New opportunity

[sb47]

I've been approached by a large well known pit builder wanting a new firewood suppler.
I'm a very small outfit but I can expand production to fill his needs.
But, by doing so, it may force me to become a real busyness and go down that "rocky" road.

I'm thinking, stay small and work a cash deal or walk away.

Any thoughts?

 

[Del_]

Let it pass by.

 

[sb47]

I'm thinking the same thing. Not the first time I've let something like this go.
He can come pick it up and pay cash, or he can find someone else.
No muss, no fuss. All sales final. No refunds. As is. Beyer takes all responsibility for product.
He wanted a bulk discount and I quickly let him know, I sell out every year at full price.
So there is no incentive for me to sell at a bulk discount.
He will quickly find out, I don't mind waiting for my money.
It may be slow money, but it's guarantied.

 

[Locust Cutter]

It might be worth it, but you'll have to consider it carefully, The business will likely want receipts for tax/accounting purposes. Are you ready for that? It's not hard but it takes some business smarts to do it right.

 

[blades]

slow pay- bump the price up - I do not like the business model of "use someone else's money". Referring to Locust Cutters post make it enough to cover all the addition costs. Basically an unsecured loan- as in credit card so that would be at minimum 18% increase in price. Never agree to a guaranteed delivery/ quantity/ type of material on a regular basis either as sxxx happens. Particularly important if you are purchasing log loads for processing- no sense in getting hung out to dry. What will this do to your income tax status? another area of cost to consider. Base formula $1.00 cost requires $3.00 income to break even and that might even be on the short side now days. Most importantly do not short your current base in order to accommodate this potential, as it can vanish all too quickly leaving you possibly upside down. I know this sounds very negative- but I have been around the block a few times and some those potholes are awful deep.

 

[unclemoustache]

The more the gub'ment gets involved, the less you make but the more you work. I hired an employee this year, and I have to charge customers double what I pay him because of the extra paperwork time and expenses (taxes, insurance, etc). Poor kid is trying to save for college, and I just can't pay him what he's worth, and I spend SO much time with paperwork.
"Growing the business" is not all it's cracked up to be.

 

[cantoo]

Uncle, why don't you just adopt him? It's not like you would notice another mouth at the table.

 

[flashhole]

I know I'm showing my ignorance but what is a pit builder?

 

[RAYINTOMBALL]

blades and stache nailed it on the head. If it was me, stay small unless you can really hit a homerun money wise . Me and my wife ran a small business for 30 years. Never have I made so much money and never have I spent so much money. Food for thought. Good luck whichever way you choose to go.

 

[Locust Cutter]

Barbecue pits, or what many people call smokers, just larger.

 

[sb47]

I know I'm showing my ignorance but what is a pit builder?

BBQ pits.
Down here BBQ is king and takes 75% of my inventory.
My answer is, stay small.
I can do a cash deal but thats going to be as far as it goes.
I've been asked many times to consider filling large orders and supply several BBQ outfits.
I would up production to fill his orders as long as he gives me a dew date and I can fill that order without selling all my inventory.
Like I said, I sell out every year, so there is no insensitive in dumping all my inventory on one order and lose my regulars.
I may try to increase my inventory, so I can provide for both.
If he backs out, that means I'm just that much farther ahead on my production.

 

[ponyexpress976]

Stacked wood is money in the bank. My only question is how long has the other guy been doing it? If he's been building for 20 years and has a good clientele, this could be a golden goose for you. I'd approach it like he's just starting out. If he folds, don't be in a position where he drags you down with him.

 

[sb47]

Stacked wood is money in the bank. My only question is how long has the other guy been doing it? If he's been building for 20 years and has a good clientele, this could be a golden goose for you. I'd approach it like he's just starting out. If he folds, don't be in a position where he drags you down with him.

He and his headquarters are in my home town, and he's been building BBQ pits for 40 years.
He holds 8 world records for his pits and he sells them world wide. He's the real deal.
We hit it off like good old boys from the same home town right away.
But my caution flag is always out when things seem a little to comfortable in a busyness deal.
It's tempting, but is it worth the extra work and red tape to do it?
I can think of a hundred of reasons not to, and only a few to do it.

 

[blades]

Hit it off like good ole boys- tell ya what- fire engines just left the the garage and called in for reinforcements. Maybe that's just me. Business don't work that way now days. in the 50's ya, still pretty much in the 60's, by the 70's cut throat. This is a deal where it will go to greener pastures in 1/2 of an eye blink. Generally won't even bother to beat ya up on price. Kinda like dealing with Walmart- if you are unaware of their practices I would suggest that you read up on it. Pessimistic you bet- just don't want to see some one get their posterior in a sling. If you increase production without adding equipment or employees Ok, taking on additional costs ( other than raw material) to accommodate one possible customer - in todays business market/model not good. The raw material while it would hurt for a bit will move in your normal channels- anything else can put you 6ft under overnight. If you decide to go with this- put the extra away- then you use it for equipment up grade if needed by paying for it up front. Extra help- would suggest part timers under 20 hrs a week or maybe from a temp service which isolates you from the Government to some extent- as always look at insurance costs first. You will need to factor that in. As I said before If It costs $1 you need $3 income to cover it and that is about a break even point.

 

[ponyexpress976]

As someone who walked away from a guaranteed paycheck to go into business for himself, here are my questions. 1) what is your source of wood? If you are buying truckloads, will your supplier give you a better deal on a larger volume? Would the new customer give you a deposit say 25-33%...not an unreasonable request as long as everyone is being open and honest. What would the "increased production" actually cost you? Are we talking a few extra hours a week running a small splitter and a new saw or major investment like a small processor/dump truck/dump trailer/hired help? If it were me, I'd give it a try by getting my feet wet very slowly. It sounds like you have a pretty good handle on what he wants/expects. If you're confident you won't be sacrificing your sanity to fulfill the order, go for it.

 

[ponyexpress976]

While it pisses me off having to interact with the gub'mint in any way, having an official on the books business does have it's advantages

 

[blades]

Ain'T denying good book keeping if running in full view - but if this is a lucrative beer running operation ( as so many are) is he going to legit with all its ramifications in order to accommodate this potential customer. Once you are in the IRS & Insurance sights you are pretty much locked.

 

[sb47]

Here is my game plan. I have made it my policy to give "everyone" the same deal, no mater who that are.
Your money or fame does not impress me.
Getting involved with a big company, means leaving a paper trail that would lead back to me.
Pay cash upon pick up or find another suppler.
He can take it or leave it.

 

[Del_]

He and his headquarters are in my home town, and he's been building BBQ pits for 40 years.
He holds 8 world records for his pits and he sells them world wide. He's the real deal.
We hit it off like good old boys from the same home town right away.
But my caution flag is always out when things seem a little to comfortable in a busyness deal.
It's tempting, but is it worth the extra work and red tape to do it?
I can think of a hundred of reasons not to, and only a few to do it.

In the biz for 40 years and looking for a supplier?

There's the red flag.

He's shopping.

His last three suppliers went belly up.

 

[Locust Cutter]

As much as I hate to agree with Dell on anything, he's right on this. I wonder if the previous suppliers were trying so hard to get a contract that they cut their own throats to do so. You two might have hit it off but in business, friendship doesn't mean squat. Fairness, respect, quality and integrity are everything. I can easily work with people I despise on a personal level if they're good at what they do and are timely, quality-driven and honest.

On the flip-side, there are people I dearly love who I would no more be in business with, nor engage in business transactions with, than the man in the moon.

There are a few friends I have that I could work with as though we are good friends, the lines are clearly drawn and understood no matter who's working for who.

I don't know if that helps or not.