Are Tree Companies Actually Worth Anything?

Sfoppema · Aug 29, 2018

Honestly, if you split the equipment, and you're giving him half of what it's worth, he's making out great. He's not going to like paying the tax on it though, cause if you depreciated everything year one, everything from the sale is profit. He should pay you for the pain in the ass you're going to have finding a replacement for him.

Stephen Moore · Aug 29, 2018

Yeah capital gains is a real issue when dissolving a company. If you don’t know how that works I urge you to research the tax regulations in your country. But in essence, a piece of equipment will be allocated in a depreciating category with a percentage allowable per year. Example 30 percent per year of the total value. So if your machine was 1000 dollars new 330 dollars could be applied that year and your equipment is now worth 670 dollars. This process continues until the machine no longer has taxable value and is written down. But if the machine is sold in year 1 the 670 dollars would be considered a capital gain and would be taxed as such. And logically the same would apply each year in a diminishing fashion until written down. So if you are both share equal ownership, you are both responsible for the tax. If not, the business owner / owner of equipment will be stuck paying the tax. Be careful it ain’t you!

Stephen Moore · Aug 29, 2018

I should clarify that if the machine in year 1 was sold at a loss it may not be a capital gain, but either way you lose. Either you did not recover your investment or you payed tax on the sale. That is why you need to understand the math involved. People generally hire a CPA or CGA or other certified tax consultant when dissolving assets in a partnership.

flyingsquirrel25 · Sep 1, 2018

Sfoppema said:
250k in revenue with a two person company in the second year in Boulder? how much weed you guys selling?

Not really. You put two highly motivated individuals together and the correct equipment I would be surprised not to see $250k. I would actually expect better than that (not dissing the OP). The reason I say that is in the early stages there is a ton of capital outlay to get the equipment, licensing, insurances and everything in place. It doesn't leave much to pay the partners if you only make 250. Just my experience. I know my expenses pile up quickly especially when we start doing big work.

Sfoppema · Sep 1, 2018

Quarter of a million with two 25 year olds and presumably low end chip truck, chipper, and dump trailer is really good revenue for a second year in business. Can't be convinced otherwise. Plus if they're partners, they probably aren't paying WC. And I'd doubt they each have a policy for themselves. If you've got a cheap place to keep gear, they're probably both making 75-85k+. Not to mention the cash. Realistically, working 10 months out of the year max. Not trying to start an argument, but that seems like pretty damn good money and a great setup for second year.

Beats the hell out of working 40 hours a week for $25/hr.

I probably work 10 months, and just got over 200 last year with chipper, chip truck, and a pickup on my fourth year. Myself, and two ground guys who definitely don't fall under the "highly motivated individuals" category. Good guys though. Probably only 30 real production hours a week if you averaged it over the 10 months. Was pretty pleased with that.

I suppose I could get over 250, but I'm too tired.

Anyway, I'm impressed, but maybe I'm just not as smart as I thought! Happens all the time....

flyingsquirrel25 · Sep 1, 2018

Sfoppema said:
Quarter of a million with two 25 year olds and presumably low end chip truck, chipper, and dump trailer is really good revenue for a second year in business. Can't be convinced otherwise. Plus if they're partners, they probably aren't paying WC. And I'd doubt they each have a policy for themselves. If you've got a cheap place to keep gear, they're probably both making 75-85k+. Not to mention the cash. Realistically, working 10 months out of the year max. Not trying to start an argument, but that seems like pretty damn good money and a great setup for second year.

Beats the hell out of working 40 hours a week for $25/hr.

I probably work 10 months, and just got over 200 last year with chipper, chip truck, and a pickup on my fourth year. Myself, and two ground guys who definitely don't fall under the "highly motivated individuals" category. Good guys though. Probably only 30 real production hours a week if you averaged it over the 10 months. Was pretty pleased with that.

I suppose I could get over 250, but I'm too tired.

Anyway, I'm impressed, but maybe I'm just not as smart as I thought! Happens all the time....

All I’m saying is I think you are selling yourself short. One of the things that shows just how short is job costing. Figure the income and expenses for each job and divide what’s left by how many hours you worked. Now take into account your sales time, paperwork (dot, ins, etc) and you are probably making a lower wage than your unmotivated ground help. Some weeks 40 @ $25/ hour looks enticing! The problem is I love what I do!

Sfoppema · Sep 1, 2018

I definitely love this business. I would not say that it was a problem that I love what I do. Totally above board, between 50-60% of my revenue has been profit, each year for four consecutive years.

If you're not factoring in paying yourself for office work, estimates, wrench time, etc., and you don't know how much each cog in the company is costing you each hour you're on a job, then you shouldn't be attempting to run your own company!

I took a class at one time on how to cost out equipment, labor, overhead, and all expenses. Specifically relative to a tree company. Best class I ever took, and I modeled my business based on it. Not sure how I would have come up with my numbers otherwise. I love climbing trees, but I also love money! Hate to say it out loud, but it is the reason we're climbing trees!

Sorry to have strayed so far from the original topic, but I guess we are still in the "behind the desk" section.

Someone should make a "What percentage of your revenue is profit?" post. Though, magicians don't like to reveal too many of their secrets!

I don't think hitting 50-60% on 200k revenue for 10 months of work is selling myself short. Am I wrong about this? Anyone else want to weigh in? As previously mentioned, I'm probably wrong more often than I think.........

southsoundtree · Sep 2, 2018

Sfoppema said:
Quarter of a million with two 25 year olds and presumably low end chip truck, chipper, and dump trailer is really good revenue for a second year in business. Can't be convinced otherwise. Plus if they're partners, they probably aren't paying WC. And I'd doubt they each have a policy for themselves. If you've got a cheap place to keep gear, they're probably both making 75-85k+. Not to mention the cash. Realistically, working 10 months out of the year max. Not trying to start an argument, but that seems like pretty damn good money and a great setup for second year.

Beats the hell out of working 40 hours a week for $25/hr.

I probably work 10 months, and just got over 200 last year with chipper, chip truck, and a pickup on my fourth year. Myself, and two ground guys who definitely don't fall under the "highly motivated individuals" category. Good guys though. Probably only 30 real production hours a week if you averaged it over the 10 months. Was pretty pleased with that.

I suppose I could get over 250, but I'm too tired.

Anyway, I'm impressed, but maybe I'm just not as smart as I thought! Happens all the time....

You're too tired because you don't have a machine doing the machine work.

evo · Sep 4, 2018

Sfoppema said:
Quarter of a million with two 25 year olds and presumably low end chip truck, chipper, and dump trailer is really good revenue for a second year in business. Can't be convinced otherwise. Plus if they're partners, they probably aren't paying WC. And I'd doubt they each have a policy for themselves. If you've got a cheap place to keep gear, they're probably both making 75-85k+. Not to mention the cash. Realistically, working 10 months out of the year max. Not trying to start an argument, but that seems like pretty damn good money and a great setup for second year.

Beats the hell out of working 40 hours a week for $25/hr.

I probably work 10 months, and just got over 200 last year with chipper, chip truck, and a pickup on my fourth year. Myself, and two ground guys who definitely don't fall under the "highly motivated individuals" category. Good guys though. Probably only 30 real production hours a week if you averaged it over the 10 months. Was pretty pleased with that.

I suppose I could get over 250, but I'm too tired.

Anyway, I'm impressed, but maybe I'm just not as smart as I thought! Happens all the time....

Eh, I don't know I did half that by myself working 20 hour weeks (in the felid) with a dump insert and a chipper.