It's universal that during times in my life when I planned extensively, I made the most progress. The progress wasn't always in the direction of the plan. However, without a plan, it's easy to let inertia take hold. Once you're leaving yourself to the charity of the prevailing winds, you've relenquished a lot of control in your life.
Ever since my current business got off the ground, I really have lost a lot of fire in the belly. However, I'm a bit young to be retired in place and it's time for me to set some goals so that I won't be sitting here 10 years from now, in the same shape, business-wise, that I'm in right now.
I've decided that I need some very tangible goals for the next 5 year business period. Here they are.
1. To be debt free in my Servpro business. I've made what I consider prudent use of debt in my business. We grew quickly, from revenues of over $200,000 in year one, to revenues of almost $900,000 in year 4. As much as I tried, I simply could not acquire the necessary equipment using ongoing revenue as my only source of capital. However, from here on out, my goal is to pay for everything in cash and to pay off the notes I have remaining.
Part of me doesn't think this goal is very important. My debt service isn't that substantial, really. All told, maybe $3,000 a month. But to paraphrase an old saying, a thousand here, a thousand there, and pretty soon you're talking about real money. There are better things I could think of to do with $36,000 a year. Over a 5 year period, that's enough money to buy a house.
2. I just took some baby steps to establish a lawn care business unit. In 5 years, I want to make sure that thing is cash flowing enough that it would be a reasonable stand-alone business operation, even if I weren't trying to take advantage of synergies with Servpro. I have several contingencies based on how well this business unit performs, but I'll need to see what happens before I take it in any specific direction. This could just be a way to absorb overhead during down-times in my Servpro business. Or, it could take off and be something I could scale up. I won't know until I get in it, full-time.
3. Servpro has a level of operations that earns an operator a Rolex. Right now, it's given for $1.5 million in revenue in a calendar year. I suspect they'll change it (probably right before I hit $1.5 million), but sometime in the next 5 years, I want my Servpro revenues to be at whatever the prevailing Rolex level is.
4. We are currently leasing our warehouse. I love the arrangement. The rent is cheap and the warehouse meets all my needs. However, I would like to have some commercial real estate, and I think sometime in the next 5 years is a reasonable time-frame to reach that goal.
5. I want to establish an asset lease business unit that leases various vehicles (like the commercial trucks and vans we use in the business). In the next 5 years, I want to establish that as a separate business unit and include things such as aircraft leasing and disaster restoration equipment leasing under the same corporate structure.
If I can do all those things, the next 5 years will be really great. My son will also be 13 years old, then. So, the 5 year plan after this one will take up the years until his 18th birthday. Not long after that, I am looking forward to a business plan that brings him in as a partner in the business and transitions operations to him so I can retire.
Thursday, November 26, 2009
Tuesday, November 24, 2009
There but for the grace...
I have lived my life with very little empathy in most cases. Maybe I'm just hard hearted, but I've never been one who could look at various states of misfortune and think, "Oh, I'm lucky I'm not in those shoes..."
I mean, what are the odds that I would look at a drug-addict and think, "Wow, that could have been me!". The reality is that it couldn't have been me. I have too much respect for the rules. I have too little enthusiasm for tying one on. I don't even drink. Not that I never did, but these days, maybe once or twice a year, at best. I don't even finish all the pain meds the doctors give me. They do nothing for me. Even the ones that folks say are "the good stuff".
So, this plea has fallen flat on me for all my life. It means little to me. However, there is one exception. When I see a small businessperson fail, it tears me apart.
For some reason, seeing a business go under, and knowing the folks involved, is a hard emotional experience for me.
When I first bought my franchise, I became acutely aware of other small business owners. I struck up conversations with the guy who owned the local UPS store. I bought lunch at the local Roly Poly, not because the food was good (even though it was), but because I liked the owner who had told me a lot about his business and himself.
As I participated in various community organizations, I got to know folks who owned, say, the local car dealership.
I remember the time I talked with the guy who owned the Roly Poly and he said his store wasn't doing well. I could sense that he felt like there was a slow moving train bearing down on him. He just didn't know what to do about it. I ate there as often as I could, but it takes more than a $7 purchase to rescue a floundering restaurant. I doubt the total of the meals I bought there in a month amounted to more than 1% of his rent, alone.
I also remember the time I went there and the signs indicated that he was closed. Gone. I didn't even have a chance to say goodbye to him.
I felt so awful for him. He wasn't that different than me. He had a severance from GM and bought the restaurant with it. Now, it was all gone. A once in a lifetime windfall, gone in the blink of an eye.
That could have been me.
Back when GM was going through its bailout request and they announced that they would be cutting their dealership network, I never, ever imagined that the local Chevy dealer would be on the block. He had a large, succesful dealership, or so it appeared.
In the days after the closures were announced, he would say he was selling more cars than ever! He was upbeat and happy. I presumed he was spared the ax.
I would scan his inventory of Cadillacs and Corvettes and say to myself, "someday, when I buy one of those, I'll buy it from Tom."
With the current incentives, I figured I'd go there and get a new pickup truck and maybe an HHR for my business tpo help with my '09 tax bill. Not quite a caddy or vette, but combined, they cost about the same.
As I walked around waiting to speak to his son, the internet sales manager (who had stepped out for a moment), it became blatantly obvious that they had no new cars on the lot. Just used ones.
So, I came right out and asked what happened. He said that they were in arbitration trying to get their dealership back from GM. I'm guessing that's not going to happen, and even if it does, if enough time elapses, they'd be building their dealership up from zero.
He had a perfectly profitable business that employed his whole family. Of all the Chevy dealers to close, his seemed an unusual fit since there weren't, as far as I knew, any other Chevy dealers in Monroe, MI. I have never met a nicer person in all my life. Out of nowhere, his business is gone.
Such are the frailties of hanging out a shingle and going into business, yourself.
Once I returned from the dealership, I was so depressed I had to leave my business and go home.
It doesn't help that I'm an hour out of Detroit. California may have comparable unemployment, but hey, it's California. It'll bounce back. I just can't think of any driving force that will bring back Ohio and Michigan.
There's a feeling here like we're being picked off one by one. Even my business is having some tough times. Not so much because of the economy, but because of some extended, unusually mild weather.
It's just not much fun being in business right now. I'm just hoping that a harsh Winter can save us.
Small businesspeople are not a sympathetic lot. Half the folks think we're rich and the other half aren't aware that we exist. When times are good, we benefit disproportionately, but when times are bad, we suffer disproportionately.
Small business has been an endeavor where I can make 5 figures in a single month... and lose 5 figures in a single month just as easily.
More often than not, we finance our businesses with our life savings and the equity in our homes. Most small business people I know, myself included, financed at least part of their business with a credit card at one point in time or another. We have no financial backstop. When we run out of money, it's game over.
When we run out of money, it isn't like a person with a job who runs out of money. We don't run out of money until after we crater. When we crater, it can take a lifetime to dig out.
So, when I see a shuttered business, I see a memorial of one of my fallen brothers or sisters.
I also take a moment to say that, at least so far, I'm glad it isn't me.
I mean, what are the odds that I would look at a drug-addict and think, "Wow, that could have been me!". The reality is that it couldn't have been me. I have too much respect for the rules. I have too little enthusiasm for tying one on. I don't even drink. Not that I never did, but these days, maybe once or twice a year, at best. I don't even finish all the pain meds the doctors give me. They do nothing for me. Even the ones that folks say are "the good stuff".
So, this plea has fallen flat on me for all my life. It means little to me. However, there is one exception. When I see a small businessperson fail, it tears me apart.
For some reason, seeing a business go under, and knowing the folks involved, is a hard emotional experience for me.
When I first bought my franchise, I became acutely aware of other small business owners. I struck up conversations with the guy who owned the local UPS store. I bought lunch at the local Roly Poly, not because the food was good (even though it was), but because I liked the owner who had told me a lot about his business and himself.
As I participated in various community organizations, I got to know folks who owned, say, the local car dealership.
I remember the time I talked with the guy who owned the Roly Poly and he said his store wasn't doing well. I could sense that he felt like there was a slow moving train bearing down on him. He just didn't know what to do about it. I ate there as often as I could, but it takes more than a $7 purchase to rescue a floundering restaurant. I doubt the total of the meals I bought there in a month amounted to more than 1% of his rent, alone.
I also remember the time I went there and the signs indicated that he was closed. Gone. I didn't even have a chance to say goodbye to him.
I felt so awful for him. He wasn't that different than me. He had a severance from GM and bought the restaurant with it. Now, it was all gone. A once in a lifetime windfall, gone in the blink of an eye.
That could have been me.
Back when GM was going through its bailout request and they announced that they would be cutting their dealership network, I never, ever imagined that the local Chevy dealer would be on the block. He had a large, succesful dealership, or so it appeared.
In the days after the closures were announced, he would say he was selling more cars than ever! He was upbeat and happy. I presumed he was spared the ax.
I would scan his inventory of Cadillacs and Corvettes and say to myself, "someday, when I buy one of those, I'll buy it from Tom."
With the current incentives, I figured I'd go there and get a new pickup truck and maybe an HHR for my business tpo help with my '09 tax bill. Not quite a caddy or vette, but combined, they cost about the same.
As I walked around waiting to speak to his son, the internet sales manager (who had stepped out for a moment), it became blatantly obvious that they had no new cars on the lot. Just used ones.
So, I came right out and asked what happened. He said that they were in arbitration trying to get their dealership back from GM. I'm guessing that's not going to happen, and even if it does, if enough time elapses, they'd be building their dealership up from zero.
He had a perfectly profitable business that employed his whole family. Of all the Chevy dealers to close, his seemed an unusual fit since there weren't, as far as I knew, any other Chevy dealers in Monroe, MI. I have never met a nicer person in all my life. Out of nowhere, his business is gone.
Such are the frailties of hanging out a shingle and going into business, yourself.
Once I returned from the dealership, I was so depressed I had to leave my business and go home.
It doesn't help that I'm an hour out of Detroit. California may have comparable unemployment, but hey, it's California. It'll bounce back. I just can't think of any driving force that will bring back Ohio and Michigan.
There's a feeling here like we're being picked off one by one. Even my business is having some tough times. Not so much because of the economy, but because of some extended, unusually mild weather.
It's just not much fun being in business right now. I'm just hoping that a harsh Winter can save us.
Small businesspeople are not a sympathetic lot. Half the folks think we're rich and the other half aren't aware that we exist. When times are good, we benefit disproportionately, but when times are bad, we suffer disproportionately.
Small business has been an endeavor where I can make 5 figures in a single month... and lose 5 figures in a single month just as easily.
More often than not, we finance our businesses with our life savings and the equity in our homes. Most small business people I know, myself included, financed at least part of their business with a credit card at one point in time or another. We have no financial backstop. When we run out of money, it's game over.
When we run out of money, it isn't like a person with a job who runs out of money. We don't run out of money until after we crater. When we crater, it can take a lifetime to dig out.
So, when I see a shuttered business, I see a memorial of one of my fallen brothers or sisters.
I also take a moment to say that, at least so far, I'm glad it isn't me.
Thursday, November 19, 2009
Jimmy's General State of Things 11-19-09
The biggest thing hanging over me right now is that the weather has remained phenomenally nice up here. This has pretty much been a year without bad weather. We haven't even had big rains.
Business-wise, that's been a killer. We started off the year like gangbusters, but are limping in to the end of the calendar year. Overall, we'll gross the same as we did last year. Considering the weather conditions, that's not so bad. However, we worked twice as hard for it and I ended up with about 40% less profit as a result.
I still see huge reasons for optimism, despite our losses in the 4th quarter. For one thing, we stayed steady despite the economy and lack of help from the weather.
So, when the weather breaks bad, we should do fantastic.
I finally submitted my paperwork to the State of Ohio to become a minority owned firm. It won't matter much as far as getting our disaster restoration work. However, it may come up huge when it comes to pursuing commercial cleaning and construction contracts.
One thing I'm doing to try and even out the cyclicality a bit is launching a lawn-care business in the Spring. There, the minority-owned thing may be a help when bidding on larger commercial accounts.
I'm not that convinced that it's a great idea from a stand-alone business model standpoint. However, it has nice synergies with my current business.
For instance, houses that pay to get their lawns mowed are also good candidates to have their carpets cleaned every now and then.
The main idea is to keep people on the payroll, and to engage them in something that at least covers the cost of their wages and perhaps absorbs some overhead.
We just got our brand-new John Deere 840 with the grass-catching system. The thing is a monster. It is capable of delivering a quality cut at 17 miles per hour and has a 60" mowing deck. Basically, it mows a swath that's almost as wide as I am tall, at a speed faster than I can sprint.
Like virtually all credit I get, this one came with 0% down, 0% apr, and a 42 month amortization period. It is sorta funny, when I think about all the debt I've accumulated, very little of it has been at an interest rate of over 3%.
I'm getting a little bit spoiled.
I may see about getting a pickup truck here soon so I can get the tax-writeoff. And yes, even those are coming with 0% terms. I'd really like a new Toyota Tundra extended cab, but since this will probably be used primarily for lawn-care, I'll probably be looking at something more like a Ford F-150, spartanly appointed.
For the Navy, I'm going back to Athens, GA to repeat my last 4 day midpoint worth of instructions. There are 3 food service tests. I passed one in July in Athens, but have failed the 2nd one, twice now. One more failure and I could be dismissed from the program and although that would mean no trip to the desert, it would also mean I would no longer be an officer in the Navy. Service to my country means too much to me, and serving with my fellow sailors has really been a great part of my life. I'm going to do all I can to keep up. The Navy isn't making me do this: I suggested it, myself, even if I had to go unfunded (meaning I wouldn't get paid for any of it.)
Next week, Logan and I leave for Disney so he can have some fun with all his Phoenix cousins.
And that's all I have to say about that.
Business-wise, that's been a killer. We started off the year like gangbusters, but are limping in to the end of the calendar year. Overall, we'll gross the same as we did last year. Considering the weather conditions, that's not so bad. However, we worked twice as hard for it and I ended up with about 40% less profit as a result.
I still see huge reasons for optimism, despite our losses in the 4th quarter. For one thing, we stayed steady despite the economy and lack of help from the weather.
So, when the weather breaks bad, we should do fantastic.
I finally submitted my paperwork to the State of Ohio to become a minority owned firm. It won't matter much as far as getting our disaster restoration work. However, it may come up huge when it comes to pursuing commercial cleaning and construction contracts.
One thing I'm doing to try and even out the cyclicality a bit is launching a lawn-care business in the Spring. There, the minority-owned thing may be a help when bidding on larger commercial accounts.
I'm not that convinced that it's a great idea from a stand-alone business model standpoint. However, it has nice synergies with my current business.
For instance, houses that pay to get their lawns mowed are also good candidates to have their carpets cleaned every now and then.
The main idea is to keep people on the payroll, and to engage them in something that at least covers the cost of their wages and perhaps absorbs some overhead.
We just got our brand-new John Deere 840 with the grass-catching system. The thing is a monster. It is capable of delivering a quality cut at 17 miles per hour and has a 60" mowing deck. Basically, it mows a swath that's almost as wide as I am tall, at a speed faster than I can sprint.
Like virtually all credit I get, this one came with 0% down, 0% apr, and a 42 month amortization period. It is sorta funny, when I think about all the debt I've accumulated, very little of it has been at an interest rate of over 3%.
I'm getting a little bit spoiled.
I may see about getting a pickup truck here soon so I can get the tax-writeoff. And yes, even those are coming with 0% terms. I'd really like a new Toyota Tundra extended cab, but since this will probably be used primarily for lawn-care, I'll probably be looking at something more like a Ford F-150, spartanly appointed.
For the Navy, I'm going back to Athens, GA to repeat my last 4 day midpoint worth of instructions. There are 3 food service tests. I passed one in July in Athens, but have failed the 2nd one, twice now. One more failure and I could be dismissed from the program and although that would mean no trip to the desert, it would also mean I would no longer be an officer in the Navy. Service to my country means too much to me, and serving with my fellow sailors has really been a great part of my life. I'm going to do all I can to keep up. The Navy isn't making me do this: I suggested it, myself, even if I had to go unfunded (meaning I wouldn't get paid for any of it.)
Next week, Logan and I leave for Disney so he can have some fun with all his Phoenix cousins.
And that's all I have to say about that.
Tuesday, November 17, 2009
The Big Question on Bailouts: Why?
Why?
The government is only now starting to realize that the AIG bailout was a stupid idea, poorly executed, to the detriment of the taxpayer.
This, of course, was obvious last year to anybody who wasn't bought and paid for by special interests.
AIG should be out of business right now.
They're not.
They're rich.
You're not.
These banks? The ones complaining that they have compensation limits? The limit should be zero. Nobody in those companies should make anything because they should all be unemployed.
The banks that paid back the TARP money and are now back to giving multimillion dollar bonuses every year? They should be bankrupt, too. The AIG bailout was for their benefit.
So, I'm left to wonder, "Why?"
Why do I do it? Why do I have the sleepless nights owning my own business? Why do I stress on months when I lose money? Why do I take cash advances out on credit cards to keep this thing afloat?
It's not like rescuing the banks helped me. In fact, I'm worse off now than ever as far as the help I get from banks.
Small business lending is a joke. It's nearly non-existent and the terms are absurd. Yeah, you can sometimes get an SBA loan if you're willing to put up all your assets and the equity in your home. Seriously, giving somebody a loan at double digit interest and demanding that it be securitized at 300% of the value of the loan isn't exactly doing anybody a favor.
Our home equity loans have all dried up. That's how most business owners I know financed their businesses. No bailout for HELOCS for entrepreneurs, though.
So, why? I mean, yeah, I know the macro-level "why?". The macro-level "why?" is that Wall Streeters are rich and connected. Because of that, they own the government, and they tell the government to steal our money and give it to Wall Street.
No matter how much pain is endured on main street, Wall Street will use the government to step on our heads to make sure their party doesn't ever end.
But why? Why?
Why could nobody see that just giving money to the country's worst businessmen was a stupid idea?
Why could nobody see that it was morally wrong to give wealthy people the taxpayer dollars paid in by millions upon millions of middle class people struggling to get by?
In a country that decries partisan rancour, the only thing that both democrats and republicans could agree on was the fact that the little guy should get totally annihilated in order to benefit rich folks on Wall Street.
So, why?
I joined the military a few years ago as a reservist. I felt it was my obligation to a country that has blessed me so greatly. Now, I honestly wonder, why did I do that?
Why am I going to risk losing my life? Why would I subject myself to absence from my family?
To represent a corrupt government whose only purpose appears to be to victimize the citizenry for the benefit of the wealthy?
Why? Why pay taxes just to see the money go to Wall Street? Why support a system that has already bankrupted my son's and countless future generations in order to give millions and billions to people who were already multi-millionaires?
Why did I spend my life thinking that my government was basically good when in reality, it's just a corrupt means by which the struggling middle class is taxed to death for the benefit of the lazy and the greedy?
It is a testament to the civility of our population that we aren't taking to the streets with pitchforks right now. In any other age, these Wall Street bankers would be hunted down and beaten to death by angry mobs.
Sometimes, the modern, civilized ways aren't the best ways.
Ultimately, I'm left to wonder, why doesn't anybody, anywhere in government, care about anyone other than Wall Street bankers?
It is said that the East Germans, after the fall of communism, would say:
"Everything we were told about Communism was a lie. Everything we were told about Capitalism was true."
Recent times have borne this out.
However, this past episode was not a product of capitalism. In capitalism, those banks would have failed. Those Wall Streeters would have sufferred the financial consequences of their decisions.
If we were going to engage in socialism, why did we only do it for Wall Street bankers? For god's sake, we've got the worst of both worlds.
Where the working person suffers all the financial problems inherent in capitalism, but politically connected people are allowed to do anything and never have to suffer the consequences of their actions because the government will victimize the population in any way necessary to support the system.
Why?
The government is only now starting to realize that the AIG bailout was a stupid idea, poorly executed, to the detriment of the taxpayer.
This, of course, was obvious last year to anybody who wasn't bought and paid for by special interests.
AIG should be out of business right now.
They're not.
They're rich.
You're not.
These banks? The ones complaining that they have compensation limits? The limit should be zero. Nobody in those companies should make anything because they should all be unemployed.
The banks that paid back the TARP money and are now back to giving multimillion dollar bonuses every year? They should be bankrupt, too. The AIG bailout was for their benefit.
So, I'm left to wonder, "Why?"
Why do I do it? Why do I have the sleepless nights owning my own business? Why do I stress on months when I lose money? Why do I take cash advances out on credit cards to keep this thing afloat?
It's not like rescuing the banks helped me. In fact, I'm worse off now than ever as far as the help I get from banks.
Small business lending is a joke. It's nearly non-existent and the terms are absurd. Yeah, you can sometimes get an SBA loan if you're willing to put up all your assets and the equity in your home. Seriously, giving somebody a loan at double digit interest and demanding that it be securitized at 300% of the value of the loan isn't exactly doing anybody a favor.
Our home equity loans have all dried up. That's how most business owners I know financed their businesses. No bailout for HELOCS for entrepreneurs, though.
So, why? I mean, yeah, I know the macro-level "why?". The macro-level "why?" is that Wall Streeters are rich and connected. Because of that, they own the government, and they tell the government to steal our money and give it to Wall Street.
No matter how much pain is endured on main street, Wall Street will use the government to step on our heads to make sure their party doesn't ever end.
But why? Why?
Why could nobody see that just giving money to the country's worst businessmen was a stupid idea?
Why could nobody see that it was morally wrong to give wealthy people the taxpayer dollars paid in by millions upon millions of middle class people struggling to get by?
In a country that decries partisan rancour, the only thing that both democrats and republicans could agree on was the fact that the little guy should get totally annihilated in order to benefit rich folks on Wall Street.
So, why?
I joined the military a few years ago as a reservist. I felt it was my obligation to a country that has blessed me so greatly. Now, I honestly wonder, why did I do that?
Why am I going to risk losing my life? Why would I subject myself to absence from my family?
To represent a corrupt government whose only purpose appears to be to victimize the citizenry for the benefit of the wealthy?
Why? Why pay taxes just to see the money go to Wall Street? Why support a system that has already bankrupted my son's and countless future generations in order to give millions and billions to people who were already multi-millionaires?
Why did I spend my life thinking that my government was basically good when in reality, it's just a corrupt means by which the struggling middle class is taxed to death for the benefit of the lazy and the greedy?
It is a testament to the civility of our population that we aren't taking to the streets with pitchforks right now. In any other age, these Wall Street bankers would be hunted down and beaten to death by angry mobs.
Sometimes, the modern, civilized ways aren't the best ways.
Ultimately, I'm left to wonder, why doesn't anybody, anywhere in government, care about anyone other than Wall Street bankers?
It is said that the East Germans, after the fall of communism, would say:
"Everything we were told about Communism was a lie. Everything we were told about Capitalism was true."
Recent times have borne this out.
However, this past episode was not a product of capitalism. In capitalism, those banks would have failed. Those Wall Streeters would have sufferred the financial consequences of their decisions.
If we were going to engage in socialism, why did we only do it for Wall Street bankers? For god's sake, we've got the worst of both worlds.
Where the working person suffers all the financial problems inherent in capitalism, but politically connected people are allowed to do anything and never have to suffer the consequences of their actions because the government will victimize the population in any way necessary to support the system.
Why?
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