Business Plans and Planning

[QUOTE='68 Coronet R/T;453]The last place I worked at the owner of the company also owned the building the company was in. He had incorporated the business with him being the president but kept the building in his personal name. His business then rented the building from him personally. This allowed him to raise the rent if the business was doing well thus controlling the profit level on the business. If things really went gang busters he would see the need to expand the business thus requiring a larger facility which the business would then pay for and he would gain more value in his real estate holdings personally and raise the rent.[/QUOTE]
I believe this is what the owner of the place I work does.
 
[QUOTE='68 Coronet R/T;453]The last place I worked at the owner of the company also owned the building the company was in. He had incorporated the business with him being the president but kept the building in his personal name. His business then rented the building from him personally. This allowed him to raise the rent if the business was doing well thus controlling the profit level on the business. If things really went gang busters he would see the need to expand the business thus requiring a larger facility which the business would then pay for and he would gain more value in his real estate holdings personally and raise the rent.[/QUOTE]

That all actually seems to make perfect money sense to me. He keeps his personal money separate from the corp. money. I believe that is required, specially if the corporation is ever questioned as a safety net, rather than a real corporation. It has to be a corporation all the time, not just when it is needed for legal safety, to hide behind. Obviously, when a business is doing good, you would be able to get the rent from it. If things are a little rocky, then you don't want to make things worse by taking money out that is not necessary. I am no tax expert, but I believe the real estate is depreciated over time also, meaniung that it's value reduces over time. Your home may increase in value over time, and the land of a business building will also. The building however may decrease in value. The shop I work in, for instance, is in kind of poor shape because of it's age and use. The owner is actually considering building a new building to replace it. He should have depreciated the building over the years. That would have been listed as an expense, if the building is listed as belonging to the company, rather than him personally. If it is listed as his personal property, he would depreciate it as an expense, reducing his "income" from the rent.

It all makes a big difference. It also makes a lot of money over the years to the tax preparer. They love all of the additional paperwork they have to fill out.

Aaron
 
The biggest reason the building is in his personal name would be for liability and if the truth was known, it was probably an LLC.

For any small business this is a must if you own real estate and really the only time it becomes the right time to put the buildings in the company name is when you go public with a stock offering.

Of course, like Aaron said, CPA's love this, as now they are billing two companies, instead of one, ouch!
 
rent is 100% income . got into this once before. no matter what the payment is it is still considered income. if you get 1200 rent and pay 1000 it is 1200 income and you cant write off the payment , only interest. sucks . owned some rental stuff once. much better to be an asset to depreciate .
 
SCORE is a good program and they also work with the SBA. You can find websites for both of these programs. They both have information templates so a person can see what are the basics in a business plan.

The depth of a plan will depend on if the buisness will be a startup or an existing plan. The plan is like a resume for your business.

In the end, it will come down to the financials of the business.
 
Great thread on the business side of our trade, There have been many great perspectives on how we all deal with running a business day in and day out.Thanks Joe
 
To sum it up, with the business climate like it is, the chances of survival for first three years are just plain bad.

There is not an economic course in college, that I did not take 35 years ago, as that was fist love but none of those classes help me today.

Some ideas.
Hire a good CPA not wifes best friend, one that knows what they are doing.

Get legal advice on how to set up LLC, S corp or C corp and why, very important choice here.

Math 101 that is the killer of most businesses, if you take in $1000 cash today, that cash is NOT yours to spend personally UNTIL all the business bills have been paid.

If you get a line of credit, be tight as fish pussy with that money or you will end up like a friend of mine that started out with $50,000 line of credit and then 4 years later woke up to the fact, it had turned into 1.6 million. Just took a new car here and here and cell phones for all the kids and mother, adds up fast and then the bank now has control.
 
you may think i'm nuts but i use to have an accountant and a tax professional that checked his work every year. accountants cause more business failures than you would think.
 
It is definately right about the CPA, but make sure that they are familiar with that particular type of business. If you are going to open a repair shop, you want someone that knows how repair shops do business. Common practices of a repair shop are definately different than say a grocery store. I would also make sure that they have dealt with a new start up business.

Definately don't want a friend. They won't be a friend anymore if things go bad. They also have to be able tell you how it really is.

Aaron
 
Barryk;503 said:
To sum it up, with the business climate like it is, the chances of survival for first three years are just plain bad.

There is not an economic course in college, that I did not take 35 years ago, as that was fist love but none of those classes help me today.

Some ideas.
Hire a good CPA not wifes best friend, one that knows what they are doing.

Get legal advice on how to set up LLC, S corp or C corp and why, very important choice here.

Math 101 that is the killer of most businesses, if you take in $1000 cash today, that cash is NOT yours to spend personally UNTIL all the business bills have been paid.

If you get a line of credit, be tight as fish pussy with that money or you will end up like a friend of mine that started out with $50,000 line of credit and then 4 years later woke up to the fact, it had turned into 1.6 million. Just took a new car here and here and cell phones for all the kids and mother, adds up fast and then the bank now has control.
Click to expand...

Surprised that you say the classes didn't help. but then again i also think a lot of running a business is instinct, some just have better instinct than others..

3yrs.. :) I'm working on 10. Always said i would do something to celebrate if i made it to 10.. I think i'll celebrate by going into work the next day.. lol..

CPA, ya, i need a new one.. not very impressed with the one that I have.
 
I think most of you that know me, know I can never have enough friends, to me its a great feeling not to have to look over your shoulder when out in public.

The one exception to that rule is my CPA.
I don't want a friend of family.
I don't want a relative.
I don't want the CPA to buy me lunch or do anything for me.
I just don't want to be their friend, pure business.

Here is our understanding:
If I email, I will have an answer the same day.
If I call, I will have a call back that day.
I'm not looking to screw the IRS and I'm not looking to over pay for no reason.
I'm not stealing cash - we never get cash, so could not if I wanted to. LOL
I want all my deductions, that is fair for both sides as I have no interest in being audited.
If CPA makes a mistake, they correct and pay the penalty, not me.
Also, I refused to signer their contract, that says all disputes will be in arbitration.
Hey, if the CPA screws up that bad, I want a lawyer option.

I do know I'm their best customer but no doubt they think, I'm a prick.
 
I never remove cash from the business checking and I never buy a large purchase for the month unless I have the local jobber paid up and I have the funds to pay for it. It makes me more aggressive to put the overtime in when I really want something and it's kind of a bonus to shoot for at the end of the month. Pretty sad that a bonus is a tool but that is small business. Most of us work everyday to make a living. I consider I had a day off yesterday and I changed the oil in the compressor, mopped the shop floor, and did a spit shine on my lathe and mill. I think a line of credit from the bank would be the worst thing a business could do. Like Barry said, It's to easy as you haven't earned the money yet so it seems free until it catches up. I've been watching the new american chopper show lately and I know it is for television but you guys imagine setting up a shop like they did in a few weeks. I think they recieved a lot of the equipment for television which pisses a guy like me off since I've worked hard the past 5 years and I still don't have all the stuff they delivered in a day. Could you imagine the overhead if a guy had to rent that building and lease that equipment. They would be broke and out of business in 1 month trying to build some fad bikes and most look retarded anyway.
 
depends on what kind of business you are setting up . when we opened the van shop there was no way to do it out of pocket. 10k sqft building , 2500 sqft booth , lights , 2 compressors, the list just goes on. a long term business may go in hock 100k to start up . if the business is run right it will pay its self out of debt. no different than a farm, you buy the land, the equipment , build the barns and fences then spend 20 years paying it all off. the most important thing about business is being smart enough to find the right people to help run it. dont even think a car painter can do it. it is not something you want to learn as you go. i paid accountants because i did not have time to learn accounting .
 
So the old saying "think small, be small" applies to business. I'm small and always will be because I enjoy working alone. Seems like it was stressful whenever I tried help. I can talk to myself just easy as someone else. I have a friend with a bodyshop that employs around 30 guys. He built it small and worked his way big over 35 years. He is there everyday but people run it for him. Nice arrangement but it took years. They used to say the 2nd and 3rd generation family business owners have it made but also usually run the business into the ground because they didn't build it.
 
i'm a one man show here and have been since about 90 . just got tired of supporting a big shop and crew. too much hassle for me. my new venture will be the same but without customer problems. when a car is done it's for sale.
 
Brad..... Some people judge the success of a business by how big it gets. I figure that you are a success if you can stay in business while enjoying yourself. Personally, I would rather have a business that stays small and controllable.

Aaron
 
Shine.... That sounds like a great deal. If I was going into business again, it would just be me and my son. That way when I am ready to hang it up, he can go on by himself. I can definately see where you are going with the "no customers". When they buy a car, you did the work for yourself, not them. They have to be happy with it, or they wouldn't/won't buy it.

Aaron
 
Shine, my grandfather in law is 84 years old. He started a body shop a few years after WW2. He had a few shops for the next 25 years. He started restoring in the 70's and has been busy with customers until last year. He did a 48' Buick Super conv. and a 41' Cad conv. to his specs which at 84' years old is now good drivers. The attention to detail that made him great over the years has faded. Anyway he did them with the idea of selling them. He has tried to sell these two as well as a couple of his other cars that have been done for years. He has fair prices and can't even get anyone to look at them. Just to let you know it's easier to do them than to sell them sometimes. He has gotten a few super internet low ball offers that are offensive but thats about it. For his retirement he wants to sell 1 car a year. Out of 4 it shouldn't have been a problem. He has 30+ invested in each car and was trying to make a fair wage. You might have a customer base built up though. He has outlived most of his customer base that would have purchased the cars years ago. I used to do modern wrecks for side money but quit a few years ago as the cash investment and the labor involved = a break even more than not. Most of the old cars kicking around the internet wouldn't be a good deal if they were given to you. This makes it even harder to invest cash+labor=profit. I know it sounds like cake to do spec cars but you will need a huge chunk of workable funds. I know this isn't your first rodeo either so you must have a good idea of how it will work.
 
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