Anyone familiar with starting a small business?

[The_Kat]

Jenn has a good chance of starting a new teaching job back home after the first teaching Pre-K. Since I started this pipeline the whole goal was to make as much money as we could and pay off our debts. We've suceeded in our goal, and now that she is potentially going to start back to work in Oklahoma I promised her and Cash I would do my best to come back home for work as well.

I've brain stormed and brain stormed and searched for work in my area. The outlook is fairly bleak.

So my grandpa told me I should go into business for myself. It should be something I am familiar with and something that has a decent need. I've been thinking on this for almost a year now and think I've finally came up with a business that will be perfect for me and the family. It requires no employees other than myself, a CPA, and time. There is only one company in my area that is open for business and it is through an older fella who won't be in business for many more years.

What is the business you ask? Home and Construction Inspections......

Construction inspection is my specialty.......home on the other hand is something I will need school on. I have done some research and found that error and omission insurance will be quite costly. Reporting software, licensing, networks, national association memberships, etc are not too awful expensive to get setup.

I would not need any employees...just a CPA to help with taxes, and books. I already own a laptop computer that is free to use as a company computer as well as a commercial printer for printing reports, invoices, etc for clients. I could work from home in my den for an office. I would be able to cover a large area for inspections to keep business flowing. I also figure I can arrange a deal with local realtors to help recommend my business for a fee....as well as yellow pages.

Home inspectors charge anywhere from 245$-450$ per inspection depending on the size of the home/construction site....I would need at least 250 inspections a year to keep above water at 245 a pop. Thats figuring one inspection per day.....of course I could possibly do more, but I want to put my estimates low.

Costs include vehicle wear n tear, gas,vehicle insurance, office supplies-paper-printer ink-binders for reports per inspection, yearly insurance, CPA expense, and additional training.

Grandpa recommends me doing this through the SBA if I decide to go through with it. I would have about 20k to start the business with if I decide to do so.

Any thoughts, recommendations? This is a good chance for me to make a decent living at home with my family if it works. I know most new business fails, but I think I have what it takes and also have a good job outlook in my area.

I appreciate any and all comments!

[92xj]

Why not go talk to old fart that is only going to be working a few more years and see if you can learn what he knows. His knowledge will teach you more than schooling will. The only downside would be that you dont have that piece of paper, but if he takes you in under his wing then he could sell you the company or just have you take it over. Win win.

But, I have been a part of opening a small business. It's surprisingly easy to do with small initial cost.

I would buy a track hoe and dig perk holes for a small business. 300 bucks a lot and can easily do 5 a day if there is enough construction going on. If not, one a day is still a dang good pay check.

[Dawg]

My uncle does home inspections down around New Orleans and makes a killing.

[The_Kat]

I won't make a killing I know...but I think I could do well enough to make a comfortable living as long as Jenn has a job.

[philray]

Why not go talk to old fart that is only going to be working a few more years and see if you can learn what he knows. His knowledge will teach you more than schooling will. The only downside would be that you dont have that piece of paper, but if he takes you in under his wing then he could sell you the company or just have you take it over. Win win.

But, I have been a part of opening a small business. It's surprisingly easy to do with small initial cost.

I would buy a track hoe and dig perk holes for a small business. 300 bucks a lot and can easily do 5 a day if there is enough construction going on. If not, one a day is still a dang good pay check.

I agree, you should at least ask the man for some advice on starting your own business. It would be ideal if he would take you under his wings and help you along, but he may not want the competition. If this is the case, I would search for a business owner in another area, who wouldn't be threatened by the competition, that would be willing to set down and talk to you about starting this type of business. I am sure they could offer a lot of insight.

[philray]

Also, since there is only one inspector, I will assume you live in a small community. Is there enough construction or realestate sales to support two inspectors in your area? Not trying to discourage you on starting this business, but do your home work. The most common mistake made in small business is not picking the right business to begin with. Best of luck!

Edited December 16, 2010 by philray

[mike]

Like what was said before Kyle you need to have a solid housing market to support that kind of business all on its own. Most people I see around here do that as a second business or to add to their established businesses, like appraisal companys and contractors. I am all for small business, I am getting one off the ground myself as you already know, but like I said it takes a pretty sound housing market to keep a guy busy just doing inspections. Whatever you decide, good luck, and you know how to get ahold of me if you need anything.

[MCH]

This might help:

http://www.sba.gov/idc/groups/public/documents/sba_homepage/recovery_act_microloans.pdf

And I'd have to agree with the consensus so far. I'm not sure you've established a demand for the business.

Speaking as an individual who oversees 40+ home loans each year, I rarely use home inspectors. In fact, none this year.

[The_Kat]

Thanks for the offer mike. I am by no means jumping into this yet. As for business I would cover a large area. Around 75 miles in any direction which encompasses several big cities. My home bank requires home inspections and does around 70 loans a year and have already offered me their recommendation if I go through with the idea. Of course that doesn't mean their customer would use me either.

I believe there to be a healthy enough demand for home inspection in my scoped area. It's just a matter of networking. Also construction inspections are required on alot of builds so that's another area of interest. I'm trying to get a good potentiAl customer base through banks and realtors before I do anything. If I can get enough banks and realtors that move real estate then it would be worth a shot.

Another advantage is my costs and risk is very low here. Worse case scenario I fail and lose 4-5k dollars in insurance costs and software/education expense.

[PA_RIDGE_RUNNER]

If you do go through with your plan you may also want to look into auctioneers that sell houses too. They have to be inspected too.

[TBow]

It doesn't sound like you have to put up a great deal of capital to get started. If you do have to consider financing to any degree, here's something my wife and I learned very early in our plunge into the small business waters (which by-the-way failed):

1. Ensure that your business and personal finances and lives are isolated from one another. If the banks or financial institutions want you to put up your home or any personal equities for security against the business, look for other options or tell them to go blow smoke!

2. Talk to a CPA before you start the business to get suggestions on where to start and ideas that will provide security and possibly save you money.....and listen to them!

3. Keep maticulous books and files of all business transactions and expenses.

4. If the business looks like it's going to make a ton of money right off the bat, take a deep breath and apply some self-control on the spending. There will be highs and lows in the income aspect of it more than likely. Jumping into early and extravegant financial commitments based on early returns can bury a small business when poorer times present themselves.

5. PAY YOURSELF!

6. If things are floundering, know when to call it quits. Many small business owners want to hold on until the last dog is hung when tough times just keep getting worse. They have some personal blood, sweat and tears invested into their business and don't seem to be able to walk away and watch the ship sink. Learn how to determine when the ship has already sunk. Don't stay in it when it seems like all you're doing is digging a deeper hole.

7. If you have to finance the business through other institutions, be carefull that their needs for proof of securities don't tie your hands on how to run your business. ie: In small business it's sometimes advantageous to show a loss or to have a lot of write-offs in order to reduce the taxes you pay on the business and personal salary. Quite often the banks do not want you to show losses on your books as it doesn't bode well for security on the money they've loaned you. They can pressure you into showing profits, which translates into additional taxes as well as admin fees to the banks to ease their anxieties.

Best of luck!

TBow

[The_Kat]

Thanks again for the responses folks.

I have had a few emails back and forth the last few weeks with various realtors who have said the need for a good inspection company to refer is there....the guys they normally use are getting old and don't want to do many locations.

That positive note said, most of them also cautioned that alot of the homes in my area are low end, and customers don't want inspections. They said the houses that sell for over 100k usually have responsible buyers who want inspections....but to get to an area that sales enough homes to support a new business I would have to travel about an hr.

I've ran the numbers several times and if I could get at least 250 inspections a year I could make it work. Most of the inspection companies I have talked to run around 350-450 inspections a year per inspector, but those are in Metroplexes.

[hoosierhunter]

Kyle-Have you thought of picking this up part time to start and see how it goes? Honestly you could do inspections on the weekends to start and if demand picsk up enough then you make it a week day deal. Just a thought.

Also as silly as this sounds being an insurance agent can be a very financially rewarding career choice as well. In a small town setting if you know people and have good relationships selling insurance is easy.

[The_Kat]

Kyle-Have you thought of picking this up part time to start and see how it goes? .

Yes sir...I would start off part time initially. Once/If the demand gets high enough, then I would take off full time.

[92xj]

Sounds like you have made your mind up, now it's time to poo or get off the pot. I say go for it, but be prepared for 100% failure. If you plan for failure and you succeed its great, if you plan for failure and you fail, you're prepared so it's not as big of a deal as it would seem to the outsiders.

[hoosierhunter]

The other thing to think about is that I would start when home sales pick up. I.E. spring, tax time, etc.....

[Newarcher]

I would strongly urge you to forget about the debt part. Save your money until you can afford to pay cash for the items you need up front---although I don't think that would take long. Getting a loan is the number one thing that sinks most of my customers....they have a good idea, passion, and many times a good business idea--but what they don't have is the cash flow to maintain the loan. Bad bad idea. Debt is the number one reason for failure of small businesses I deal with.

Next, don't be surprised if you cannot find a CPA who is interested in helping you. Most of my most dedicated clients came to me from CPA's who didn't want to deal with the noob. To properly setup a new business properly, it includes insurance, accounting procedures, tax issues, business structure, etc. etc. etc. etc. It is hands on and takes a considerable amount of time. I have probably worked for $5 and hour doing new business setups with rookie (said admirably) owners--but I get a lot of satisfaction and dedicated tax clients out of the deal. I have also spent an inordinate amount of time undoing things that new business owners have done to themselves. I'll give an example.....a client didn't bother to consult me before starting his business, a partnership (I just threw up in my own mouth) organized as an S Corp for a PART TIME HVAC business.

Next to debt, the number one error I see most new business owners make is to either create zero organization or go overboard (see the S corp above). You don't make your money based on what kind of business organization you use, you make it by your service you provide and controlling expenses.

I'll send you a PM.

New

[The_Kat]

Thanks again Michael!

[stevebeilgard]

most banks want a home inspection prior to financing any homes. it's a pretty good business. get with a national chain of inspectors and learn what they have to offer you. forget the cpa. you'll only need him after you hit the big money. just keep track of your own costs, expenses, income and such, and go to a good tax preparer. you'll be fine.

[Newarcher]

most banks want a home inspection prior to financing any homes. it's a pretty good business. get with a national chain of inspectors and learn what they have to offer you. forget the cpa. you'll only need him after you hit the big money. just keep track of your own costs, expenses, income and such, and go to a good tax preparer. you'll be fine.

I'll disagree.....you may not need a CPA but find a good Enrolled Agent or Tax Preparer ahead of starting the business. I cannot tell you how many times I have to look at a client and say "hmmm, sorry. You did XXXXX and it is going to cost you $YYYYYYYY and there's nothing I can do about it".

People lose tax advantages, improperly convert assets, make too many mistakes to note...the biggest is choosing the wrong business type because it sounds cool to say "I have an S Corporation". Forget to withhold payroll taxes or remit them on time, forget to pain quarterlies. The list goes on. The time for an Accountant or EA is before you open the doors.

New

[TBow]

My wife and her sister went to a CPA prior to jumping with both feet into a small business. He gave them some excellent advice after reviewing their business plan and the available books. Unfortunately, they didn't listen to him and 14 years later the business went t_ts up. Had they listened to him, they would have started the business with far less debt and would still likely be in business today showing books in the black. Either that or they wouldn't have ventured down that road knowing the possibility of failure.

Live and learn!

Would I ever consider starting a small business? Not unless I won $20 million in a lottery and could afford to loose a $100,000.

Richard Branson, the founder of the Virgin Group of businesses, was once asked, "How do you become a millionaire?".

"Easy!", he said. "Just start out with a billion dollars, and buy an airline!".

Although most of us (well at least me) will never be able to afford a business like Virgin Airlines or the like, his message serves the purpose of understanding that not all businesses MAKE money. Some LOOSE money, and as a small business entrepeneur, you should consider that possibility and go into this venture with both eyes open and definately not tunnel-visioned!

TBow

[The_Kat]

Very true tbow. Something else I know is you gotta spend money to make money. I have low startup costs. Failure won't break the bank. Im still making contacts and researching. Actually got an invite to come shadow a guy from Dallas who is doing well in the suburban areas around Dallas.

I got nothing but money n time to lose here. We shall see what happens.

[ntrout]

Hey Kyle i was in Moore yesterday taking a lead renovaters couse at Charles Barnes real estate school and there is a guy there by the name of Cord Werner who offers classes for home inspection and also lets people shadow him if thats closer. If you might want the number let me know.

Edited December 19, 2010 by ntrout
missed spelled word

[The_Kat]

Hey Kyle i was in Moore yesterday taking a lead renovaters couse at Charles Barnes real estate school and there is a guy there by the name of Cord Werner who offers classes for home inspection and also lets people shadow him if thats closer. If you might want the number let me know.

Yes please! Moore is definitely closer than Dallas and is more towards the area I would be working in. I have decided to take some online classes while I'm here in PA so that I can take my licensing exam. Charles Barnes is actually one of the places I looked into taking online courses at.....small world

[unioncountyslayer]

I started my own business 6 years ago, and thanks to some pre-planning I survived the down economy/recession. Do lots of research, pay cash for as much as possible, look into incorporating, and at the least talk to a financial planner. If you have any specifics feel free to PM me.