Private Investors...Good idea?

[Montana_Sam]

Hello All!

So, I've been in the industry for a little over a decade. Cut my teeth with the Forest Service here in MT, sawing on wildfires and clearing trails. Got certified up the wazoo for climbing and falling timber. Left the Feds after college and got my ISA certification, worked as an arborist and crew lead for the biggest outfit in our valley for 5 years. Everything from municipal pruning contracts (100's of trees) to county-wide stump grinding contracts, complex urban rigging and crane removals, wild fire reduction, etc.

I love the work truly, and am good at it. I've got a good eye for tree work, and the heart for the long game. The big tree company sold out two years ago, parceled up, no one has yet to fill the void. I currently do tree work part time, for myself, completely under the table. Over the years I've come to know enough clients personally that they have reached out and asked me to work for them, which is just fine with me. But hauling brush with my 1/2 ton and a rented dump trailer truly blows, especially when you've so recently done it with a finely tuned Bandit and a brush grapple. Regardless, I'm able to make great cash money, stay in fighting shape and be a stay at home Dad, which is fantastic.

I have a repeat customer with 26 acres of woods I manage, he's a wealthy guy who owns several small companies in various states, everything from shipping and delivery trucks to material handling. He asked about helping me invest in equipment recently. I'm sure to someone like him $75k is less than a drop in the bucket. Enough for me to get a nice used chip truck and a nice used chipper, some extra gear, etc. I imagine he wants to squirrel some money away in a small LLC, have all the equipment at his disposal, and turn a small but regular source of local revenue (he doesn't live here, just owns properties). Fully trustworthy, good, business smart guy; I wouldn't be posting this otherwise.

Is this every small business owners dream or some type of lurking trap??? I wouldn't be beholden to a bank, and could grow small. This guy clearly knows how to run a business, which I don't. I'm a tree guy, that's why I haven't gone into business on my own yet. With the right resources we could fill the void here in the valley, there are perhaps 1/2 dozen outfits that do tree work, but show up in sweatpants and a chipper born in the 80's dripping oil all over a millionaires new driveway. I want to be small, high-end, and super professional. Our town is a lot like Vail or Aspen, LOTS of second, third and fourth homes tucked into the woods that need LOTS of routine tree work. That's my jam. Low risk, easy jobs for the ultra wealthy....but I'm not going to do it without equipment.

Thoughts on having a private investor like this? Anyone done this before? I'm sure there are some things to get hammered out before hand....

 

[Del_]

I'd rather deal with a bank than with private investors.

But then I've never had a loan on equipment.

If I couldn't pay for it at purchase.....I didn't buy it.

 

[ATH]

I might do that if he buys and owns the equipment and you have an exclusive relatively low rental rate that you pay (by the machine hour, not by the day...so you don't need to run it back at the end of the day all the time).

That way he isn't telling you how to run your business. You can ask him to coach you in that...but an investor doesn't coach...they tell.

If I were borrowing, I agree with @Del_ - it would be from a bank. That is what they do and they don't meddle. Just send them a check each month and otherwise they could care less what else you are doing.

Look at interest rates right now...they are less than 5%. An "investor" wants higher returns than that. Ultimately, they aren't investing in a tree company to make money on an equipment loan. They are investing in a small company with good relatively short-term growth potential, so the company can be sold for a profit in a defined period of time (usually 5-10, at the most, years). If an investor wants a 4% return, they'll buy low risk equities.

 

[northmanlogging]

TRAP!

If he's fronting all the money, he will want some sort of control, meaning you will be working for him some how some way.

Running a business is fairly easy, know your worth and don't take less then that, keep track of expenses and save all your receipts, get a good accountant., and listen to them.

there is absolutely no reason you need to run out and get a massive loan on even used equipment. It may take a couple years to get up to what you were once used to, but there is nothing wrong with using a small pickup and rented dumb trailer, or even renting other equipment such as chippers and excavators, just be sure to account for that in the bid.

Save every penny, and buy what you can without a loan, it may not be the best gear around, buy you will own it, and it won't own you. Eventually you will find that you have the big chip truck and a bitchin 12" diesel chipper, maybe a small crew and a bucket truck to boot, just be a little patient set some goals and work toward them.
You have the certs, a biz license should be fairly easy to get ($25 here in WA more if your a general contractor) Ins is affordable, as its not required, at least in WA. Bonding is a waste of money, but some folks think its important, good thing its fairly cheap too. From the sounds of it, you have enough gear to make a start of it, so use what you have and get on it already.

DON"T BLOW ALL YOUR MONEY ON THE NEWEST SAWS THE DAY THEY HIT THE SHELFS... Samsies for climbing gear, yea its cool, but do you need to have it today? For instance, I'd realllllllly like to have a 500i having used a couple they are skookum choochers however my current saws sthil run pretty good, and other things need replaced/fixed first, so the 500i has to wait.

 

[Montana_Sam]

I might do that if he buys and owns the equipment and you have an exclusive relatively low rental rate that you pay (by the machine hour, not by the day...so you don't need to run it back at the end of the day all the time).

I like that. Thanks for the honest feedback fellas, lots to chew on by the woodstove this winter. We'll see what the new year brings.

 

[SeMoTony]

I like that. Thanks for the honest feedback fellas, lots to chew on by the woodstove this winter. We'll see what the new year brings.

May good fortune be yours in this.
How well do you know this man with the cash? The nature of the man is most important IMHO. If he is far away and tries running your use of his equiptment,, may be as successful as our stay in Viet Nam, where D.C. tried directing operations they could not see or relate to.

 

[ClimberBusinessman]

Hello All!

So, I've been in the industry for a little over a decade. Cut my teeth with the Forest Service here in MT, sawing on wildfires and clearing trails. Got certified up the wazoo for climbing and falling timber. Left the Feds after college and got my ISA certification, worked as an arborist and crew lead for the biggest outfit in our valley for 5 years. Everything from municipal pruning contracts (100's of trees) to county-wide stump grinding contracts, complex urban rigging and crane removals, wild fire reduction, etc.

I love the work truly, and am good at it. I've got a good eye for tree work, and the heart for the long game. The big tree company sold out two years ago, parceled up, no one has yet to fill the void. I currently do tree work part time, for myself, completely under the table. Over the years I've come to know enough clients personally that they have reached out and asked me to work for them, which is just fine with me. But hauling brush with my 1/2 ton and a rented dump trailer truly blows, especially when you've so recently done it with a finely tuned Bandit and a brush grapple. Regardless, I'm able to make great cash money, stay in fighting shape and be a stay at home Dad, which is fantastic.

I have a repeat customer with 26 acres of woods I manage, he's a wealthy guy who owns several small companies in various states, everything from shipping and delivery trucks to material handling. He asked about helping me invest in equipment recently. I'm sure to someone like him $75k is less than a drop in the bucket. Enough for me to get a nice used chip truck and a nice used chipper, some extra gear, etc. I imagine he wants to squirrel some money away in a small LLC, have all the equipment at his disposal, and turn a small but regular source of local revenue (he doesn't live here, just owns properties). Fully trustworthy, good, business smart guy; I wouldn't be posting this otherwise.

Is this every small business owners dream or some type of lurking trap??? I wouldn't be beholden to a bank, and could grow small. This guy clearly knows how to run a business, which I don't. I'm a tree guy, that's why I haven't gone into business on my own yet. With the right resources we could fill the void here in the valley, there are perhaps 1/2 dozen outfits that do tree work, but show up in sweatpants and a chipper born in the 80's dripping oil all over a millionaires new driveway. I want to be small, high-end, and super professional. Our town is a lot like Vail or Aspen, LOTS of second, third and fourth homes tucked into the woods that need LOTS of routine tree work. That's my jam. Low risk, easy jobs for the ultra wealthy....but I'm not going to do it without equipment.

Thoughts on having a private investor like this? Anyone done this before? I'm sure there are some things to get hammered out before hand....

I'd probably decline the offer. He probably wants to be a de-facto "partner" in your business. He's probably hoping his $75,000 investment will be worth 1-2 million in 5 years, which isn't a good deal for you if you can start your business without his help and arrive at the same place in 5 years. If you want the equipment and you have a solid business case for it, Northern Atlantic Financial, Western Equipment Financing, and AP Equipment financing all finance tree equipment. It's literally a 1 page application, which is very easy. Assuming you have decent personal credit (650 plus FICO score) and possibly some business credit history, since equipment loans are securitized/collateralized with the equipment, getting a loan shouldn't be much of an issue. You'll probably pay 4-7% interest APR on a 5 year equipment loan, which is far better than having someone own half of your company. Or, simply grow your business slower and pay cash for equipment as you need it and can afford it.

 

[StumpBustersLLC]

TRAP!

If he's fronting all the money, he will want some sort of control, meaning you will be working for him some how some way.

Running a business is fairly easy, know your worth and don't take less then that, keep track of expenses and save all your receipts, get a good accountant., and listen to them.

there is absolutely no reason you need to run out and get a massive loan on even used equipment. It may take a couple years to get up to what you were once used to, but there is nothing wrong with using a small pickup and rented dumb trailer, or even renting other equipment such as chippers and excavators, just be sure to account for that in the bid.

Save every penny, and buy what you can without a loan, it may not be the best gear around, buy you will own it, and it won't own you. Eventually you will find that you have the big chip truck and a bitchin 12" diesel chipper, maybe a small crew and a bucket truck to boot, just be a little patient set some goals and work toward them.
You have the certs, a biz license should be fairly easy to get ($25 here in WA more if your a general contractor) Ins is affordable, as its not required, at least in WA. Bonding is a waste of money, but some folks think its important, good thing its fairly cheap too. From the sounds of it, you have enough gear to make a start of it, so use what you have and get on it already.

DON"T BLOW ALL YOUR MONEY ON THE NEWEST SAWS THE DAY THEY HIT THE SHELFS... Samsies for climbing gear, yea its cool, but do you need to have it today? For instance, I'd realllllllly like to have a 500i having used a couple they are skookum choochers however my current saws sthil run pretty good, and other things need replaced/fixed first, so the 500i has to wait.

this is solid advice.

 

[CCMovingtoOmaha]

Hello All!

So, I've been in the industry for a little over a decade. Cut my teeth with the Forest Service here in MT, sawing on wildfires and clearing trails. Got certified up the wazoo for climbing and falling timber. Left the Feds after college and got my ISA certification, worked as an arborist and crew lead for the biggest outfit in our valley for 5 years. Everything from municipal pruning contracts (100's of trees) to county-wide stump grinding contracts, complex urban rigging and crane removals, wild fire reduction, etc.

I love the work truly, and am good at it. I've got a good eye for tree work, and the heart for the long game. The big tree company sold out two years ago, parceled up, no one has yet to fill the void. I currently do tree work part time, for myself, completely under the table. Over the years I've come to know enough clients personally that they have reached out and asked me to work for them, which is just fine with me. But hauling brush with my 1/2 ton and a rented dump trailer truly blows, especially when you've so recently done it with a finely tuned Bandit and a brush grapple. Regardless, I'm able to make great cash money, stay in fighting shape and be a stay at home Dad, which is fantastic.

I have a repeat customer with 26 acres of woods I manage, he's a wealthy guy who owns several small companies in various states, everything from shipping and delivery trucks to material handling. He asked about helping me invest in equipment recently. I'm sure to someone like him $75k is less than a drop in the bucket. Enough for me to get a nice used chip truck and a nice used chipper, some extra gear, etc. I imagine he wants to squirrel some money away in a small LLC, have all the equipment at his disposal, and turn a small but regular source of local revenue (he doesn't live here, just owns properties). Fully trustworthy, good, business smart guy; I wouldn't be posting this otherwise.

Is this every small business owners dream or some type of lurking trap??? I wouldn't be beholden to a bank, and could grow small. This guy clearly knows how to run a business, which I don't. I'm a tree guy, that's why I haven't gone into business on my own yet. With the right resources we could fill the void here in the valley, there are perhaps 1/2 dozen outfits that do tree work, but show up in sweatpants and a chipper born in the 80's dripping oil all over a millionaires new driveway. I want to be small, high-end, and super professional. Our town is a lot like Vail or Aspen, LOTS of second, third and fourth homes tucked into the woods that need LOTS of routine tree work. That's my jam. Low risk, easy jobs for the ultra wealthy....but I'm not going to do it without equipment.

Thoughts on having a private investor like this? Anyone done this before? I'm sure there are some things to get hammered out before hand....

Sounds like a good partner to me. I would vet his ideas, quality , tidy looking work and workers are key to repeat business. You need to give yourself more credit , yyou can do this! Talk to an accountant too get some advice, then make a decision. Many trees and yards in Omaha too! Good luck Montana Sam!

 

[blades]

do not forget the # one big budget item INSURANCE, and secondly dealing with all the Gov. requirements the big one is OSHA. Once you go commercial these are the monkeys on your back.