Making sure you are running a business

[Clutchy]

I'm not saying I know it all (far from it) but it does pain me to see other trees surgeons undervalue themselves and not work for profit. 

 

This came up in another thread regarding under-pricing and received welcomed feedback so thought it might be worth posting on here 

 

I did a podcast on All things arb that may help get us the money we deserve and ensure you're running a business. 

 

 

 

https://open.spotify.com/episode/2jBIQS1gMG4xnuSjDpR1Oy?si=9XTo87mUT--2AEo6UwF10g&utm_source=copy-link

 

Please bare in mind the rates mentioned in this are a little out of date since all this inflation/rise in the cost of living. 

[Hodge]

As I said I the other thread this is well worth the time to listen to it. Some excellent points made and a few valuable lessons for me. I hold my hands up and say after 21 years in this industry I am still open to new ideas and this has a few that seasoned business owners can learn from.

[josharb87]

Listened to it yesterday, did find it interesting.

be interesting for you to do one in say 5 years too  

 

one thing I think could be worthy of a discussion on track with running a business (and from the other thread I enjoyed our dialogue) is the old saying you used, turnover is vanity, profits sanity.

 

is it? 
 

my first few years I paid myself on the modest-low side of what a decent climber should be getting on the books. (rough currency conversions-I’m in Sweden) paid myself 30k a year, I (well my LTD co) made 20-40k profit those years. Great! 
 

but that profit isn’t my money, I can’t use it, if anything it’s vanity money! …. Yes I could pay the tax on it and take it out as dividends, but that is a short sighted reward - an alternative I done last year, I whacked my wage up (mainly due to buying a farm needing renovation) to about 50k- I wanted to buy a mill privately, build a barn etc.

So 20k increase, I pay a little more tax than dividends, but gives me a higher pension and better sick/paternity pay-more benefits! 
 

profit last year will be down on previous years to about 5k. (That 20k pay rise cost the company 30k)

but my private bank balance looks better, the machine park still grew (like every year) and there’s still a healthy balance in the company’s bank. (Even taking a sabbatical until next summer but keeping the kit. no moneys owed on the kit just a few years of writing it off in the books left) 

 

 

so why is profit sanity? Why does profit benefit us as private individuals? 

[Mick Dempsey]

I have always found that saying a bit trite and simplistic. (Profit/turnover saying)

Haven’t got round to finishing the rest of the podcast.

Your sales training come though….in a good way!

 

Your business model works for you, for the moment.

 

What was the famous Mike Tyson saying, everyone’s got a plan, till they get punched in the face.

 

Good stuff though!

Edited April 28, 2022 by Mick Dempsey

[IronMike]

I never said that, honest 😂💪🏻

[Hodge]

Listened to it yesterday, did find it interesting.
be interesting for you to do one in say 5 years too [emoji4] 
 
one thing I think could be worthy of a discussion on track with running a business (and from the other thread I enjoyed our dialogue) is the old saying you used, turnover is vanity, profits sanity.
 
is it? 
 
my first few years I paid myself on the modest-low side of what a decent climber should be getting on the books. (rough currency conversions-I’m in Sweden) paid myself 30k a year, I (well my LTD co) made 20-40k profit those years. Great! 
 
but that profit isn’t my money, I can’t use it, if anything it’s vanity money! …. Yes I could pay the tax on it and take it out as dividends, but that is a short sighted reward - an alternative I done last year, I whacked my wage up (mainly due to buying a farm needing renovation) to about 50k- I wanted to buy a mill privately, build a barn etc.

So 20k increase, I pay a little more tax than dividends, but gives me a higher pension and better sick/paternity pay-more benefits! 
 
profit last year will be down on previous years to about 5k. (That 20k pay rise cost the company 30k)
but my private bank balance looks better, the machine park still grew (like every year) and there’s still a healthy balance in the company’s bank. (Even taking a sabbatical until next summer but keeping the kit. no moneys owed on the kit just a few years of writing it off in the books left) 
 
 
so why is profit sanity? Why does profit benefit us as private individuals? 

Because we're not losing money surely? I was speaking to a lad today who said he likes to have 6k in his business account at all times yet pays himself next to nothing?? What's the point of rinsing yer pan day in day out to loose money and not have a nice life. High turnover with little profit is a waste of time surely??

[Clutchy]

1 hour ago, josharb87 said:

Yes I could pay the tax on it and take it out as dividends, but that is a short sighted reward - an alternative I done last year, I whacked my wage up (mainly due to buying a farm needing renovation) to about 50k- I wanted to buy a mill privately, build a barn etc.

So 20k increase, I pay a little more tax than dividends, but gives me a higher pension and better sick/paternity pay-more benefits! 

Always want to see things from different perspectives and you do raise some good points. 

 

You do take home a lot less the PAYE route on 50k, net around £37.5k take home vs 15k PAYE and 35k divs. Take home there is £46.3k

 

I do appreciate the negatives of low salary, as it can make re-mortgaging and upsizing difficult. In hindsight, I disagree with my own statement, not only is it cliché, I've learnt that having a high turnover is important to winning larger contracts where larger profit may come down the road   

1 hour ago, josharb87 said:

so why is profit sanity? Why does profit benefit us as private individuals?

In my situation my money is worth more to me out the company than in, as my investments return me more £ for £ than the tree company does. We use it as a vehicle/producer for other investments. I also use it to max my ISA each year. I do need to really start putting more into my pension which will be my goal this year. 

 

33 minutes ago, Mick Dempsey said:

I have always found that saying a bit trite and simplistic. (Profit/turnover saying)

When I first listened back to the episode it made me cringe so hard 🤣

 

33 minutes ago, Mick Dempsey said:

What was the famous Mike Tyson saying, everyone’s got a plan, till they get punched in the face.

Sound advice, its all good until it's not 

Edited April 28, 2022 by Clutchy

[Mick Dempsey]

It was good, don’t worry.

 

I liked, ‘don’t make the customer’s problems your problems’

[josharb87]

1 minute ago, Hodge said:

 

Because we're not losing money surely? I was speaking to a lad today who said he likes to have 6k in his business account at all times yet pays himself next to nothing?? What's the point of rinsing yer pan day in day out to loose money and not have a nice life. High turnover with little profit is a waste of time surely??

 

That’s kinda my point, what’s the point in paying yourself a mediocre wage but the business has lots of profit? Isn’t it better to pay your self more, or improve the business and have a smaller profit?

 

I don’t really see why it’s beneficial to have loads of profit which could have been used for investment’s or higher wage 

[Hodge]

That’s kinda my point, what’s the point in paying yourself a mediocre wage but the business has lots of profit? Isn’t it better to pay your self more, or improve the business and have a smaller profit?
 
I don’t really see why it’s beneficial to have loads of profit which could have been used for investment’s or higher wage 

Yep, agreed, I re read your post and it clicked.....[emoji847] sorry.