A question for business owners

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So I have been thinking of beginning to move in the direction of self employment and I had a thought. What are some things a small business should NOT do. What have been some of the mistakes you have seen made as far as the business side goes? I know one guy that is a great fabricator, and a hard worker but has no since of how to keep track of the expenses on a job. He has been in business for himself three times, he now works for someone else.Ranger 250 GXTSmith Gas Axe
Reply:I see plenty of businesses fail, not because the person can't do the work, it's because they can't manage a business. There's a great deal more to your own business than simply doing the welding.You've mentioned tracking costs, and that's a big one. Not just "simple" things like materials, labor and consumables, but the "intangible" things like advertizing, accounting, overhead, like phone, insurance, vehicle expenses taxes, Social Security, healthcare, license costs, rent, power, water etc.  Many times these never get figured into the job, then people wonder why they are loosing money. Then there are all the "little" consumables that many forget, that can of paint, those couple of bolts, sanding disks, mig tips or liner and so on. Everyone thinks of the big items like steel and rod, but what about the small amount of OA to cut the pieces down?There's also a huge amount of "unbillable" time that goes into running a business. Running around doing estimate, picking up materials, doing billing and chasing down customers who won't pay right away. Expect this to be a 12 to 14 hour, 7 day a week job for quite a while, with no time off for vacations or illnesses. Better plan on having enough money socked away to last you at least 12 to 18 months if nothing comes thru the door until you are established. Then expect to break even at best for at least another year..No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth! Ronald Reagan
Reply:Best advice I can give you is....you don't want all the jobs that come along. Know when to say no.
Reply:Yes know your true costs of running the business and bid accordingly. Don't bend to low ballers or ball busters or you will get hurt. You can stay home do nothing and lose money, don't go to work to lose money.EXO Fabrication, Inc.www.exofabrication.com
Reply:Be ready to work for $3/hr on the occasion you under estimate a job.Regards,RobGreat Basin WeldingInstagramBlue weldersRed weldersMy luscious Table DIY TIG Torch cooler
Reply:Originally Posted by DSWI see plenty of businesses fail, not because the person can't do the work, it's because they can't manage a business. There's a great deal more to your own business than simply doing the welding.You've mentioned tracking costs, and that's a big one. Not just "simple" things like materials, labor and consumables, but the "intangible" things like advertizing, accounting, overhead, like phone, insurance, vehicle expenses taxes, Social Security, healthcare, license costs, rent, power, water etc.  Many times these never get figured into the job, then people wonder why they are loosing money. Then there are all the "little" consumables that many forget, that can of paint, those couple of bolts, sanding disks, mig tips or liner and so on. Everyone thinks of the big items like steel and rod, but what about the small amount of OA to cut the pieces down?There's also a huge amount of "unbillable" time that goes into running a business. Running around doing estimate, picking up materials, doing billing and chasing down customers who won't pay right away. Expect this to be a 12 to 14 hour, 7 day a week job for quite a while, with no time off for vacations or illnesses. Better plan on having enough money socked away to last you at least 12 to 18 months if nothing comes thru the door until you are established. Then expect to break even at best for at least another year.
Reply:The type of welding I am into in my area is booming, and welders are still suffering here from making bad decisions. The mistake I see the most is guys getting their big paychecks and thinking that is how much money they have to spend. They forget about the week that may come when things ain't so busy, and things that they should buy to write off on their taxes to reduce their tax burden and give them some back up equipment. I think the best advice is to work hard to make good money, spend that money on your business, and don't stop doing that year after year. The year when you make a killin is no time to head for a month vacation. My wife and I do an evaluation of finances around November every year and by Thanksgiving we have a number in mind of how much we are gonna spend on the business before the year runs out. I buy boxes of grinding wheels, pallets of common electrodes, backup tools, things I can use to keep working next year even if profits aren't high next year. That is how you get through the highs and lows.Bob is absolutely right, you gotta realize that there are jobs that you can't make money on and if you can't make money on it you can't afford to do it. There are also jobs you should NOT do because the risk of being liable is high and the profit is low. If you are welding something that could get someone hurt or killed then that is fine, do the job, do a good job, but you gotta charge enough to make it worth risking your liability insurance. If someone ever makes a claim against your insurance no matter if it is your fault or not it could put you out of business. Insurance companies will drop any small business guy if they think there is risk. They want to make money. Not pay claims. The highest paying jobs will REQUIRE that you have a certain amount of insurance. The gas companies I contract for require 9 million liability. It takes a long time working your way up from a one million dollar policy to three, then five, then 9. If you have never had a liability policy for welding and you go in and ask for 9 million dollars worth you might not even be able to get it.The worst thing I can think of happening is if everything I ever welded instantly became UNWELDED
Reply:Well I have a little more confidence now. I have already been thinking about most of the things you guys have mentioned. I may a little common since after all.Ranger 250 GXTSmith Gas Axe
Reply:Be honest with your patrons, plain and simple.  It will workout in the long run to your benefit.  Your business will be slower out of the gate but succeed for much longer.  Get ready to be the last guy paid and be able to swallow your pride about being the "boss".  No one really cares.
Reply:Originally Posted by NBS WeldingThe type of welding I am into in my area is booming, and welders are still suffering here from making bad decisions. The mistake I see the most is guys getting their big paychecks and thinking that is how much money they have to spend. They forget about the week that may come when things ain't so busy, and things that they should buy to write off on their taxes to reduce their tax burden and give them some back up equipment. I think the best advice is to work hard to make good money, spend that money on your business, and don't stop doing that year after year. The year when you make a killin is no time to head for a month vacation. My wife and I do an evaluation of finances around November every year and by Thanksgiving we have a number in mind of how much we are gonna spend on the business before the year runs out. I buy boxes of grinding wheels, pallets of common electrodes, backup tools, things I can use to keep working next year even if profits aren't high next year. That is how you get through the highs and lows.Bob is absolutely right, you gotta realize that there are jobs that you can't make money on and if you can't make money on it you can't afford to do it. There are also jobs you should do because the risk of being liable is high and the profit is low. If you are welding something that could get someone hurt or killed then that is fine, do the job, do a good job, but you gotta charge enough to make it worth risking your liability insurance. If someone ever makes a claim against your insurance no matter if it is your fault or not it could put you out of business. Insurance companies will drop any small business guy if they think there is risk. They want to make money. Not pay claims. The highest paying jobs will REQUIRE that you have a certain amount of insurance. The gas companies I contract for require 9 million liability. It takes a long time working your way up from a one million dollar policy to three, then five, then 9. If you have never had a liability policy for welding and you go in and ask for 9 million dollars worth you might not even be able to get it.
Reply:i'd hire an accountant sooner, doing your own taxes sucks.