tips from business owners!

[Gareth Dalzell]

Make sure as you progress, you realistically know what your running costs are. It can be very easy to be sweep along for the first few years and then realise in year 3 or 4 when you have to start replacing machines etc that this hasn't been factored into your costs. I see it happening all the time with businesses. They think they are making a fortune at first, then year 3 - crunch and realiality.

 

Second point - remember if someone doesn,t want to pay you for something they can often avoid doing so. So don't let anyone get into you for more than you can afford to use.

[Gareth Dalzell]

I think that VAT reg versus not VAT reg debate is an interesting one.

When VAT went up to 20%, did it make that much difference to most people? No, they know they pay VAT, 2.5% wasn't a deal breaker was it, another 25 quid on every thousand, not a fortune.

So with most customers who don't want to pay someone who's VAT reg'd, surely it will cost them the same? Because a non VAT reg'd business loses out on claiming VAT back on purchases etc, so their costs are higher.

 

I'm pretty sure that if you worked out what it actually costs you in lost reclaimable VAT against how much business you would ACTUALLY lose as a result of having to work VAT into your quotes, MOST people would find that going VAT registered pays off.

Additionally, larger firms who are VAT reg'd prefer to employ VAT reg'd sub-contractors, I know I do in construction, keeps everything running smoothly.

 

My advice is don't be afraid of VAT registration, it can have some massive advantages....

 

Totally agree - I've often thought about this and a Vat registered company (like for like) should have lower costs as they can recover their imput VAt on their costs so if they are working for a Vat reg company they could be cheaper and make more profit than an non reg compay.

[luftwaffe]

Make sure as you progress, you realistically know what your running costs are. It can be very easy to be sweep along for the first few years and then realise in year 3 or 4 when you have to start replacing machines etc that this hasn't been factored into your costs. I see it happening all the time with businesses. They think they are making a fortune at first, then year 3 - crunch and realiality.

 

Second point - remember if someone doesn,t want to pay you for something they can often avoid doing so. So don't let anyone get into you for more than you can afford to use.

 

Well said Gareth!!

 

Another thing is don't let sweet talking salesmen talk you into buying things, they are only interested in their sales commission.

[Matthew Storrs]

golly, i never really thought of it like that but your right, a Vat reg company should be able to run cheaper then non reg so the added vat may not deter customers, I always plodded along thinking Il aways outprice a vat reg company, i may be rather wrong.

[Tom D]

I'll stand by it.

 

If your under that vat threshold you are only turning 60something? How can this pay you a decent wage? your overheads must be close to 50K? van, chipper, wages etc. how much do you spend on staff? You personally can't be taking much more than 10k a year? As recent discussions have shown, benefit claimants get much more than that!

 

I learned the hard way, started out working a 2 man team for £220 a day, utter madness.

 

I have been there and done that, its no way to live.

 

Going vat reg will loose you work. But thats no reason not to do it, you will win work that you otherwise wouldn't get.

There will always be someone out there cheaper than you. Just let them be, they can do the jobs for the customers for whom price is the only issue and you can do the jobs for the customers who value service more highly. I have won countless jobs where I was much more expensive than the next quote, because people believe that we will provide them with a better/ safer/ higher quality service. I am not saying that I am better than you. But being vat reg and giving the impression that I am a bigger more successful company will often win the day.

 

There is a guy near me who is dirt cheap, he does a few logs, and fencing, and lambing in the spring, he will do jobs for less than half of what I will. I just let him get on with it, he will always be busy, but he is only one guy, there is only so much work he can do. He can't do it all. He does all the skin flints and I do the rest.

 

Imagine the guys at the BMW salesroom all crying because Kia and Hyundi are much cheaper. Does a BMW do anything a kia does not? why doesn't everyone drive Kias? because for MANY people price isn't the only issue.

 

This principle works with all jobs, not just the small ones. I am currently working on a £50k LA contract that was won over another firm who were £0000's cheaper, yet I won because of the quality of our work, H&S, quals etc.

 

Invest in quality and charge more.

[Hodge]

I think that VAT reg versus not VAT reg debate is an interesting one.

When VAT went up to 20%, did it make that much difference to most people? No, they know they pay VAT, 2.5% wasn't a deal breaker was it, another 25 quid on every thousand, not a fortune.

So with most customers who don't want to pay someone who's VAT reg'd, surely it will cost them the same? Because a non VAT reg'd business loses out on claiming VAT back on purchases etc, so their costs are higher.

 

I'm pretty sure that if you worked out what it actually costs you in lost reclaimable VAT against how much business you would ACTUALLY lose as a result of having to work VAT into your quotes, MOST people would find that going VAT registered pays off.

Additionally, larger firms who are VAT reg'd prefer to employ VAT reg'd sub-contractors, I know I do in construction, keeps everything running smoothly.

 

My advice is don't be afraid of VAT registration, it can have some massive advantages....

 

I hit the vat limit last year, I had to make the choice and I decided not to register. If I did I would go out of buisness. None of my direct competitors are vat reg, when I go and look at work and give a quote most people ask if there is vat to be added. On the stuff we buy and need from say shops etc we pay the vat as we have no choice but when it comes to trades because of the vat limit people will allways want to avoid paying it and know they can by getting the small guy.

[Hodge]

I'll stand by it.

 

If your under that vat threshold you are only turning 60something? How can this pay you a decent wage? your overheads must be close to 50K? van, chipper, wages etc. how much do you spend on staff? You personally can't be taking much more than 10k a year? As recent discussions have shown, benefit claimants get much more than that!

 

I learned the hard way, started out working a 2 man team for £220 a day, utter madness.

 

I have been there and done that, its no way to live.

 

Going vat reg will loose you work. But thats no reason not to do it, you will win work that you otherwise wouldn't get.

There will always be someone out there cheaper than you. Just let them be, they can do the jobs for the customers for whom price is the only issue and you can do the jobs for the customers who value service more highly. I have won countless jobs where I was much more expensive than the next quote, because people believe that we will provide them with a better/ safer/ higher quality service. I am not saying that I am better than you. But being vat reg and giving the impression that I am a bigger more successful company will often win the day.

 

There is a guy near me who is dirt cheap, he does a few logs, and fencing, and lambing in the spring, he will do jobs for less than half of what I will. I just let him get on with it, he will always be busy, but he is only one guy, there is only so much work he can do. He can't do it all. He does all the skin flints and I do the rest.

 

Imagine the guys at the BMW salesroom all crying because Kia and Hyundi are much cheaper. Does a BMW do anything a kia does not? why doesn't everyone drive Kias? because for MANY people price isn't the only issue.

 

This principle works with all jobs, not just the small ones. I am currently working on a £50k LA contract that was won over another firm who were £0000's cheaper, yet I won because of the quality of our work, H&S, quals etc.

 

Invest in quality and charge more.

 

You really are a mile off Tom, I don't employ, I have a truck that's paid for, I have a chipper that's paid for, a stumpy that's paid for etc. I earn well over 10k. 90% of my work is private. I make a decent living from doing this . Maybe where you are that's how it is but up here it's a cut throat industry and I charge a fair price and do a good job.

[Tom D]

So if your van blows up tomorrow can you afford a new one? Chipper? what happens when you kit is worn out and needs replacing? can you afford to go out tomorrow and buy a second hand chipper, £6-8k?

 

Its a H&S requirement that you have 2 guys on site when climbing, how can you work alone? If you are a gardener and just do hedges and wee stuff then fair enough but I was referring to tree surgeons / arborists in the posts I made.

 

Having kit that is paid for doesn't mean that you should be cheaper, its just a different way of working from someone who hires it in and claims the cost against tax.

 

Do you work part time? That would be different.

 

 

Is there a company in your area who is vat reg?

[skyhuck]

You really are a mile off Tom, I don't employ, I have a truck that's paid for, I have a chipper that's paid for, a stumpy that's paid for etc. I earn well over 10k. 90% of my work is private. I make a decent living from doing this . Maybe where you are that's how it is but up here it's a cut throat industry and I charge a fair price and do a good job.

 

What will you do when they are worn out???

 

I like the fact that I took out finance on most of my kit, it taught me to charge what it costs, now its paid for I still charge the same, that way I will have the money to repair and replace it.

[Czlowiek Drzewo]

Marketing is important for a starter company.

 

Trial and error - I spent a fortune on yellow pages...and got 1 call!!!!. I made up hundreds of flyers and handed them out in good area..not even 1 call!

 

While a website can bring in a decent percentage of work and it doesn't involve using time and energy chasing work. Sign writing van will get you noticed and you don't need to pay for it every year. Local newspapers are ok also but can be expensive over a long period. Business cards are must and hand them out with every invoice. I even have fridge magnet business cards that i give to loyal costumers who pass my number on often.

 

Many ways to advertise ...but find out whats most cost effective first.