New In Business

[Hairy-Neil]

As a director of a Limited Company and you know exactly what your exposure is - and that does not have to involve your house or your boat, just those things that you are comfortable taking a risk with.

 

Agreed on the first bit, however, the second part obviously depends how much you need to borrow. The bank managers are not daft and are unlikely to accept a 'specific asset' with a 10k value as security for a 100K loan. Many company directors these days have to be comfortable taking a risk with their house, boat etc.....

[kitman]

The last person I would ask for advice on running a small business is a young chap who's entire career has been spent working in a relatively minor role for a colossal multinational. Do not fall for this crazed stereotype perception that Bank Managers know lots about running a business - they dont, if they did they would be doing it for themselves. Get small business advice from people who run small businesses .

 

Totally agree with this, when you see the business bank managers/advisors they will want to sell you there 'business package' which I think is ok if you can afford it. When we started our partnership we got an Abbey Business Account which is FREE. It was good for us because we could keep our business account seperate from our personnel accounts which helps when organising and documenting the company accounts for the Tax Office for example. The Abbey account is worth looking into because they don't charge you for banking cheques and there are no monthly fees for having the account open. You get the usually debit card and cheque book, you can also bank online with them. The only draw back is that they do not give you an overdaft facility without 3 years of business accounts, which is obviously difficult to produce when you first set up! At first I floated the company on my own personal overdrafts and credit cards.

 

Happily my business advisor is my Father who has many years experience in running a small business, it really is worth talking to small business owners and people operating in the same field for the best advice. The best advice my dad gave me in regard to charging customers was 'work out the business costs plus your domestic living costs'. Sounds obvious now, but at the time we were having a real problem trying to deal people atempting to knock us down on price which will invariably happen because 'so and so down the road is doing it cheaper'. If you work out how much money you need to live a comfortable life plus your materials, travel and others then it starts to become much clearer about what you need to charge and what price you are prepared to be knocked down to. It also gives you the confidence to say 'no' to people who try an knock you down too far. Mainly because you know what money you need to live.

 

If your are working to a fixed price some customers may come out with the 'Oh while your there could you just...............'. It is important that they accept that extra work will raise the price because the amount of time spent and materials used has risen. Customers are a canny bunch!! It's very easy to fall into the trap of doing favours especially when you like your customers, but the favours don't pay your bills!!

 

The real danger as someone has already said is undercharging.

 

Other things we did at first was ring up alot of other people in the trade to find out what they were charging, it helps to get an idea of what the going rates are. You may get a frosty reception if you tell them that you are looking to get into the same business as them so pretend to be a customer if you like.

 

And get yourself out there with leaflets and business cards, try and attach yourself to a boatyard as they may provide work for you.

 

In our experience Third Party Insurance or Public Liability Insurance will go up by around x3 as soon as you mention you are working in docks, or maybe even by the water. There are companies who specialise directly in Marine Public Liability Insurance, so with them you should be reasonably assured that they will help you if you need to make a claim.

 

I wish your dad the best of luck, the canal industry is a great one to work in

[ditchcrawler]

snip

 

Has anyone had experience of having work done on there boat by an outside party? How much would you pay per hour for such a service?

 

Sorry for coming back on with another random question.

I have just had a small welding job done on my hatches, I took them off and took them into the workshop. Nothing technical, not a coded welder. Cost £25 just under 3/4 hour

I had 2 anodes welded on by the boatyard in dry dock also £25 with reciept.

[WJM]

Rounding up to one full hour, £25 for an hour of a skilled man's time and the use of welding equipment and all it's supporting overheads sounds very cheap to me. Not a business I would be interested in, the returns would be very poor at that level of charging. Anything less than £40 per hour sounds like pointless subsistence rather than good business.

[Chris Pink]

Anything less than £40 per hour sounds like pointless subsistence rather than good business.

 

One person's pointless subsistence is another's good living.

 

You should (re)examine your work/life balance and then you won't be quite so grumpy.

[Chickadee]

Wow! Thank you everyone for your advice. I will pass this on to him.

 

I should have said hes a qualified and very experienced mechanic used to working on cars, lorrys and tractors.

He already has insurance so that he could take the work he had already been offered. He also has most of the tools he will need so doesn't need to buy these.

He has been working traveling costs into what he has been charging already.

He has now had a free meeting with one acountant who was really helpful and hes looking into doing a small business course which I have done before when I was considering starting my own business and found that incredibly useful. The tutors were all people with alot of experience running business.

I think he's going to wait until hes done this course to see which way he takes the business.

 

He will only do things by the book and really I know hes my Dad but he is the most trust worthy person I have ever met.

He has already got a very positive response from marinas he has visited and even a hire company.

Thanks for the good luck wishes, i'll pass those on to.

 

One person's pointless subsistence is another's good living.

 

You should (re)examine your work/life balance and then you won't be quite so grumpy.

 

Which is exactly why my Dad has decided to do what hes doing. He doesn't want to make millions he is close to retierment and now wants to do what he enjoys rather than working just to make money. He will charge enough to live and cover his expences but he was horrified to find out someone had charged £60ph for a basic call out charge which was partly what led to me starting this thread as this totally threw us as to what was an acceptable price to charge.

[WJM]

I am not grumpy at all, very happy in my work in fact! I just like to avoid doing pointless things like running a loss making business. It is incumbent on every business to make a profit, without profit you are not in business, you are either a charity or a provider of occupational therapy. I just paid a plumber £60 for an hours work. I could have done the job myself but I dont want to. He is happy, I am happy, we are all happy! Never undersell yourself or be apologetic about what it is you sell!

 

 

 

 

 

OP: Some quick maths - Your dad probably needs to draw an income of £600 per week just to live. He wont achieve more than 30 productive hours a week so that is £20 per hour. His equipment and tools should be charged out at something around £10 per hour to allow him to maintain and upgrade them. Having achieved that he should surely be looking to make at least £10 per hour profit to make the exercise worthwhile. I have lots of jobs that need doing on my boat that I would happily pay £40 per hour to have done.

[Chris Pink]

I just like to avoid doing pointless things like running a loss making business.

 

Well don't we all dear? There are two major ways to enhance profitability; one to raise your rates, the other to reduce your overheads. The problem with the former is that you lock yourself to feeding the Man, the advantage of the latter is you retain your stakeholding in your business and thus your time.

 

Your model is, not before time, becoming obsolete.

 

 

£600 a week? - just to live? you poor thing - Get help quick.

Edited September 16, 2008 by Chris Pink

[WJM]

Reducing overheads in Britain in 2008! Nice trick if you can achieve it! Where do you start, energy, money and people all cost more? That just leaves improved selling price!

 

I am enjoying my obsolescence immensely!

[ditchcrawler]

Rounding up to one full hour, £25 for an hour of a skilled man's time and the use of welding equipment and all it's supporting overheads sounds very cheap to me. Not a business I would be interested in, the returns would be very poor at that level of charging. Anything less than £40 per hour sounds like pointless subsistence rather than good business.

No he charged me actual time, so that works out at about £40 hour

[Big Steve]

My local boatyard charged me £10 per hour for the labourer and £20 for the welder/fitter. I thought it was a bargain at the time, still don't know how he can do it.

[Troll]

My local boatyard charged me £10 per hour for the labourer and £20 for the welder/fitter. I thought it was a bargain at the time, still don't know how he can do it.

 

Oh they are braisen

[WJM]

"My local boatyard charged me £10 per hour for the labourer and £20 for the welder/fitter. I thought it was a bargain at the time, still don't know how he can do it."

 

 

Ultimately he cant. There is no income for future investment, no income for profitability to develop or protect, long term there is no future for a business like that.

 

And when that boatyard closes down people will be shaking their heads and saying it is terrible there are so few boatyards left. The owner will be telling us that there is no money in boat services. Apologetic underselling, the small business disease, if you know what you are selling is good then dont give it away at a bargain price!

[kitman]

And when that boatyard closes down people will be shaking their heads and saying it is terrible there are so few boatyards left. The owner will be telling us that there is no money in boat services. Apologetic underselling, the small business disease, if you know what you are selling is good then dont give it away at a bargain price!

 

Fantastic comment, I totally agree.

[Machpoint005]

There are two major ways to enhance profitability; one to raise your rates, the other to reduce your overheads. The problem with the former is that you lock yourself to feeding the Man, the advantage of the latter is you retain your stakeholding in your business and thus your time.

 

This is an oversimplification. Overheads come in two flavours - fixed and variable. Variable overheads are proportional to the amount of work you do. Fixed overheads are just that - fixed - so if you do more work, the cost of the overhead per hour comes down. WJM is spot on - a business that makes a loss is a complete waste of time and money. By all means donate your profits to a worthy cause, but don't pretend that an unviable business is the same thing - it's not.

 

Business costs and the profit motive push the price (hourly rate) up, and competition and customer pressure push it down. That's the way it works, whether you approve of capitalism or not. If someone is setting up a business, that's the system they are stuck with.

 

 

£600 a week? - just to live? you poor thing - Get help quick.

I presume he has a boat to run as well, and he'll not do that for less than £50 a week all considered. Even if he doesn't, then if he has bought a house in the last ten years he'll need most of the £600 to pay for his mortgage.

[WJM]

"Overheads come in two flavours - fixed and variable. Variable overheads are proportional to the amount of work you do. Fixed overheads are just that - fixed - so if you do more work, the cost of the overhead per hour comes down."

 

 

I will have to correct you there;

 

- an overhead is a fixed cost, rent, repayments on investment, admin staff, ie: bills that dont change regardless of what you do .

 

- Anything that varies with activity, ie: materials, sub-contracting, production staff, is called a direct cost. They are not overheads because they directly support themselves and then they carry the overheads (or they should!).

 

 

 

 

"£600 a week? - just to live?"

 

Starting with £100 in legitimate tax, then £50 in tax to shore up Gordon Brown's mess, then another £50 tax to replace the money sucked out of the economy by our obsession with the City. The remaining £400 will then carry all the myriad of direct taxes leaving, in my estimation, about £300 actual clear money for the man. Welcome to GB plc!

[Chris Pink]

I presume he has a boat to run as well, and he'll not do that for less than £50 a week all considered. Even if he doesn't, then if he has bought a house in the last ten years he'll need most of the £600 to pay for his mortgage.

 

I am sure WJM is thankful for your sympathy, poor dear. If anyone needs £600 a week to live on there is something seriously wrong. Even Radio 4 estimates £13K pa per person - in my opinion this should be considered to be a good living. But then there is a lot of greed around.

 

Profit and loss is simple, read your Dickens, Mr Micawber puts it quite nicely and as WJM points out what you called 'variable overheads' should have been priced into the job.

 

Fixed overheads can always be reviewed and usually reduced especially in a skills based business such as the one we are (were) discussing.

 

Starting with £100 in legitimate tax, then £50 in tax to shore up Gordon Brown's mess, then another £50 tax to replace the money sucked out of the economy by our obsession with the City. The remaining £400 will then carry all the myriad of direct taxes leaving, in my estimation, about £300 actual clear money for the man. Welcome to GB plc!

Well, good news! I can save you loadsamoney. If you are paying that much tax, sack your accountant.

Edited September 17, 2008 by Chris Pink

[WJM]

Or earn less!!! Ha!

 

Dickens or Radio 4 are all very nice but hopefully this aspirant businessman will draw some tangibly useful advice from my responses to his OP.

[Machpoint005]

Or earn less!!! Ha!

 

Dickens or Radio 4 are all very nice but hopefully this aspirant businessman will draw some tangibly useful advice from my responses to his OP.

 

Quite so. I've obviously been doing it completely wrong for the last 19 years. I wonder how I ever managed to afford to buy a boat?

 

Edited to say:

 

I write not as an accountant, but as an engineer. My terminology might be inaccurate, but the costs are still there. That's also why I pay an accountant to deal with HMRC: it's what they do.

 

But there's nothing much wrong with WJM's analysis, especially if you are paying income tax at the higher rate (on part of your income).

Edited September 17, 2008 by Machpoint005

[david and julie]

As a complete aside, there are shysters in business, but lets not forget that some customers are just as bad or even worse.

 

I would strongly suggest he gets himself a good digital camera and a simple check sheet to document any damage to customers property, prior to starting any work. In the motortrade we use printed sheets with an outline of a vehicle. Use simple tick boxes and mark areas of scratches or damage and even photograph them if they are near where you are working.

 

I've been self-employed for 30 years and some people are out for anything for nothing so you have to be one step ahead them.

 

Good luck to him, but my advice would be to keep it simple and avoid as much officialdom as possible. Do have good insurance though.

[Chickadee]

As a complete aside, there are shysters in business, but lets not forget that some customers are just as bad or even worse.

 

I would strongly suggest he gets himself a good digital camera and a simple check sheet to document any damage to customers property, prior to starting any work. In the motortrade we use printed sheets with an outline of a vehicle. Use simple tick boxes and mark areas of scratches or damage and even photograph them if they are near where you are working.

 

I've been self-employed for 30 years and some people are out for anything for nothing so you have to be one step ahead them.

 

Good luck to him, but my advice would be to keep it simple and avoid as much officialdom as possible. Do have good insurance though.

 

Thats a very good point about having a camera on him. I'll pass that on thanks.

 

I presume he has a boat to run as well, and he'll not do that for less than £50 a week all considered. Even if he doesn't, then if he has bought a house in the last ten years he'll need most of the £600 to pay for his mortgage.

 

If you mean my Dad he helped me buy my boat so he gets to use it and I get all the work done on it when it needs it. He doesn't contribute anything to it money wise.

As for his house is has a small amount left to pay for his ex council house so thats not a problem. My Mum also works alot so if he strugles they are not going to starve.

He has also had about 6 offers for various driving jobs so he also has these to fall back on.

 

I think hes going to do fine.

[bargeeboy]

I wish I had got in at the beginning

of this thread !