Opening a Local Saw Shop...Thoughts

[XP_Slinger]

I am an LLC and run a small engine shop in a small building on my property. When it comes to insurance things vary but if you have walk in customers that come to your place of business you need a $1,000,000 liability policy. Mine costs a little over $500 a year. If you want a policy that covers loss/theft of customer's equipment that is usually a rider on the policy. If your shop is on the property you live on your homeowner's policy will most likely cover loss of your tools or equipment up to a dollar value but not any of you customers. If your shop is not on the property you live on your homeowner's policy probably won't cover anything. I have a rider on my homeowner's policy for $20,00 worth of tools and equipment. Always check with your insurance agent as to what coverages you have or don't have.

Set up a commercial checking account and credit card with your tax ID number in your LLC name. Make all your business purchases with the business credit card and keep ALL you receipts concerning anything to do with the business for deductions. If you don't have an accountant you should get one. Mine is worth every penny.
Good luck

Thanks for this info, the insurance aspect definitely an unfamiliar world to me. My local dealer told me how he has his business laid out, basically leaves his business with no assets because they are scattered throughout a couple different LLC’s that get paid by his business. I’m still deciding whether or not I want to have a public shop or keep it more remote.

 

[Larry B]

Thinking of doing both mods and repair. But I want to stay with reputable brands. I’m open to whatever work is needed, have a good in with a big tree company up here that has a steady need for repair service.

If that tree company spends signifigant .money with you they will want receipts and may 1099 you. They will want to deduct your services on their taxes. For every dollar they show they gave you they pay less tax. Which means you will must show what they pay you as income. May not be relevant but if you are at the age to draw social security showing that as personal income may decrease your benefit significantly. All my shop income is under the LLC so it does not matter how much i make. Another thing is buying parts. Do you plan to setup accounts with vendors for parts? Do you want to buy tax free? If you buy parts tax free you will either need to show you sold them to customer on a saw and charged tax ir you resold them to another vendor. If you buy parts and pay the sales tax when you buy then the state won't care what you do with them. If you want to buy tax free you will need a taxID number and the state will be looking for sales tax. Running a small business is more complicated than a lot of folks think. Do your research and stay out of lawyers and the tax man's crosshairs. Everybody is your friend till something bad happens then lawyers get involved.

 

[USMC615]

If that tree company spends signifigant .money with you they will want receipts and may 1099 you. They will want to deduct your services on their taxes. For every dollar they show they gave you they pay less tax. Which means you will must show what they pay you as income. May not be relevant but if you are at the age to draw social security showing that as personal income may decrease your benefit significantly. All my shop income is under the LLC so it does not matter how much i make. Another thing is buying parts. Do you plan to setup accounts with vendors for parts? Do you want to buy tax free? If you buy parts tax free you will either need to show you sold them to customer on a saw and charged tax ir you resold them to another vendor. If you buy parts and pay the sales tax when you buy then the state won't care what you do with them. If you want to buy tax free you will need a taxID number and the state will be looking for sales tax. Running a small business is more complicated than a lot of folks think. Do your research and stay out of lawyers and the tax man's crosshairs. Everybody is your friend till something bad happens then lawyers get involved.

Good knowledge and advice...a small business, LLC can be a tricky road to navigate. A damn good knowledge of QuickBooks or the likes (many other business related software programs out there), goes a long way as well.

 

[Larry B]

A good accountant is a small business's best friend. I have retirement income, the mower shop income and i do some consulting work under a business name. No way could i do my tax return. I just have to tally up all my receipts by category and the income from each business and give it all to her and she takes care of it. Like she says. She shouldn't try to fix mowers and i shouldn't try to prepare tax returns.

 

[XP_Slinger]

If that tree company spends signifigant .money with you they will want receipts and may 1099 you. They will want to deduct your services on their taxes. For every dollar they show they gave you they pay less tax. Which means you will must show what they pay you as income. May not be relevant but if you are at the age to draw social security showing that as personal income may decrease your benefit significantly. All my shop income is under the LLC so it does not matter how much i make. Another thing is buying parts. Do you plan to setup accounts with vendors for parts? Do you want to buy tax free? If you buy parts tax free you will either need to show you sold them to customer on a saw and charged tax ir you resold them to another vendor. If you buy parts and pay the sales tax when you buy then the state won't care what you do with them. If you want to buy tax free you will need a taxID number and the state will be looking for sales tax. Running a small business is more complicated than a lot of folks think. Do your research and stay out of lawyers and the tax man's crosshairs. Everybody is your friend till something bad happens then lawyers get involved.

You are absolutely correct, a lot more to it than I expected. Thanks for sharing your experience, it helps a lot

 

[pwheel]

I'm sure there's a market for repair services that dealers aren't in a position to offer. I have a sole proprietor business and use dual-entry accounting software and an accountant for year-end taxes. Big issue over the years is finding out who the potential bad clients are and avoiding them like the plague. It's a good sign when a tree company spends a reasonable amount of time for preventative equipment maintenance at the end of the day instead of flogging the equipment to failure and expecting the repair guy to fix the wreckage for little money.
I'm clueless about the saw porting business model.

 

[Ketchup]

I’ve been doing almost exactly the same busines that @XP_Slinger describes for about a year now. I work out of my garage in a remote area and don’t have customers come to the shop. Not having an accessible place for customers to pick up or drop off saws is a huge hassle and a big deterrent for customers. I also work with tree services and that’s really the bulk of my business. For those guys I charge a flat fee for pickup or delivery. That has worked pretty well. In some cases I even charge for mobile work when a crew is in a bind. I guess my advice is establish a good location that saws can be dropped off and picked up.

I’m a year in and my head is still spinning. No idea what I’m doing. X10 on getting an accountant or tax person.

And I want one of those big USC’s soooooo bad.

 

[angelo c]

Thinking of doing both mods and repair. But I want to stay with reputable brands. I’m open to whatever work is needed, have a good in with a big tree company up here that has a steady need for repair service.

"Reputable brands"..... what ya gonna say when the hooskies come a knocking????

 

[Larry B]

Well, while i am rambling........
What are you going to charge and will it be by the job or hours spent? How much will you markup parts. Will this small business need to provide a living wage or supplement other income or a hobby business? My ex-brother in law is one of the best welders i have ever met. He does artistic welding. His TIG work is amazing. He decided to start a side business doing welding. He spent over $10k on equipment. He priced his services so low just to get business it took him years to pay off the equipment and he actually cleared very little. Great welder but lousy businessman. A friend retired and opened a coffee shop by using his retirement savings and promptly went bankrupt. Never use retirement dollars to start a business. Especially pre-tax savings dollars. The 2 John Deere/Stihl dealers near me both charge $98/hr. I don't need to charge that but i do need to cover my expenses and make a profit. You need to figure in many costs that go into your overhead. Tools, shop supplies, parts, insurance, advertising, mileage, office supplies, website, phone, etc. Many people start a small business and charge $20 an hour if they want to clear $20 an hour but in reality after taxes and shop overhead it is more like $40 an hour to clear $20 an hour.

 

[Duce]

"Reputable brands"..... what ya gonna say when the hooskies come a knocking????

. Finally! Saw I can repair and customer will not complain about cost of parts and didn't have to wait months for them.

 

[XP_Slinger]

Well, while i am rambling........
What are you going to charge and will it be by the job or hours spent? How much will you markup parts. Will this small business need to provide a living wage or supplement other income or a hobby business? My ex-brother in law is one of the best welders i have ever met. He does artistic welding. His TIG work is amazing. He decided to start a side business doing welding. He spent over $10k on equipment. He priced his services so low just to get business it took him years to pay off the equipment and he actually cleared very little. Great welder but lousy businessman. A friend retired and opened a coffee shop by using his retirement savings and promptly went bankrupt. Never use retirement dollars to start a business. Especially pre-tax savings dollars. The 2 John Deere/Stihl dealers near me both charge $98/hr. I don't need to charge that but i do need to cover my expenses and make a profit. You need to figure in many costs that go into your overhead. Tools, shop supplies, parts, insurance, advertising, mileage, office supplies, website, phone, etc. Many people start a small business and charge $20 an hour if they want to clear $20 an hour but in reality after taxes and shop overhead it is more like $40 an hour to clear $20 an hour.

I won’t be relying on the business for a living wage, my military retirement will pay all of my bills and living expenses plus a little extra. My overhead is pretty low, already have a structure to operate out of, most tools I have. Biggest up front is a lathe which I’m feverishly hunting for now, payin cash for it and the tooling. Also in the beginning stages of getting insurance quotes, looking into some sort of business program and others costs you mentioned to get an idea of that overhead. My local dealer said once I get a business on record he’ll sell me parts at 10 - 15 % off. I intend to mark up the same percentage from whatever my cost is. Won’t make much on parts but that will put my charge for parts in line with a well known dealer which I think is important so I’m not gouging customers nor under cutting my local guy who is supporting me. I’m still trying to decide on time rate. Juggling between flat rate and hourly. I think people in general are more comfortable with a flat rate for a given job but that has potential to hurt me with regard to time. Still have a lot of thinking to do on that subject.

 

[angelo c]

Josh...in mediacat there is a "suggested hour" for many repairs don't know what is available for HOOSkie but that might not be a bad start. I would make sure I have an estimated labor for most common repairs....then if there are problems like...oh...I dunno...a stripped bolt or three you could contact the owner and let him know why you were "off" the estimate...or if you had to have some part machined/welded ect. Communication is king. Know your skills and how to charge for them. Spinning some chain can make a few bucks but sharpening them sucks . I would make DAMN sure that dirty saws pay more for repairs gungy clapped out stripped saws suck. Anything I can do to help is a ring ring away

 

[ManiacalMark]

Congrats! Where abouts will the shop be? I see you’re in central ny

 

[Huskygasaxe]

I am doing the same thing with a mobile welding and small engine repair business. Just starting. I’m keeping all my tools and equipment at the basic level. Will spend the money on the tools that I actually see the need for. Keeping a really low overhead. Going to give it a go and if it doesn’t work out I can sell the gear and move on. The key is not to take on a pile of debt. Keep the overhead low so you can survive until you get the clients lined up. Good luck.

 

[XP_Slinger]

Congrats! Where abouts will the shop be? I see you’re in central ny

I’m very close to the eastern shore of Oneida lake.

I am doing the same thing with a mobile welding and small engine repair business. Just starting. I’m keeping all my tools and equipment at the basic level. Will spend the money on the tools that I actually see the need for. Keeping a really low overhead. Going to give it a go and if it doesn’t work out I can sell the gear and move on. The key is not to take on a pile of debt. Keep the overhead low so you can survive until you get the clients lined up. Good luck.

Best of luck man.

 

[XP_Slinger]

Josh...in mediacat there is a "suggested hour" for many repairs don't know what is available for HOOSkie but that might not be a bad start. I would make sure I have an estimated labor for most common repairs....then if there are problems like...oh...I dunno...a stripped bolt or three you could contact the owner and let him know why you were "off" the estimate...or if you had to have some part machined/welded ect. Communication is king. Know your skills and how to charge for them. Spinning some chain can make a few bucks but sharpening them sucks . I would make DAMN sure that dirty saws pay more for repairs gungy clapped out stripped saws suck. Anything I can do to help is a ring ring away

Great points Angelo. Thanks

 

[Larry B]

More ramblings from just some random guy on the internet.

According to the SBA 90% of small businesses fail in 2 years or less.
First rule of any business. Never blame customers for your business failing. If you start a business and it fails it is your fault not the customers. Small business startups usually fail for 3 reasons. 1. Not enough business. 2. Prices not compatible with the area. 3. Quality of goods or services not adequate for prices charged.

Many folks are really good at doing something they like and start a small business doing it and wonder why the world doesn't beat a path to their door. Some consider dollars spent on advertising and networking as wasted dollars. For a new business they are probably the most important dollars. Until a business establishes a reputation and customers seek you out you need to be putting your business in front of them. And don't put all the eggs in one basket. A guy got a contract at the local Air Force base for HVAC. Hires 4 HVAC techs. Government contract so money is rolling in and never seeks any new clients. 2 years in he loses the contract goes bankrupt and lays off the 4 techs. My buddy was one of the techs.

You have to price your goods or services to what your area will support. Pricing too low is as bad as too high. There are 2 JD/Stihl dealers within 8 miles of me. They both charge $98/hr labor and they both have more service business than they can handle. Find out what comperable businesses in the area charge and start from there what you will charge.

Most small home based businesses operate on their reputation. If you do quality work at a fair price you develop a reputation. If you do poor work at a fair price you will also develop a reputation. Most people looking for what ever your business is know your reputation, whatever it is. You can be the cheapest guy in town but if you do poor work even the cheap ass customers won't use your business. The quality of your work, communication skills and customer skills are some the most important things to running a small business.

Like a lot of guys here my mower business is not my primary source of income and it just supports my toolaholic addiction but i take it seriouly as a business. I try to do quality work at a fair price and treat my customers well. Seems to be working. A guy opened a shop in town a few years ago. According to folks i talked to he did poor work but he was dirt cheap. He closed in less than a year.

Time to hop down off the soap box and get another cup of coffee.

 

[ManiacalMark]

I’m very close to the eastern shore of Oneida lake.



Best of luck man.

I’ll have to check it out when you get things going. Sylvan beach was one of my favorite places in the summer.

 

[XP_Slinger]

I’ll have to check it out when you get things going. Sylvan beach was one of my favorite places in the summer.

Beer is always cold in my shop, swing by any time

 

[angelo c]

More ramblings from just some random guy on the internet.

According to the SBA 90% of small businesses fail in 2 years or less.
First rule of any business. Never blame customers for your business failing. If you start a business and it fails it is your fault not the customers. Small business startups usually fail for 3 reasons. 1. Not enough business. 2. Prices not compatible with the area. 3. Quality of goods or services not adequate for prices charged.

Many folks are really good at doing something they like and start a small business doing it and wonder why the world doesn't beat a path to their door. Some consider dollars spent on advertising and networking as wasted dollars. For a new business they are probably the most important dollars. Until a business establishes a reputation and customers seek you out you need to be putting your business in front of them. And don't put all the eggs in one basket. A guy got a contract at the local Air Force base for HVAC. Hires 4 HVAC techs. Government contract so money is rolling in and never seeks any new clients. 2 years in he loses the contract goes bankrupt and lays off the 4 techs. My buddy was one of the techs.

You have to price your goods or services to what your area will support. Pricing too low is as bad as too high. There are 2 JD/Stihl dealers within 8 miles of me. They both charge $98/hr labor and they both have more service business than they can handle. Find out what comperable businesses in the area charge and start from there what you will charge.

Most small home based businesses operate on their reputation. If you do quality work at a fair price you develop a reputation. If you do poor work at a fair price you will also develop a reputation. Most people looking for what ever your business is know your reputation, whatever it is. You can be the cheapest guy in town but if you do poor work even the cheap ass customers won't use your business. The quality of your work, communication skills and customer skills are some the most important things to running a small business.

Like a lot of guys here my mower business is not my primary source of income and it just supports my toolaholic addiction but i take it seriouly as a business. I try to do quality work at a fair price and treat my customers well. Seems to be working. A guy opened a shop in town a few years ago. According to folks i talked to he did poor work but he was dirt cheap. He closed in less than a year.

Time to hop down off the soap box and get another cup of coffee.

Got a point of contention with your "top reasons for failure" I've started and run about 10 businesses so far and getting a business up and running turns me on. I love the energy.
That being said... a top 3 killer of business start ups is failing to know and FUND your life while you wait for "profits" to arrive. Part of the "expenses" to a start up is funding YOUR life while you don't earn a thing. Sometimes that takes 2 years and people never thought about braces for the kids and wifeys vacation needs and shoes and whatever keeps you house "happy" for at least 2 years.... sorry pet peave of mine.