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12 Replies Last post: Mar 17, 2009 2:23 PM by pezz26

Between a Rock and a hard place!

Mar 10, 2008 7:08 PM

Click to view jslatt27's profile Professional jslatt27 9 posts since
Mar 10, 2008
Hello to all,
I am glad I found this web site because getting accurate information from people that you can trust is sometimes difficult. I am a Master Electrician and have been in the trade 18 years, I have worked for a large union shop as a superintendant for several years. Last year, I decided to start my own business on the side (Electrical Contractor) becuase working for myself is something I have always wanted to do. I didnt take out any bank loans or 2nd mortgages on my house but I did aquire 3 or 4 credit cards that are close to beinig maxed out as I am writing this. Everything went well for about 8 or 9 months now work has slowed down and I am struggling to pay the bills that I have racked up through the business, I can't use any of the money from my full time job because that pays all of the bills in the household budget, child care ,mortgage, utilities, vehicle payments and so on.

I really do want to make this work and eventually take the leap and go full-time but right now, it's stressfull on all involved I really can't dedicate a whole lot of time in finding new work because of my full time job.

I am sure someone can relate to this and give me some tips. Thanks
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Click to view lowdose's profile Authority lowdose 11 posts since
Feb 19, 2008
1. Re: Between a Rock and a hard place! Mar 10, 2008 7:19 PM
You need to organize those credit balances under a single, low-to-zero interest account. You'll likely find an offer from any of the major credit cards for a free balance transfer to an account with a promotional APR. You need to make some sacrifices to budget 12 payments (one a month) to pay down that balance within a year. But I can't stress this enough: you can't run a business with credit card debt. It will kill you.
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Click to view LUCKIEST's profile SCORE LUCKIEST 7,926 posts since
Aug 6, 2007
2. Re: Between a Rock and a hard place! Mar 10, 2008 9:49 PM
27, Welcome to this web site and good luck.
Starting a new business is the American Dream.
It is great that you have a full time job and a salary. that is a plus.
Suggestions Do you know about SCORE?? SCORE is FREE
Do you have a Business and Marketing Plan??
Do you know why work has slowed down??
LUCKIEST
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Click to view jslatt27's profile Professional jslatt27 9 posts since
Mar 10, 2008
3. Re: Between a Rock and a hard place! Mar 11, 2008 7:57 AM
in response to: LUCKIEST
LUCKY,
Thanks for responding, no I do not know about SCORE what is it? I do not have a business and marketing plan that was my next question, who would I contact about both? Is this something that an accountant can do?
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Click to view jslatt27's profile Professional jslatt27 9 posts since
Mar 10, 2008
4. Re: Between a Rock and a hard place! Mar 11, 2008 7:59 AM
in response to: lowdose
Thank You for the advice, I will definately look into consolidating and paying down my debt.
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Click to view jslatt27's profile Professional jslatt27 9 posts since
Mar 10, 2008
5. Re: Between a Rock and a hard place! Mar 11, 2008 8:11 AM
in response to: LUCKIEST
LUCKIEST,
I did not answer the 2nd part of your question, you asked if I know why work has slowed down? I live in the Washington DC metropolitan area (DC,Maryland,Virginia)work is plentiful in the construction/skilled trades industry. I guess lack of marketing is the reason for MY slow down, I am doing work for 1 builder who does all residential and you know how the housing market is these days.I have other work as well which is all word of mouth but nothing steady.It is frustrating for me in the position that I am in right now because there is so much work in this area and I know I can get the work if I bid on it, but these general contractors out here work full time during the day and I couldnt be there during the day having a full-time job.
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Click to view FCPainter's profile Mogul FCPainter 83 posts since
Jan 8, 2008
6. Re: Between a Rock and a hard place! Mar 11, 2008 9:32 AM
in response to: jslatt27
I agree that a) you need to consolidate this debt b) you need to figure out why you'd generate so much debt for work you are doing on the side and c) you need to start drumming up business again.

Do you know where the money went? I would think for an electrician doing side jobs you would make really great margins. Are you charging enough money? Did you buy things that you really at the end of the day did not need to buy for your business (e.g. could you rent them on a per job basis or do without or share the cost with another electrician who also does side jobs)

I am really alarmed that you are generating so much debt for a side business. I would sit down with a trusted SCORE counselor or reasonable accountant ASAP to better understand where your money is going.

Let us know how we can help
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Click to view Ed O'Gee's profile Mogul Ed O'Gee 215 posts since
Oct 25, 2007
7. Re: Between a Rock and a hard place! Mar 11, 2008 11:45 AM
Painter gives a good explanation, either he has lived through it or is a smart guy. If you are maxed out on credit cards, consolidating the debt isn't as easy as some people have made it sound. However they are absolutely right you do need to consolidate, (not sure how low your interest will be) but this will help you with one single payment per month.

One thing that Painter pointed out that is dead on is that you have to figure out where the money is going. If you have a full time job, I assume you are not taking personal money from the business, therefore where is the money going? If you are losing money now, without taking a salary, the prospects for quitting your job one day and running the business full time are grim.

If you don't have an accountant, find one that is also a financial planner, pay the person a few bucks to audit your books and help you develop an action plan around the business. They will be able to tell you if you need to find cheaper suppliers, cheaper labor (if you subcontract) or if you are simply not charging your clients enough.
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Click to view jslatt27's profile Professional jslatt27 9 posts since
Mar 10, 2008
8. Re: Between a Rock and a hard place! Mar 11, 2008 12:43 PM
in response to: Ed O'Gee
O,Gee/Painter,
Thank you both for your advice. I have a partner that is just a working partner he does not contribute to the busineess financially. I pay him 40% of what a job makes AFTER material and other expenses have been paid, he gets a 10-99 at the end of the year. Price wise I am comparable to other local electrical contractors maybe a little cheaper but not by much. Most of the debt stems from mismanagement, I will be the first to admit that I am not very good at managing my money. I know where I went wrong, I just need to turn it around and get this debt paid off and meet with a local SCORE counselor. Another mistake that I made was not getting an accountant. I have an appointment with one next week. Who do I get to help with a business plan and marketing strategies? Can SCORE help with that?
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Click to view LUCKIEST's profile SCORE LUCKIEST 7,926 posts since
Aug 6, 2007
9. Re: Between a Rock and a hard place! Mar 11, 2008 12:53 PM
in response to: jslatt27
27, Thanks for the additional info. I am a SCORE Counselor
SCORE is FREE and SCORE helps people in business.
You can visit a SCORE office and talk to a live counselor, or visit online.
You can also go to " www.score.org " and see the Virtual Learning Center
with 26 online courses FREE including Developing a Business Plan.
Hope this helps.
LUCKIEST
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Click to view jslatt27's profile Professional jslatt27 9 posts since
Mar 10, 2008
10. Re: Between a Rock and a hard place! Mar 11, 2008 1:02 PM
in response to: LUCKIEST
LUCKIEST,
Thanks, I will keep everyone informed of my progress. On another note, How do taxes work when you are an LLC? Should I be paying taxes quarterly?
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Click to view pezz26's profile Professional pezz26 3 posts since
Mar 11, 2009
11. Re: Between a Rock and a hard place! Mar 17, 2009 2:19 PM
in response to: jslatt27

Since you and the general contractors are both working during the day, the evening is a perfect chance to catch them by phone. I'd pick up the phone to call and introduce yourself. Ask if you can send them your business card and if they'd consider using you in the future. If you don't hear from them, call them back. Just because they haven't called doesn't mean they aren't interested. Sometimes they get busy, etc. Don't give up. Persistance is the key in sales and that's basically what you're doing..selling yourself. Good luck!
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Click to view pezz26's profile Professional pezz26 3 posts since
Mar 11, 2009
12. Re: Between a Rock and a hard place! Mar 17, 2009 2:23 PM
in response to: jslatt27
40% seems like a rather large cut for your partner not to be contributing financially. What else is he bringing to the table?
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