Help Starting A Small Business

MikePowers321

Well-Known Member
#1
So this spring, I intend on starting my own small business. I have read all sorts of information on how to start it legit, or at least the best possible way for first starting out. Yet I always keep running into confusions. It would be very advantageous for me, if someone can just tell it to me straight....in terms of taxes, insurances, workman's comp, etc......all tips are helpful.

I am keeping it simple. I now live in a small town in New York. Word of mouth gets a lot of work around here. I will be working with one other guy (good hometown friend) as my groundman. But I want him and I to be taken care of, without being devastated by finances (if this is possible). I will be working low maintenance - Truck / chipper / trailer when needed. I also have 2 companies I will be "subcontracting" to, and most likely 2 plus days a week (only me as the climber). I have relatively secure work with them because they really don't have my climbing skills, and I think they just like my company. Not that I am a master, they just haven't been trained properly on technical removals and prunes alike. Nor do I think they want to.

So "Powers Tree Care" will be a small business, making up probably 50% or less of my work, with one guy (who will also have a different part time gig).

What's the best way to approach all of this? I know some of you could write a thesis on this with your wisdom throughout the years; yet I am hoping for a layman's explanation and what to watch for, what not to miss, etc. Thanks guys.
 

ROYCE

Well-Known Member
#2
It's really going to be hard the first year. I just started this past summer. What was hard for me was the projections. Everything is based on projections when you haven't been in business for a while. What I mean is, your w/c is based in what you pay your employees. They want to know how much your employees will make this year. Do you know that? Probably not because you haven't worked a full year yet. So you are going to have to project what you think it will be. Now, W/C will want that premium up front. Also your going to want a good general liability insurance. This will cover you for any damage to the property. You will also want to be covered for errors or omissions.
I hope I am not confusing y0u anymore. Here is some advice. Just take the first step and then the second step. You will run into problems and questions along the way. Just face each problem independently and you can get through this. There is no easy way, the government doesn't like it to be easy. They want you confused.
Also, you will want to register your business with the state of NY. This is the first step. Once you've done that you open a business checking account, put some money in the account. Then start getting your insurance, both W/C and G/L and commercial auto.
Are you going to do your own books? quickbooks is a really good tool. If it's just you and one other guy your payroll will be super easy. I would buy quickbooks and then take a class on how to set up your quickbooks for the services you will perform. Most often local tech schools offer these classes really cheap and at night. Really worth it.
Then go get the work!!! Make it happen!!!
 

MikePowers321

Well-Known Member
#3
Thanks for tips Royce...so let's say I'm under on my estimate for how much my employee will make that year. Do you get hit with a bomb at the end of the year for being off? What about myself? Do you actually get workers comp on yourself as the owner? Or a different kind of disability insurance?
 

treehumper

Well-Known Member
#4
Here's a link to the NY state WC "What Business owners must know" document. Yes, you can as the owner be included in the policy. They'll adjust the premium at the end of the year. If you were short you'll be required to pay the difference and if you were over you'll get a refund. The more accurate you can be with your projections the better. Your projections are the most important thing you do. This will force you to really look at the numbers you need to generate to make this a success. Look into some small business admin or management courses. Once you go down this road it's tough to learn by experience.

Do you already have a man-hr or crew-hr, daily rate, weekly, etc..? Know how much of that will be going to expenses.
 
#5
Track your job totals and expenses together on a per job basis so you can see how much it costs you to do what

This will make projections easier and more realistic

Lots of issues with subs, but everyone's different so it can be great with the right combo, just be extra careful putting your name on what someone else gonna do
 

kstreehuggerco

Well-Known Member
#7
Im in just about the same boat as you are Mike. I have been a working arborist for 15 years but alot of that was as a hired gun sub, lead arborist for a really good company for about 5 years, and then being the head grounds keeper for a huge 5 star hotel. We know the in's and out's of the business it was just a matter of time till people like us take a leap of faith and do what we are doing. Good on ya Man.
 

MikePowers321

Well-Known Member
#8
Here's a link to the NY state WC "What Business owners must know" document. Yes, you can as the owner be included in the policy. They'll adjust the premium at the end of the year. If you were short you'll be required to pay the difference and if you were over you'll get a refund. The more accurate you can be with your projections the better. Your projections are the most important thing you do. This will force you to really look at the numbers you need to generate to make this a success. Look into some small business admin or management courses. Once you go down this road it's tough to learn by experience.

Do you already have a man-hr or crew-hr, daily rate, weekly, etc..? Know how much of that will be going to expenses.
Realistically, it would all be a guess. I am just trying to find an even balance working in this mad world. I love tree work. But, there are other things in life that are also very important to me. Work isn't everything. In a way, I don't want to dive into the deep end right away. I have watched too many people in my life work way, way too hard; and end up with a stressful frown upon their face. I'm trying to find a balance and break that cycle. Just seems like I will have to work harder and make less money (though money isn't everything). I had to rant a bit, sorry : /
 

treehumper

Well-Known Member
#9
No need to apologize. While I hear where you're coming from, what I'm not hearing is where you're going and how you'll get there. Yes, you'll have to work harder to build a business than if you were just to work for someone else but there can be rewards that make it enjoyable. Just as there are many, many pitfalls that can make it a living hell.

Sure it's guess work but it's informed guess work. What's the average tree co equivalent in size to what you're planning making? Is this enough for you? Can you live on less at first? how much is the least you'll need to put in your pocket? What about your groundsman? With a net out figure for you and him plus the amount you need to cover your expenses both fixed and variable then you'll be able to compare that to the average earnings of existing equivalent companies.

Break it down to monthly, weekly, daily, and hrly rates. Royce's step by step comment is just that, take the step you know you can take then see what's next. If there's information you need to do this, like expenses research that number. Contact insurers that are advertising in the trade publications or you've heard referenced here. They'll help you figure out what you need to know. Look at the equipment you'll need to start with, then talk to your bank about what the financing will look like or to the supplier they can give you some insight as well. Once you've got some idea about the numbers you'll see what you need to produce and how much selling you'll need to do in order to get to where you want to be.

Finally, while you may know how to get the work done and the ins and outs of the business, you need to know business. Once you take on the ownership you're no longer a tree guy, your a business guy who runs a tree service. Just as you've built up your knowledge of trees and the care of them you need to do the same for the business side of it. That will make the world of difference to you.
 

frashdog

Well-Known Member
#10
So the business aspect is my weakest area.
Thankfully I pay an accountant and insurance broker. Worth every penny IMO!

I also live in NY.

shop/ ask around for all the following

Get an accountant.

File for sole owner LLC , did mine through my accountant.

Get a bank account under your LLC

Get a credit card for the business... Pay for everything on it related to the business. Helps during tax season. So does having one bank account. ONLY pay for business related expenses with the bank account and credit card, otherwise it weakens the foundation of your LLC.

File for NYS sales tax authority to collect under your LLC

Get insured, pay an insurance company, local person you can call and ask for certificates and questions when ever you want. Worth every penny to have them broker your policies, especially workers comp. ask about the disability policy required for your employees. When I filed for LLC I got bunch of junk mail, I thought the required disability policy was fake...it's not.

Workers comp was the biggest confusion for me, thank goodness I had a broker and accountant to guide me. Let's say you have one employee, they will do a minimum payroll amount that they set you up on, I did not and have not had to pay it all upfront. They brake the payments up. Important advice...READ...start your policies in a time of year were you are making money and are about to make more, all the policies want a chunk down payment to renew, and if you did not estimate your WC policy they want that too be fore renewal.

When you get your annual wc audit they want to see your payroll, bank statements with checks written, and a sample of invoices to make sure you are doing what you say you are, with us it is not a big deal cause we are in Such a high bracket already. Landscaper dabbling in tree work would be an issue. I did not even have to be present for my audit as my accountant took care of it for like $75.00. My estimation of payroll was this year $11.75 under! Closest the auditor had ever seen.

When subbing others, Make sure they have wc or you will pay wc premium ontop of it after the audit. Also if during the audit they see a check written to someone for a purchase have a receipt available.

With regards to equipment, starting out cheap is the way to go till the business gets over whelming and you need better equipment to keep up. You are a climber so don't worry bout a bucket for a while. One ton, chipper, dump trailer and mini skid steer in that order has made us sooo much money! Also working with other tree guys is huge, sounds like you figured that out already.

Good luck! It can be a blessed path my friend... Not many skilled professions out there with so much opportunity. When ever people as me how business is... I reply," great, as long as the trees keep growing!" Or "the trees are just growing too fast"
 

MikePowers321

Well-Known Member
#11
I love the buzz. Those last two posts were both a great help. Thanks a lot for taking the time to write those posts up. I have many things to look more deeply into now but you guys poured me a nice sturdy foundation to build upon. It is just nice to hear it straight instead of from a technical document.
 

frashdog

Well-Known Member
#12
I love the buzz. Those last two posts were both a great help. Thanks a lot for taking the time to write those posts up. I have many things to look more deeply into now but you guys poured me a nice sturdy foundation to build upon. It is just nice to hear it straight instead of from a technical document.
Wish I had the buzz when I started!
 

Mangoes

Well-Known Member
#13
Your annual salary?
Labourer's annual salary?
Billable hours (think units from now on)?

Typical worker does 2080 hours a year. My Estimate for you: 950 billable crew hours (1900 total)
Your salary: $60k - divide by your 950 hours = $63.16/hr
Labourer salary: $40k - divide by his 950 hours = $42.11/hr

65% efficiency is to be expected if you're repairing, selling, travelling (unapplied hours), so both of you will expel 1461 hours on the year. Not alot of time available for subbing, and my hourly rate forecasts are likely unreasonable because Overhead (Insurance, Phone, Lawyer, Accountant, Rent etc) and Direct Expenses (Fleet, Fuel, Fleet Ins, power tools, cabling gear, fert, chems etc) are not accounted for.

If your determine how many UNITS you have to sell and what you have to sell them for to break even, you will forget about subbing and focus on trying to sell UNITS (billable hours). Additionally subbing will contribute nothing to your OH or Direct expenses, its part of your salary.

Priority #1 - become TCIA member.
Priority #2 - read and re-read their budgeting and costing resource info
Priority #3 - create a budget
Priority #4 - KPIs!! (simple in this case 1900 total billable hours)
Priority #5 - determine what it costs you to buy 1 billable hour

There's one member on here who, by my estimation, requires 374,000 UNITS for his company.
 

AW4130

Active Member
#14
Realistically, it would all be a guess. I am just trying to find an even balance working in this mad world. I love tree work. But, there are other things in life that are also very important to me. Work isn't everything. In a way, I don't want to dive into the deep end right away. I have watched too many people in my life work way, way too hard; and end up with a stressful frown upon their face. I'm trying to find a balance and break that cycle. Just seems like I will have to work harder and make less money (though money isn't everything). I had to rant a bit, sorry : /
Sounds like you and I are on the exact same page my friend. Awesome to hear. I just started my own show as well down here in Black Mountain N.C. For all of the same reasons you just listed. I am also a little confused on all the business end of this. Let's try and stay in touch and help one another on this journey Mike! Or Mebbe we just need to collabo our company's one day into a one! Haha! Sending good energy your way for your business endeavor bro, take care and climb safe! :)
 

MikePowers321

Well-Known Member
#16
Sounds like you and I are on the exact same page my friend. Awesome to hear. I just started my own show as well down here in Black Mountain N.C. For all of the same reasons you just listed. I am also a little confused on all the business end of this. Let's try and stay in touch and help one another on this journey Mike! Or Mebbe we just need to collabo our company's one day into a one! Haha! Sending good energy your way for your business endeavor bro, take care and climb safe! :)
Haha, thanks buddy.

I might have to do all the estimates if you look like that though:loco:
 

dmd

Active Member
#17
I started my business last year. D's Trees has been a ton of hard work, fun and learning. I was thankful that I had a full time job while learning how to run this thing. I can identify with your goals and reasons for wanting to start your own business.
Debt can help buy stuff but it will also put you in the "cycle".
 

MikePowers321

Well-Known Member
#18
You guys have any good ideas on a small, yet reliable chip truck? I have the chipper, gear truck, trailer....but an inexpensive chip truck is needed. F550? Mitsubishi Fuso? I'm open to all ideas. Doesn't need to be huge. Just a good hauler/dumper.
 

marlinspiker

Well-Known Member
#20
My first chip truck was a 2002 F-450 landscape dump, that i built a custom chipper top on. That truck was bombproof and it still runs to this day. In 2013 I sold it to another young guy starting out and he still runs it daily. I like the idea of a smaller truck to start. Less exspensive to fix, title and they dont requite a cdl.
 
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