I am being given a business

Brad2770 · Dec 25, 2019

I have never thought of owning my own business or where to start. Since my divorce, I have lived on the edge of paycheck to paycheck and having enough money to spoil my kid. I have never really had the problem with working for someone else.

I am being given a pest control “business”. The man that “owns” it used to do pest control for a local company. He “retired”about 10 years ago, but had done some work on the side, under the table. At this point, he makes anywhere from 4k to 7k a month and has had to turn down some exceptional business because he doesn’t have a business license. I already have some of the certification and only need to take one test (waiting for Texas to respond with the date I can take it) before registering for the business and getting the insurance. The man is going to sign everything over to me, work for a few more years until I get to know his current customers and help me build it a bit more before he retires for good.

His reason for doing this: His son and daughter in law already own and operate their own business. He doesn’t want to build this to just sell it. There are no strings attached or any kind of hidden agenda, he just wants to see it grow and prosper.

Any advice or pointers would be appreciated. I know how to do the work. I don’t really know how to properly run it. I especially want to avoid getting sued. I will answer any questions you guys may have if it helps give better informed answers. Thanks in advance.

yamikazo · Dec 25, 2019

Get out while you still can.

Sanrith Descartes · Dec 25, 2019

I own a business. It's great and can suck both at the same time. Things I will pass on...

Unless you have an accounting degree dont try to do your own books. You dont need an accountant, a bookkeeper will do fine part time. Lots of part-time bookkeepers can be had. My wife's business is just this. She does accounting for multiple small businesses.

Make sure you have some sort of liability insurance. Especially dealing with chemicals and around people's houses.

Hiring the right people is crucial. One asshat can fuck up your business in a heartbeat.

Write out a business plan for yourself. You need focus and goals.

Dont waste a fucking penny. Expenses kill small businesses. Learn to read a general ledger and go through it monthly, especially on the expense side. See if the prior owner signed any contracts for services (cleaning, supplies etc).

Use a PO for every single thing you buy. You want a paper trail of every penny you spend.

Borzak · Dec 25, 2019

I was given a business a number of years ago. The owner had tried his son running it. It did not work out and he hired me to run the business. After a while he told me I could have it if his son was kept out. He still owned a share of it, and made money off of it. Worked out extremely well for me. I would never have gotten to that point, the owner wound up making more money giving it to me. After I burned out mentally and physically I sold it and came out ahead as well as the owner. I still get contract work from the business I sold.

I am the last person to ask. I did not have or write a business plan. I contracted out payroll and some of the accounting. None in house. The business plan and financing was all in my head. I had an estimator who only did take offs I put prices on them all bids. I had a purchasing agent which I did 1/4 of his job at times, a shop manager, a secretary. I was the engineering department. The rest, 35 in the shop. No HR. The entire business was in my head, from prices, bids, designs, scheduling, sales calls (rarely), I did the pricing on unit price jobs and year long contracts in my head.

The only "business" deal I ever made was one of the best and they still use it. The galvanizing plant is minutes away that does all ours and all our stuff needs it. Normal backlog is 7 days. We don't have that kind of time. You can pay a premium to move up. So many people do it you really don't save much time. Stuff gets lost in the galvanizing dips all the time. I made a deal to make all the stuff they lost immediately so the end customer wouldn't know. In exchange we moved to the front of the line, like 6 hours down from 7 days.

That is where a large part of the money I made came from. This afternoon was too late. We charged for it.

Is he being squeezed out by the big name chains and franchises?

Good luck. I loved the hell out of it.

Erronius · Dec 25, 2019

Sanrith Descartes said:
Use a PO for every single thing you buy. You want a paper trail of every penny you spend.

Company I work for does this religiously. To the point it's annoying/infuriating.

If I need to buy something...let's say, from Grainger...we have an account, I can handle it all online, and they'll send us an invoice that our folks will process.

Depending on who you ask, I still need to go fill out one of our own forms, assign it a sequential PO#, complete the purchase, go back to our PO form and add in all the correct information, and then give it to our accountants.

Other people say that's redundant, and just to put a PO note on the purchase like "supplies" so they know how to handle the invoice.

The accountants have told me that they'll come find me if they ever have a question. To date, the number of times they've tracked me down to ask a question on any of my purchases: 0

I also try really hard not to abuse it, and I'll say something if I need to buy something unusual, or $$$. I do appreciate being given enough autonomy to handle purchases I need w/o having to ask someone else to do all my purchasing.

Brad2770 · Dec 25, 2019

Borzak said:
Is he being squeezed out by the big name chains and franchises?

Good luck. I loved the hell out of it.

Not that I know of. It sounds to me that he keeps getting large offers for big money that he can’t take and he is tired of passing it up. The most recent was a developer that wanted quarterly interior and exterior preventative service. He said that alone was enough to hire someone with a commercial technician’s license, pay them well and still walk away with about 70-75% earnings for the business and personal paycheck.

Fogel · Dec 25, 2019

Is this residential, commercial/industrial, or a bit of both? Also, are you doing this solo or plan on hiring your own technicians? I deal with pest control on the commercial/industrial end as I work in food manufacturing, so if you have any questions on that end I can give some insight from the customers point of view. I don't know about your area, but in the mid atlantic area all the big names like western/orkin seem to be neglecting the larger food manufacturing accounts. Western has been getting the rug pulled out from under the feet all across NJ/PA from a single local guy.

Arden · Dec 25, 2019

Brad2770 said:
I am being given a pest control “business”...Texas

Arbitrary · Dec 25, 2019

yamikazo said:
Get out while you still can.

"I've entered in to an arranged marriage, any advice or pointers would be appreciated."

Brad2770 · Dec 25, 2019

Fogel said:
Is this residential, commercial/industrial, or a bit of both? Also, are you doing this solo or plan on hiring your own technicians? I deal with pest control on the commercial/industrial end as I work in food manufacturing, so if you have any questions on that end I can give some insight from the customers point of view. I don't know about your area, but in the mid atlantic area all the big names like western/orkin seem to be neglecting the larger food manufacturing accounts. Western has been getting the rug pulled out from under the feet all across NJ/PA from a single local guy.

He gets all of his business by word of mouth. While he was employed by another company (over 20 years experience), the customers he serviced trusted him more than the company. When he retired, a few called him to see if he would be willing to do work on the side. That had grown over the last ten years. Some of those customers have much larger businesses now and they can’t go under the table now. And from how he explained it, as soon as I get the insurance and business license, he said we would have enough business to keep us busy. By the end of next year, he said we may have to hire another. It may be a guy that he worked with at the previous pest control business that is now ready to retire.

This would be a mix of residential and commercial. It would mostly be me, but he would be working as well. Maybe another guy by the end of the year, but that’s only going by what I was told. My hope is to eventually get my kid into if it’s going well. And if he likes doing it.

I will mention to him about the food manufacturing. We have a Pepsi, Coke and Dr. Pepper bottlers here as for Mrs Bairds, Mission and a couple of other bakeries.

Zapatta · Dec 26, 2019

Brad2770 said:
He gets all of his business by word of mouth. While he was employed by another company (over 20 years experience), the customers he serviced trusted him more than the company. When he retired, a few called him to see if he would be willing to do work on the side. That had grown over the last ten years. Some of those customers have much larger businesses now and they can’t go under the table now. And from how he explained it, as soon as I get the insurance and business license, he said we would have enough business to keep us busy. By the end of next year, he said we may have to hire another. It may be a guy that he worked with at the previous pest control business that is now ready to retire.

This would be a mix of residential and commercial. It would mostly be me, but he would be working as well. Maybe another guy by the end of the year, but that’s only going by what I was told. My hope is to eventually get my kid into if it’s going well. And if he likes doing it.

I will mention to him about the food manufacturing. We have a Pepsi, Coke and Dr. Pepper bottlers here as for Mrs Bairds, Mission and a couple of other bakeries.

Dunno if there are ground termites where ever you are but the business model for setting up monitoring and baiting stations that gets hits is a nice racket. Its a subscription service and you make regular rounds, low effort, steady income when you get enough accounts, and you can handle it when you have slow days of no outcall. Also setting up rodent control stations and rebaiting them any place that sells food is another one to look into. Grocery stores, fast food places etc.

http://msdssearch.dow.com/PublishedLiteratureDOWCOM/dh_091b/0901b8038091b652.pdf?filepath=productsafety/pdfs/noreg/233-00932.pdf&fromPage=GetDoc

Brad2770 · Dec 26, 2019

Zapatta said:
Dunno if there are ground termites where ever you are but the business model for setting up monitoring and baiting stations that gets hits is a nice racket. Its a subscription service and you make regular rounds, low effort, steady income when you get enough accounts, and you can handle it when you have slow days of no outcall. Also setting up rodent control stations and rebaiting them any place that sells food is another one to look into.

http://msdssearch.dow.com/PublishedLiteratureDOWCOM/dh_091b/0901b8038091b652.pdf?filepath=productsafety/pdfs/noreg/233-00932.pdf&fromPage=GetDoc

We talked about this. He is certified for termite. I would have to tutor under him for a year before I could test for my certification. He does some rat bating stations. We haven’t discussed what he charges or how often he services them.

Zapatta · Dec 26, 2019

Brad2770 said:
We talked about this. He is certified for termite. I would have to tutor under him for a year before I could test for my certification. He does some rat bating stations. We haven’t discussed what he charges or how often he services them.

Read up on Dow 'Shatter' termite systems, industry standard last I knew. Later if you want buy a bunch of insurance, a flat bed truck and some circus tents then hire 4 ex-cons you can get into fumigation. That is a very profitable business. Tag team with Securitas or some other rent-a-cop company to monitor the properties you are fumigating to keep crackheads with stolen scuba gear from robbing the homes.

Zapatta · Dec 26, 2019

Also, if you know anyone in organized crime offer to launder their illegal cash, pest control businesses are great for laundering money. Almost no inventory.

Brad2770 · Dec 26, 2019

I might as well make Meth with that much hassle.

Zapatta · Dec 26, 2019

Brad2770 said:
I might as well make Meth with that much hassle.

View attachment 239557

I know a gangster who started a fumigation company to launder his drug profits, within 3 yrs he had 6 trucks 30 guys and was making so much legit money he bought a nightclub a plumbing company, and an electrician outfit. Makes it harder and harder for the Feds to suss out the dirty from the clean. He is gonna go to jail forever for murder (they are closing in in that), not drugs of money laundering.

Borzak · Dec 26, 2019

Damn all I have ever done is look the other way on some OSHA violations that everyone else does.

Fogel · Dec 26, 2019

Brad2770 said:
We talked about this. He is certified for termite. I would have to tutor under him for a year before I could test for my certification. He does some rat bating stations. We haven’t discussed what he charges or how often he services them.

With food manufacturing we're serviced weekly regardless of if/when or how much activity there is. It's pretty much a requirement of our third party audits. It's a pretty sweet deal when you think about it. To give you an example, every friday our tech shows up, inspects all the stations, refreshes any bait in the outside stations if necessary, and then fill out their report. Takes about 2-3 hours and it's usually billed based on how many stations are in the facility. And the newer software lets you barcode scan all the stations, so once you have it set up, you're basically just a supermarket cashier. The key though is meeting all the required written programs and reporting that the 3rd party auditors will be looking at when they do the annual audit of the facility.

I asked if you were going to be having techs, because as you kind of alluded too yourself, it's less about who the company is and more about who the tech is.

Brad2770 · Dec 26, 2019

Well, I haven’t talked much about hiring new people because I want to see this work first. He (Randy) is pretty confident we will need another within a year, but he is also the one turning away business.

I’ll be posting in here as time goes on and as I have questions. I was posting now to see if there was something I may have been missing, especially since this is pretty muchan already established business that hasn’t exactly been operating legally. I don’t want anything to bite me in the ass while just starting off.

Mizake · Dec 27, 2019

I have started 2 separate businesses from scratch, so I can't comment on buying another person's business. I have been asked to partner with others in other ventures, but I never have because either I didn't have enough control over operational decisions, or the risk/reward balance wasn't right.

My question is....who is this guy to you, and visa versa? Seems awfully nice for someone to just fork over a profitable business to a stranger. Again, you might not be a stranger, but the circumstances seem suspect. Although admittedly I am cautious by nature, and anything "too good to be true" I am highly suspicious of.

At the very least I would ask to look at the P&Ls for the past few years. Exactly how profitable is this business, and is this something that can sustain you for your future?

As far as fear of being sued. The reality is, if you own any part of the business, you incur liability. I have no idea how the company is set up (LLC? S-Corp?) but if he really is handing over everything to you, then you should be the 100% shareholder, that way he will not have additional claims to profits. Then you just put him on a salary like a standard employee. You will make yourself an employee as well (although you will be President). Then you can more easily separate your personal and business expenses. Be sure to have en experienced accountant help you legitimize your allowable deductions. You can really save yourself on taxes the first few years in your business if you give yourself a small salary and depreciate your initial start-up costs over those years so you will have little net taxable business income.

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