I am looking for some input on a odd business situation. I was recently let go (last hired) at a small high end cabinet shop because of financial issues. They can’t afford to keep me on due to short term financial crisis that is not structural in nature. I do NOT want to find another position as this shop is five minutes away and everything else is about 45 or so during rush hour AND it is a great place to work.
I have some people who are interested in having me do work for them that I haven’t taken on because I was not equipped in my own personal shop to do what they want. I am thinking of proposing to the owner that I bring in my own work, get paid out of that work plus perhaps some sort of bonus for the commission. These initial clients are high end realtors dealing with older houses, as in the ones that need new high end woodwork so the amount of business would likely exceed what I could do. I don’t need the money (within reason) because I am in school and am poor anyway.
I realize this is NOT an ideal situation and is full of pitfalls but I am in a position where I can afford to do this so I am going to try. What I would like to hear is from people who have done similar things and made them work. I know the horror stories are out there but I am more interested in the ways people HAVE made it work.
I define “working” as making both myself and the owner happy in both a financial and a work related way plus the client happy with completed project delivered on time and on budget.
Thanks in advance!
Replies
Perhaps the shop owner will lease you time in his shop. If not, you might want to look around for another shop just in case.
Overall, I see it as a win-win for you and the shop owner. He gets some revenue you get some revenue. All he has to do is provide you with access. I'm assuming you'll deal with material costs. Your rent should cover sharpening of tools and clean-up. If he runs a one shift operation, you might work second shift...
If, on the other hand, he gets greedy - he might want the customers so what ever terms you agree to, you should make sure that he can't 'steal' the customers from you. In fact, pricing between you and your customer should be just that - between you and your customer. You should treat the shop owner like a landlord (you know, trash his place and skip out on the last month's rent (just kidding))...
Mark
Measure it with a micrometer, mark it with chalk, cut it with an ax.
View Image
The biggest liability for the cabinet shop owner is that it's going to look to the IRS like you're not really self-employed. It's going to look like this arrangement is done so he will not have to pay "payroll taxes" (I'll use this blanket term to indicate: social security, medicare, income tax withholding, and possibly, Federal Unemployment (FUTA) tax). The IRS is not fun to deal with when they think you're breaking their rules.
On the other hand, some small business do have arrangements such as you are describing: one that comes to mind is tree removal, where the tree service businesses use "stringers" to go out and drum up business and then work for them as contractors at times when the workload is high. There are specific guidelines that must be met to be considered a self-employed independent contractor when you work exclusively for just one business. Recommend looking at the IRS web site and searching the term "contractor." http://www.irs.gov You will also be interested in: Pub 334, "Tax Guide for Small Business," which is available at that web site.
Michael,
If you don't need the money, and the experience is reward enough, I can't see your situation any other way than as a win/win for both parties. Speaking as a guy who has owned 2 business's for the last 20 years, if your present employer says no to you, it is because he/she/they have a problem with you personally. He can very easily keep you on as a subcontractor, which will solve his liability issues. He may require you to purchase a liability policy of your own, though, which could be a problem. Technically, an employee is not an employee unless that person is on the payroll. Not on the payroll, not covered by liability! My subs are not covered by my liability policy, and therefore MUST have their own policy to work on any of my company's projects.
Jeff
Thanks for everyone's inputs! Lots of food for thought. I think what I am going to propose is a very low hourly so I AM covered by liability (I may not need the income but I also don't have money laying around to shell out either). Then a commission on the "sale" of the item. Keeps his overhead down and provides me with plenty of incentive to finish the project.
My advise is to approach your current employer and ask him about you doing some side work so as to keep you available when his finacial situation turns around. I would rathger see you keep your clients to yourself. Price it as if your were in business for your self and you had the full overhead(shop, utilities, machinery, employees, etc.) don't for get to add for your profit/retirement. Keep your clients away from him. Especially if he's lacks a full moral conscience.
At least this way, you can see if you can really make money at it. Being self employed, the grass is not always greener. Over the years, I had guys who thought they new more than me and thought they could make more money on their own. Most didn't make it, some did for a short time, and I only know of one that is still in business for himeself. A few even tried to take my customers away from me. The contractors that did try out the "new guy" were not my best customers, and regretted it.
Not saying this can happen to you, but...As to the realestate customers that you have, I have never had much luck in keeping these guys happy(always wanted it cheaper, faster, etc.) I had one realestate guy not want to pay me the final payment until after the house sells because he didn't think he was going to make as much as he thought. I gave him three days to pay or I was liening the house (after waiting 4 week prior). Later, I found he did the same to a tile setter and a painter. They never got paid
Nor am I saying most realestate people are this way. It only takes a few
If you are really serious about this, save every penny you can, work 16 hours a day and pay cash for you machinery. try to find a place to rent/buy where you can work from home. I did it for 9 years before I got hurt. Spent $24k on a shop and saved $1000-$2000 a month for 8 years. That's a savings of over $100,000, plus I made money on the shop when I sold the property.
Unlike most here, I DON'T want to end up doing woodwork fulltime as a job. I love working wood but I back in school as I want to work with my mind instead of my hands. That is why I am only interested in part time. As for the clients I bring in, I have no doubt that the quality and thought that I put into my pieces will keep people loyal, and if they don't, then they are not the clients I want.
I just wanted to add that I agree with migraine on the real estate people issue.
Most or all of them are looking to rehab properties as rentals or flip them and want the cheapest possible work done fast, not ideal clients if you put a lot of blood sweat and tears into your work.
The RE agent wants things done for HIS home, a rather grand old mansion. The clients I would get would be refererals from him (he deals in grand old mansions) refurbishing their OWN homes with the best of everything.
I agree, anyone rehabing houses to flip them is ONLY looking at the bottom line.
"Unlike most here, I DON'T want to end up doing woodwork fulltime as a job. I love working wood but I back in school as I want to work with my mind instead of my hands."
You don't think when you do woodworking?
Kyle,I knew someone would just have to read into that. I think almost everyone who posts here loves woodworking and the threads of "I dream of doing woodworking full time" are numerious. I however aspire to an office job, one with air conditioning and office politics. To each his own.
I've been in "thinking professions" for 20 years. It's overrated. In fact, I'm going to give up thinking all together :-)FYI running your own business is great fun and requires lots of thinking. Office politics are distractions from the real problem of making customers happy and making money. The office politics is just motion that give the impression of progress (and please never confuse motion with progress).Mark
Measure it with a micrometer, mark it with chalk, cut it with an ax.
View Image
I run 3 businesses and after a 10-12 hour day my brain is fried. I was a computer programmer for 21+ years and a manager for 4 years before I turned technical. I never had to deal with the "business" issues that I now do when I worked for someone else & that will make you think. I would never go back to an office job because I have control over my time and my money. If you do not think that you have to "think" when you run your own business you probably do not need to be running one.The Undisciplined Life Is Not Worth Examining.
Give it a rest people.I am sure I, along with the others, were talking about the product you are selling, not that doing woodworking or anything else is brain dead work. One sells the product of your hands the other your head, both require brains, both require your hands, but one is a "thinking" job, one is a "making" job. If "thinking" about woodworking was all it took, I would be a MASTER! Nobody is denigrating anyone here.
This forum post is now archived. Commenting has been disabled