:o PolarBearBob here, not sure I'm proceeding in the right direction with my new venture. I've already gotten some great advise from Paul but thought I'd re-post my concerns in hopes that others of you would wade in, please.
I've started a commercial swimming pool repair and maintenance company; sort of. My company is Polar Pools and it is a D.B.A. of my L.L.C. Arctic Eye Enterprises here in Alaska. Now before you all start rolling around on the floor laughing, there are quite a few swimming pools here in the "Great-land". If any of you have read my intro you know that I happened upon this business opportunity by pure chance.
I'm not a professional engineer but I've been in the Water & Wastewater industry for almost 40 years and I carry Class IV state licenses in Water Treatment, Wastewater Treatment, Water Distribution and I'm a Certified Pool Operator. This pool thing is a rather natural fit for me, the equipment used in swimming pools is identical to drinking water filtration and disinfection equipment only on a smaller scale. I've got the knowledge and skills to diagnose these systems regardless of complexity, size or type of treatment.
The bonus is there is no one in Alaska using their skills to work on these systems.
My challenge, is the path I'm on now, is it going to put me out of business, eventually. The next question I have at 63 years young, is "eventually" a bad thing, since I'm already retired from a full career. The best description of my work is "Consultant", I'll try to explain. It became apparent after working on two of these projects that I didn't have the infrastructure or manpower to expedite work at this level. I have the knowledge but not the muscle. I contacted a friend I've known for 30 years, he is in the commercial/residential HVAC business here in Anchorage. His business is Klebs Mechanical and they are a name in Alaska and around Anchorage especially. We had a meeting and made a gentleman's agreement to work together in trying our hand at this business.
So here is our division of work:
1. We are both actively looking for jobs and work (so far that hasn't been to difficult).
2. I look the job over and determine what is needed to either repair or replace the used or broken equipment.
3. I offer suggestions to my partner on items that will require work or modification.
4. I research equipment from various manufacturers and get bids for the equipment.
5. My partner draws up the bid for the client and interfaces with the client. In a word, he is doing the selling.
6. If our bid is accepted my partner's company purchases all the materials and equipment and his workman complete the work.
7. All the equipment is installed to my or the manufacturers specifications.
8. I trouble shoot, inspect and start-up all systems after work is completed.
9. I train all client personnel on the system and provide written SOP's (standard operating procedures) to the client.
10. I get paid when the client has paid my partners company for the completion of the work.
We have negotiated my fee to be 12% of the total cost of the actual repairs or installation. My partner and his people add their markup onto that subtotal to give the client the final bid price. My work is listed within the contract as either consultant, design engineer or some other form of professional intellectual assets. We are starting to get some traction here and we are bidding some larger more complex projects. My partner, who by the way is a friend was pointing out that our latest contract which is $160,000.00 I will be getting $19,000.00 for my services and that may be difficult to sell to the client. I don't know enough about business to challenge my friend but here is his point of view. If we sell a part to a customer, say for $5.00, my take on that sale is $0.60, customer hardly even notices. We have a bid currently for $250,000.00 on a project and my take will be in the neighborhood of $30,000.00 at 12%, customer has a seizure and drops our bid like a hot rock because the engineering costs are so large. My partner feels that we need a sliding scale for my percentage and I don't know if he is right or if that is a standard in the world of business.
So here are my questions to you fine people:
1. Is there a sliding scale used for ever increasing larger contracts regarding engineering/intellectual assets used for that contract?
2. Do you people take a lessor profit margin on larger contracts versus smaller ones"
3. Am I shooting myself in the head by sharing my knowledge with my partner? He wants to know everything.
4. Eventually my portion of this business will be passed on or sold as I have no children. Should I make arrangements for this now while our business is still new?
5. Does it honestly appear that I'm earning more than I should from a risk versus reward posture?
I freely admit that my friend has a larger risk since he is doing all the actual work and if the client gets a case of the red a$$ they probably won't be looking at me as much as my partner. I believe because of that fact it has a monetary value and he should be paid for his trouble. I know that I want to keep my mind sharp and making money at the same time is kind of nice.
I maintain Professional Liability insurance at 2 mill and General Liability at 1 mill. I don't want his insurance company coming after me if something were to go sideways. I maintain a business journal and I document everything(engineer buddy recommendation).
I'm really not sure which direction to go with this, I don't believe I want to play "General Contractor" and be responsible for the whole ball of wax. I'm also not the only consultant or professional in this situation, I'm hoping that one of you fine people may be able to provide some insight.
Thanks,
Bob Walker
Polar Pools
I've started a commercial swimming pool repair and maintenance company; sort of. My company is Polar Pools and it is a D.B.A. of my L.L.C. Arctic Eye Enterprises here in Alaska. Now before you all start rolling around on the floor laughing, there are quite a few swimming pools here in the "Great-land". If any of you have read my intro you know that I happened upon this business opportunity by pure chance.
I'm not a professional engineer but I've been in the Water & Wastewater industry for almost 40 years and I carry Class IV state licenses in Water Treatment, Wastewater Treatment, Water Distribution and I'm a Certified Pool Operator. This pool thing is a rather natural fit for me, the equipment used in swimming pools is identical to drinking water filtration and disinfection equipment only on a smaller scale. I've got the knowledge and skills to diagnose these systems regardless of complexity, size or type of treatment.
The bonus is there is no one in Alaska using their skills to work on these systems.
My challenge, is the path I'm on now, is it going to put me out of business, eventually. The next question I have at 63 years young, is "eventually" a bad thing, since I'm already retired from a full career. The best description of my work is "Consultant", I'll try to explain. It became apparent after working on two of these projects that I didn't have the infrastructure or manpower to expedite work at this level. I have the knowledge but not the muscle. I contacted a friend I've known for 30 years, he is in the commercial/residential HVAC business here in Anchorage. His business is Klebs Mechanical and they are a name in Alaska and around Anchorage especially. We had a meeting and made a gentleman's agreement to work together in trying our hand at this business.
So here is our division of work:
1. We are both actively looking for jobs and work (so far that hasn't been to difficult).
2. I look the job over and determine what is needed to either repair or replace the used or broken equipment.
3. I offer suggestions to my partner on items that will require work or modification.
4. I research equipment from various manufacturers and get bids for the equipment.
5. My partner draws up the bid for the client and interfaces with the client. In a word, he is doing the selling.
6. If our bid is accepted my partner's company purchases all the materials and equipment and his workman complete the work.
7. All the equipment is installed to my or the manufacturers specifications.
8. I trouble shoot, inspect and start-up all systems after work is completed.
9. I train all client personnel on the system and provide written SOP's (standard operating procedures) to the client.
10. I get paid when the client has paid my partners company for the completion of the work.
We have negotiated my fee to be 12% of the total cost of the actual repairs or installation. My partner and his people add their markup onto that subtotal to give the client the final bid price. My work is listed within the contract as either consultant, design engineer or some other form of professional intellectual assets. We are starting to get some traction here and we are bidding some larger more complex projects. My partner, who by the way is a friend was pointing out that our latest contract which is $160,000.00 I will be getting $19,000.00 for my services and that may be difficult to sell to the client. I don't know enough about business to challenge my friend but here is his point of view. If we sell a part to a customer, say for $5.00, my take on that sale is $0.60, customer hardly even notices. We have a bid currently for $250,000.00 on a project and my take will be in the neighborhood of $30,000.00 at 12%, customer has a seizure and drops our bid like a hot rock because the engineering costs are so large. My partner feels that we need a sliding scale for my percentage and I don't know if he is right or if that is a standard in the world of business.
So here are my questions to you fine people:
1. Is there a sliding scale used for ever increasing larger contracts regarding engineering/intellectual assets used for that contract?
2. Do you people take a lessor profit margin on larger contracts versus smaller ones"
3. Am I shooting myself in the head by sharing my knowledge with my partner? He wants to know everything.
4. Eventually my portion of this business will be passed on or sold as I have no children. Should I make arrangements for this now while our business is still new?
5. Does it honestly appear that I'm earning more than I should from a risk versus reward posture?
I freely admit that my friend has a larger risk since he is doing all the actual work and if the client gets a case of the red a$$ they probably won't be looking at me as much as my partner. I believe because of that fact it has a monetary value and he should be paid for his trouble. I know that I want to keep my mind sharp and making money at the same time is kind of nice.
I maintain Professional Liability insurance at 2 mill and General Liability at 1 mill. I don't want his insurance company coming after me if something were to go sideways. I maintain a business journal and I document everything(engineer buddy recommendation).
I'm really not sure which direction to go with this, I don't believe I want to play "General Contractor" and be responsible for the whole ball of wax. I'm also not the only consultant or professional in this situation, I'm hoping that one of you fine people may be able to provide some insight.
Thanks,
Bob Walker
Polar Pools
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