In this short story I will explain how a 31 year old man(me) blew his life savings by starting a company on his own, doing what he loves and is very good at.
In February some time this year I started my very own llc, I had a business plan I worked on for months and had finally saved up enough money to go start looking for my own jobs as a contractor.
The plan was to start small, but be ready for the big opportunity when it comes. I am a heavy equipment operator (construction worker) and was able to purchase my very own mini excavator. Finally after all this time working for “the man”. I started out digging residential drainage, with plans to scale as soon as possible. I purchased a diesel tank, pumps, trailer, and other miscellanies tools needed to work on a commercial job site. Just a couple months ago things were looking good, not great, but good. Covid has affected us less than other small business’s because we are “essential” and I work alone most of the time. I was actually starting to make enough money to pay my bills. I was no longer trending down, but up, and so soon! I was so proud my hard work was paying off. Then one day after work as I’m sitting in my garage relaxing my phone rings and I get the biggest contract my company has seen thus far. (I was doing 5k jobs and this job was 20k) I couldn’t believe it. Then after getting to the job site I started picking up more contracts from the owner of the property. Several of them were for bulldozer work, which I would have to rent, but I took that into consideration when I prepared the estimate. Then came the rain, and rain, and rain, and more rain. The job site flooded, and me being the drainage guy decided to fix it for free. The first time it took about 36hrs to pump all the water off the job. And that’s where I made my first huge mistake as a contractor. I did not charge for those 36hrs, but now I had set a president. Every time it rained I was expected to do this and did, at first it was no problem. But as the hours pumping added up so did the days spent paying for a bulldozer that wasn’t making me any money. It was too wet to make any money bulldozing. I got behind on my rental payment, but I knew I could make it up as soon as the rain subsided. And I did, I completed thousands of dollars worth of work in a very short time frame. However, I sent the invoice last Friday expecting it to be paid immediately (because that’s how we have been working thus far). There was one payment that was late before this but it was a processing error on our end. This morning I sent a text to my normally financially punctual client. The response was bad, he informed me that I wouldn’t be receiving a payment for two weeks. The next phone call I received was from the rental company, they need a payment or they need their machine is what they told me. I explained my situation, and they are coming to pick up the machine this afternoon. I am behind on my personal bills, the rental company is talking about filing a lien on my clients property, and to top it all off my mini excavator will not start.
Lessons learned -
- Create a payment schedule between yourself and long time clients that will cover your costs.
- If something on rent is not making you money - get rid of it. Even if it costs you money to ship it back and forth.
- Just because someone offers you a big number, does not mean it is a profitable number.
- Do nothing for free, something that seems easy to you can become time consuming and thus money consuming.
- Pray, because I’m going to need prayers to get myself out of this mess.
Current financial situation is -$10,000 in overdue bills with $11,500 in unpaid contracts. The rain has returned and the rental company is picking up their bulldozer this afternoon. About $2000 of the overdue bills are personal and I’m worried they are going to come take my Jeep. Which has become a tool itself.
Any advice from anyone who has been in a similar situation would be appreciated, prayers would also be appreciated.
Learn from my mistakes!