree trimming in with the rockers and tapers of the world. I know jack shit about tree trimmers obviously.
What you are saying about the generations of trimmers things sounds similar to the cattle business. There are guys I know that grew up on a ranch but didn"t inherit it and spend most of their life trying to get back into that life one way or another even though there is pretty much no money and no future in a hired ranch hand job but they define themselves by that lifestyle and they just can"t imagine doing something else.
I"m not in that category. I went to college and spent 10 years as an electronics engineer before coming back. I also don"t have a lot of the benefits you talk about. I took a big time pay cut switching jobs and while I can technically take days off whenever I want to, I have so much work to get done that I take maybe 1-2 days off per month, and none at all in the busy times of the year, for the most part I work 7 days a week. Despite all that, I don"t have any interest in going back to my old 8-5 desk job.
I would like to make the business more profitable but looking around at my neighbors I don"t think a lot of people are doing a lot better than us. Most people pretty much put whatever operating profits that they get back into the ranch. I should probably have a hired man if for no other reason than it"s hard to learn and innovate when you"re working 80 hours a week just to keep your head above water. I"m not a people person though and the idea of having someone living on the place and having to deal with coming up with work for them every day, get along with them, and make sure that they"re not taking advantage of me just seems like a lot of trouble. A ranch hand is a bit more of a relationship than your typical employee because they would be living out here with me and it would pretty much just be me and them every day. On top of that, it would cost me a good chunk of my budget every year, I would probably have to pay them more than I currently pay myself to get anyone decent, and things like capital investment would have to suffer and there"s no guarantee that the extra time that would free up for me would generate any significant revenue.
What you are saying about the generations of trimmers things sounds similar to the cattle business. There are guys I know that grew up on a ranch but didn"t inherit it and spend most of their life trying to get back into that life one way or another even though there is pretty much no money and no future in a hired ranch hand job but they define themselves by that lifestyle and they just can"t imagine doing something else.
I"m not in that category. I went to college and spent 10 years as an electronics engineer before coming back. I also don"t have a lot of the benefits you talk about. I took a big time pay cut switching jobs and while I can technically take days off whenever I want to, I have so much work to get done that I take maybe 1-2 days off per month, and none at all in the busy times of the year, for the most part I work 7 days a week. Despite all that, I don"t have any interest in going back to my old 8-5 desk job.
I would like to make the business more profitable but looking around at my neighbors I don"t think a lot of people are doing a lot better than us. Most people pretty much put whatever operating profits that they get back into the ranch. I should probably have a hired man if for no other reason than it"s hard to learn and innovate when you"re working 80 hours a week just to keep your head above water. I"m not a people person though and the idea of having someone living on the place and having to deal with coming up with work for them every day, get along with them, and make sure that they"re not taking advantage of me just seems like a lot of trouble. A ranch hand is a bit more of a relationship than your typical employee because they would be living out here with me and it would pretty much just be me and them every day. On top of that, it would cost me a good chunk of my budget every year, I would probably have to pay them more than I currently pay myself to get anyone decent, and things like capital investment would have to suffer and there"s no guarantee that the extra time that would free up for me would generate any significant revenue.
Shonuff
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You can"t work on your business, if you are working in it.My competitors work in their businesses, and they might work six months out of the year every day. I think we"ve no gone 18 months straight where my guys have had unlimited hours available to them. Someone has to take the bird"s eye view, if no one does it, you never know where your next check is coming from. I don"t spend 15-20k a month in payroll because I want to, it"s because I need them.Brutul Tarew Marr said:
I know very little about your business, other than I see small players struggling to do it. But I"ve known guys that had a bunch of people working for them, tons of equipment and buildings, that were Millionaire ranchers.
Simply put, how can you expand your hustle? This is when you take all of that book learning and put it to use. You have a lot of brainpower, you just need to focus it all into how you can make more cash. If you"ve go to do something all day, at least you can wok on lining your pockets.
That is a very interesting piece of advice. As I"m starting my own business here in a couple of months I"ve thought of this. The eternal, do I hire someone or run it myself. I was swaying towards being closed 1 day a week etc, single person business. However I think hiring an employee to work 4 days, my 2 busiest and 2 days off could allow me to still expand the growth.Lyrical said: