Non aviation career shift/ mid life crisis

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Racerx

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Ernie
So it appears the family business is coming to an end. Not because it's no longer financially viable. Dad owns the 2 unit building we're in outright and the other tenant has made him an offer for both suites he can't refuse. Here's a pile of money every month for 10 years, take it or we're moving type of thing. The plan for us was to build a bigger building in back of the current building...until the number came back double the budget and the size of the septic and detention areas would severely limit the yard space, making it almost unusable for us. He'll be 66 next month and decided he'd rather take in the 120k a year after property taxes and not work. I get it. My sister's more salty about it than I am. Despite the fact she has nothing to do with the business.

It just leaves me in a difficult situation. I'm used to a 4 minute commute to work. There's nothing available within 30 minutes that would remotely work. Even then, every place is borderline. If it's got the sq footage, it doesn't have the ceiling height. If it's got the ceiling height it doesn't have the power. And thats just looking at leasing. Options to buy something are non existent for what we do. Even thought about building on my property. I'd like to build a metal building to build a kit someday, so maybe something a little bigger. But I'm not zoned for commercial/industrial and unloading a steel truck doesn't work where I'm at.

So now I'm thinking it's time to trim the fat. Literally in a few cases. Become sole proprietor and just take on the most profitable jobs rather than the jobs that keep guys busy so you're not totally eating the payroll when you're a little slow. I can find places with the space, ceiling height, and power to make it work on a smaller scale. Frankly, as much as it sucks and feels like starting over, I'm not sure what else to do. Unless I go work for someone else, which isn't off the table. But being a very type A personality, I don't always do well not being in control.

So if anyone's got anything to share about being a sole proprietor... To go for it. Or to talk me out of it and go work for someone, I'm all for it.
 
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Welder fabricator. Lately have been doing a lot of commercial building maintenance. Forklifts will hammer columns and I'll have to straighten, plate, section in the column. Or fab and replace railings. Also work on a fair amount of excavators and skid steers. Was contemplating buying the rotary plasma to expedite railing/staircase fabrication or buy a line bore rig for re-bushing machinery. The column job I was on last week (6 days total) I did mostly by myself and was an 18k job. So it's fairly lucrative.
 
You could do it on a smaller scale and wait for an opportunity or the space to expand again at a later date.

I was a sole proprietor, but it was an engineering business with completely different economics. The downside was that it tended to be feast or famine. Eventually, one of my clients made me an offer I couldn't refuse to work for them full time, and I got to liking a steady paycheck.
 
Hi. I quit a corporate job at a satellite company and worked as a sole proprietor for 3 1/2 years. I wrote code and installed monitoring systems. Pros: I made more money than God. Like, twice as much working as a corporate drone, and that's before all the tax breaks. There were times I was cashing checks, thinking, this can't be legal. I made my own schedule. It was very gratifying, building things that would not exist if you did not build them. No team effort BS, you own it. Cons: it is lonely, you are not part of the team, you are separate. You have to work a lot harder, not just at your job but writing invoices, following up on billing, and writing props for new work. Very much working without a net. If you don't have subsidized health insurance, you are more or less not insured, in America. What made it work was my wife had subsidized insurance. Taxes take a while to figure out, you need to estimate how much you will make per quarter and pay the tax on that or you get hit by a fine. And you pay twice Social Security tax as you did when you were a drone. Summing up: Glad I did it to scratch the itch, I made enough money that getting a corporate job was not for the money, it was for fun. About sole proprietorship: this is the way to go, compared to an LLC. My experience with LLCs is they just raise your radar cross-section to be taxed by lots of government"workers" with their hands out, and in your pocket. B&O tax? Never knew about it til I formed an LLC, that's why when I made the move I just went sole proprietorship.
 
Based on what you wrote, I think you can count out working for somebody else. I did interviewing for a fortune 500 company for a bit, and what you wrote would be a big red flag to us. It fits the pattern of what we called the "future disgruntled employee". It is not necessarily a negative thing about you. It just says you are a better business owner than an employee. You are in a great position now to be a sole proprietor. You have the advantage of having an established client base and reputation. Most start up companies have to take jobs they don't want in order to build their reputation. They strive to be able to select the best jobs versus whatever comes their way. You say that your work is lucrative and can be done by mostly you, so take the good and easy "6 day-$18k" jobs, cut the fat on the rest of the days and relax. Some of us call that "semi-retired". I don't think a 30 minute drive to your office is an obstacle that warrants giving up. Where I live, many people drive 150 miles a day to go to work.
 
Iflydogs said:
Hi. I quit a corporate job at a satellite company and worked as a sole proprietor for 3 1/2 years. I wrote code and installed monitoring systems. Pros: I made more money than God. Like, twice as much working as a corporate drone, and that's before all the tax breaks. There were times I was cashing checks, thinking, this can't be legal. I made my own schedule. It was very gratifying, building things that would not exist if you did not build them. No team effort BS, you own it. Cons: it is lonely, you are not part of the team, you are separate. You have to work a lot harder, not just at your job but writing invoices, following up on billing, and writing props for new work. Very much working without a net. If you don't have subsidized health insurance, you are more or less not insured, in America. What made it work was my wife had subsidized insurance. Taxes take a while to figure out, you need to estimate how much you will make per quarter and pay the tax on that or you get hit by a fine. And you pay twice Social Security tax as you did when you were a drone. Summing up: Glad I did it to scratch the itch, I made enough money that getting a corporate job was not for the money, it was for fun. About sole proprietorship: this is the way to go, compared to an LLC. My experience with LLCs is they just raise your radar cross-section to be taxed by lots of government"workers" with their hands out, and in your pocket. B&O tax? Never knew about it til I formed an LLC, that's why when I made the move I just went sole proprietorship.
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I've got a meeting with the accountant about the LLC vs sole proprietor or how to set things up if I did go this route. I would have at least some part time help with the books. But we wouldn't be invoicing nearly the quantity of jobs. As far as working harder, being the bosses son I feel like I have to work harder than anyone else already. Insurance wise, I already don't have a work subsidized plan so nothing would change there.
 
Stating the obvious, and you've probably already done this, but if not sit down with your dad and have a good discussion about everything he did to run the business. There's a gold mine of experience and knowledge there, so be sure to dig out all the ore. Tax info, billing, account management, capital depreciation, legal matters, suppliers, contracts, liability coverage, etc., etc. (With the type of work you're doing, I suspect there's a fair amount of liability to be considered.)

A word to the wise.... Many years ago I had a small business with a few partners. We discovered that we had to spend about 80% of our time doing the business stuff, especially marketing and bid preparation, and only got to spend about 20% doing the work we actually enjoyed.
 
Racerx said:
I've got a meeting with the accountant about the LLC vs sole proprietor or how to set things up if I did go this route. I would have at least some part time help with the books. But we wouldn't be invoicing nearly the quantity of jobs. As far as working harder, being the bosses son I feel like I have to work harder than anyone else already. Insurance wise, I already don't have a work subsidized plan so nothing would change there.
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An LLC could be used to protect some of your assets, but then insurance will too. If you do not have a residence in the state where you have the LLC, you will have to hire a registered agent--basically, someone to receive the papers if your LLC gets sued.
 
Unless you’re willing to move, pivot the business to a sole prop. The juicy jobs are nice, is there a way to do some sort of inspection and preventive/corrective maintenance or other service tasks along the way to add some stability to the income?

Just spit-balling here, but look backwards at the books and find the most *profitable* work and see if there’s a way to make it recurring.
 
Half Fast said:
Stating the obvious, and you've probably already done this, but if not sit down with your dad and have a good discussion about everything he did to run the business. There's a gold mine of experience and knowledge there, so be sure to dig out all the ore. Tax info, billing, account management, capital depreciation, legal matters, suppliers, contracts, liability coverage, etc., etc. (With the type of work you're doing, I suspect there's a fair amount of liability to be considered.)

A word to the wise.... Many years ago I had a small business with a few partners. We discovered that we had to spend about 80% of our time doing the business stuff, especially marketing and bid preparation, and only got to spend about 20% doing the work we actually enjoyed.
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Oh we've had that conversation many times over the last 15 years. But moreso recently with regards to insurance. One of our clients id hope to retain requires a good size umbrella policy but apparently that's not really as expensive as I'd have thought. It's not like he's going away anyway. Just wouldn't be available as often. But the last 5 years he might show up before 10. We've never done any marketing and I oddly enjoy the numbers game of quoting work.

TCABM said:
Unless you’re willing to move, pivot the business to a sole prop. The juicy jobs are nice, is there a way to do some sort of inspection and preventive/corrective maintenance or other service tasks along the way to add some stability to the income?

Just spit-balling here, but look backwards at the books and find the most *profitable* work and see if there’s a way to make it recurring.
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A lot of our jobs are when a tenant moves out and the building owner is prepping for a new tenant. Unless it's an emergency and a forklift rips a column off the setting plate and the fire department made everyone evacuate (see below). I've thought about approaching the building owners directly. Very large real estate firm with a plethora of properties. But I really don't want to step on the toes of my 2 property management clients we bill for the work and potentially lose that work.

The water on the ground was from the sprinklers. When the roof partially collapsed, the HVAC ducts broke a couple sprinkler heads. Me and Dad shored that up on a Sunday, waited for Engineer plans for a week which called for replacing the column (shocking). I think in total we were on site for 3 hours shoring the roof, and another 4 to replace the column.

I think like @lsaway said with startups having to take on less profitable work...thats how dad started. We've got a couple guys that do just those jobs. And it's something we've always done and feels guilty turning things away.
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Iflydogs said:
An LLC could be used to protect some of your assets, but then insurance will too. If you do not have a residence in the state where you have the LLC, you will have to hire a registered agent--basically, someone to receive the papers if your LLC gets sued.
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I already have one LLC set up for my rental properties. The business assets would be a concern and something Id be going over with someone smarter than me
 
I do think it would be a great opportunity for you to continue the business on a smaller scale, based on the little info you've provided. Having the established business entity and customer base is worth a lot of money on its own. Leasing some shop space nearby would be preferable to keep it from being a chore to go to work.

However, if someone is willing to pay you a bunch of money to do what you do now without all of the hassle then there's no shame in working for someone else.
 
If you're W2 now, contemplate any loans you'd want to take out (mortgage, cars, home equity, whatever) and get them done now. Everything about working for yourself is awesome, except getting loans and having pinheads examine your books and need endless mansplainings before the ultimate denial shows up. It used to be a lot easier.
 
schmookeeg said:
If you're W2 now, contemplate any loans you'd want to take out (mortgage, cars, home equity, whatever) and get them done now. Everything about working for yourself is awesome, except getting loans and having pinheads examine your books and need endless mansplainings before the ultimate denial shows up. It used to be a lot easier.
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There's something I hadn't thought of. The hoops I had to jump through when I refinanced my house cuz some idiot underwriter. They didn't believe I wasn't an officer of the company. Needed a letter from the accountant.
 
robin ardoin said:
Well, didn’t that take special talent, bless their heart! :oops:
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"The big Forklift" freight company that deals with cargo at Ohare. Gone to Cincinnati twice for them and Seattle once. If it weren't for people like them this probably wouldn't be something to contemplate. The bar joists were sagging by a couple feet.
 
SoonerAviator said:
I do think it would be a great opportunity for you to continue the business on a smaller scale, based on the little info you've provided. Having the established business entity and customer base is worth a lot of money on its own. Leasing some shop space nearby would be preferable to keep it from being a chore to go to work.

However, if someone is willing to pay you a bunch of money to do what you do now without all of the hassle then there's no shame in working for someone else.
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Ive got a couple options to go work for someone else. Luckily being in the position I've been in, having to diagnose and repair every piece of equipment I'm not just a dumb welder. But not sure if it meets the "bunch of money" threshold. But it might be fewer headaches which is worth something too.
 
Racerx said:
But not sure if it meets the "bunch of money" threshold. But it might be fewer headaches which is worth something too.
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If the bunch of money gets spent on doctors, therapists, HIMS and an SI medical due to the extra stress, yeah, you might want to think it over.....
:)
 
Zeldman said:
Working for someone else plain sucks.
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Maybe. Sometimes.

Yeah, I worked for someone else at Lockheed, but I got to do things I never would have been able to do with my own business. Some activities simply require large organizations and lots of collaborative work. And it didn’t suck at all.
 
robin ardoin said:
Well, didn’t that take special talent, bless their heart! :oops:
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You would be surprised (or maybe not) at how often that kind of stuff happens.

Was supporting a new DC startup a few years ago. They had a fairly narrow drive-through door for forklifts to go between buildings. As we were standing there waiting for them to start unloading the first trailer into the building, I leaned over to a co-worker and said "$5 says that protective column is dinged before the first truck is unloaded". He said "No way. These are the best operators they have and everyone (bunch of big-wigs on-site to see the new site go live) is watching. They'll be careful." I won that bet very quickly and could have paid for dinner for a week if I had left the bet running for the day.
 
I would just say to be careful of basing your business only off the highly locative jobs. If they are that easy and that profitable then someone is going to come in and try to under bid you. If all you agree to are the easy jobs companies may not have you as their first call when they need something done.

Maybe I’m missing something but if the only thing keeping the existing business from functioning is that your dad wants 120k a year why not just give it to him and keep the business yourself. I assume he was already collecting a salary and that the business is profitable enough to absorb 120k a year to keep him on “payroll” and the business going.
 
Half Fast said:
but I got to do things I never would have been able to do with my own business
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My dad worked for Texas A&M for 39 years, mostly doing research. He was trying to keep small farms in business by coming up with affordable mechanical harvesting of several type of crops.

I enjoy seeing the machinery he built still in the fields, albeit updated from what my dad came up with. I doubt he could have done what he did on his own money. But working for A&M he was never allowed to take credit for any of his work. He could have worked for just about any private business doing the same thing and making beaucoup more money, but I guess having tenure at A&M was more secure.

My dad always wanted a machine shop. I went with him to look at several machine shops of all sizes, but he never made the leap to business owner. I think partly because he was insecure with going out on his own.

One of my dad's former students went on to own a machine shop. He came up with a number of military contracts that secured his retirement several times over. He probably would not been able to make that amount of money by working for someone else. Well, maybe, if he worked for a terrorist group...
 
Zeldman said:
My dad worked for Texas A&M for 39 years, mostly doing research. He was trying to keep small farms in business by coming up with affordable mechanical harvesting of several type of crops.

I enjoy seeing the machinery he built still in the fields, albeit updated from what my dad came up with. I doubt he could have done what he did on his own money. But working for A&M he was never allowed to take credit for any of his work. He could have worked for just about any private business doing the same thing and making beaucoup more money, but I guess having tenure at A&M was more secure.

My dad always wanted a machine shop. I went with him to look at several machine shops of all sizes, but he never made the leap to business owner. I think partly because he was insecure with going out on his own.

One of my dad's former students went on to own a machine shop. He came up with a number of military contracts that secured his retirement several times over. He probably would not been able to make that amount of money by working for someone else. Well, maybe, if he worked for a terrorist group...
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Doubtful I could design nuclear cruise missiles in my own small shop, though. :biggrin:
 
Vance Breese said:
In my experience the only way I can make more than wages is to have people working for me.
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Same for me. But then again I don't do well in a corporate world. I just can't drop my pants and bend over just because some corporate boot licker says so.

That doesn't mean everyone should be like me, what a boring world that would be... :yesnod:
 
kmacht said:
I would just say to be careful of basing your business only off the highly locative jobs. If they are that easy and that profitable then someone is going to come in and try to under bid you. If all you agree to are the easy jobs companies may not have you as their first call when they need something done.

Maybe I’m missing something but if the only thing keeping the existing business from functioning is that your dad wants 120k a year why not just give it to him and keep the business yourself. I assume he was already collecting a salary and that the business is profitable enough to absorb 120k a year to keep him on “payroll” and the business going.
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It's a valid point. And something that concerns me. But I think its more removing some of the less profitable customers entirely. Saying some of these jobs are easy is a stretch. They're not easy, but having done it enough I've got it down. I've had to go in after someone else was awarded the job and fix or do it right because an engineer failed their repair. I think I'm in a position with my customer base where they're not looking for alternative bids having been screwed over by others so many times previously.

As far as the building goes. It would cost me 170k a year as the 120 figure was after taxes. Not an insignificant sum for an 8 employee business. At least not to me. We probably outgrew the space we're in at current rate, but the whole building wouldn't solve my issue as the other half is walled off, half office space I don't need, and would be really difficult to make overhead cranes work.
 
I was in the Army for 20 years, and then co-founded a business for 15 years ago. So I have seen both sides of the coin. Have hired hundreds of employees and independent contractors over the years, many of whom expressed an intention to start a business but never did. Have also dealt with dozens of partners who actually did start a business.

It all comes down to comfort with risk and responsibility.

Not everyone is comfortable with risk. Everyone would be a war hero, except for the part about maybe getting killed. Everyone would be a business owner if you didn't have to worry about failing and losing everything. I find that is mostly self-selecting. Those uncomfortable with risk find reasons not to jump.

Responsibility is the other hard part of running your own business. Everything comes down to you. Every decision, every mistake, every oversight. Nobody to hand things off to when you need a break. Nobody but you to figure out things you don't have experience with, like insurance, accounting, etc etc. A lot of people can't deal with the relentless pressure of that over the years.

Sounds like you know your market and have a good template for your business, so the jump is not as hard for you. Only you can answer whether you would be more happy and comfortable flying without a net, or working in an organization that provides some structure and safety to limit risk and scope of your responsibility.
 
Well @Racerx, I had the epiphany yesterday and have started the search for a new role. I looked at the work I’m supposed to do…analyze business problems and find solutions…has become blasé at my company and nobody’s interested in figuring out how to best use my skills.

Time for me to do something different, hopefully with my same employer. We’ll see.
 
Racerx: This might not be your bag on welding, but the gentleman that Steve spends the day with, has some very interesting tidbits about operating his welding business. Especially about business costs and the decisions on taking on work vs the cost to do the work. Worth the hour or so to watch.

 
If your Dad wants to realize profits (provided the transaction is profitable) and get out, why not. It sounds like he is approaching retirement age and really just one accident will change the future and you may or may not be able to offload that property later (it sounds like this buyer is offering a premium for your property?). From what I’m reading, your job sounds like a lot of hard labor work. Hiring talent to do hard labor is becoming increasingly difficult too.

You mention it’s easy money but then you are basically saying it’s too expensive for you to invest in a newer bigger building which you need. 18k for a 6 day job is not a lot when you have overhead. A senior management team member should be earning more revenue than that when involved in the job. Even a newly minted CPA would earn more than that sitting at a desk. You need to know your numbers.

Being a business owner is profitable, if you know your industry and are charging the right prices, shouldn’t matter if you didn’t have business for a couple months. You have to be charging the right prices. A lot of business owners just charge prices so they have enough for bills and their salary, but you need to be compensated for the added risks of being a business owner and thus inflating your nest egg for your retirement. This could be why you are mentioning to getting rid of the less profitable clients, you might be feeling a pinch due to pricing issues. You can start to increase those rates on the lower end but filling up your schedule and rejecting new business opportunities is also problematic.

Perhaps keep looking for space for your business and go from there but right now is quite expensive to buy, so you have to see if it makes sense. Interest rates are also high, you’ll either lose interest on cash or pay interest on a loan. Both cause a halt to new business growth. The economy is slowing down too, are you prepared?
 
mandm said:
If your Dad wants to realize profits (provided the transaction is profitable) and get out, why not. It sounds like he is approaching retirement age and really just one accident will change the future and you may or may not be able to offload that property later (it sounds like this buyer is offering a premium for your property?). From what I’m reading, your job sounds like a lot of hard labor work. Hiring talent to do hard labor is becoming increasingly difficult too.

You mention it’s easy money but then you are basically saying it’s too expensive for you to invest in a newer bigger building which you need. 18k for a 6 day job is not a lot when you have overhead. A senior management team member should be earning more revenue than that when involved in the job. Even a newly minted CPA would earn more than that sitting at a desk. You need to know your numbers.

Being a business owner is profitable, if you know your industry and are charging the right prices, shouldn’t matter if you didn’t have business for a couple months. You have to be charging the right prices. A lot of business owners just charge prices so they have enough for bills and their salary, but you need to be compensated for the added risks of being a business owner and thus inflating your nest egg for your retirement. This could be why you are mentioning to getting rid of the less profitable clients, you might be feeling a pinch due to pricing issues. You can start to increase those rates on the lower end but filling up your schedule and rejecting new business opportunities is also problematic.

Perhaps keep looking for space for your business and go from there but right now is quite expensive to buy, so you have to see if it makes sense. Interest rates are also high, you’ll either lose interest on cash or pay interest on a loan. Both cause a halt to new business growth. The economy is slowing down too, are you prepared?
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He owns the 2 suite property. No interest in selling. Current tenant of the other suite wants to lease out the whole building, complete with bridge cranes. Theyre not looking to buy. Just sign a long term lease. We had originally looked into building another building in the back lot. But not having city sewer/ water available means putting in a massive leach field. And the sprinkler system complete with backup was 175k alone. Add in a large detention area and the space became almost unworkable to build what we wanted. And then 2.4 million for a 10k sq foot building on property already owned....and that's if IDOT wouldn't require a deceleration lane. Which seems pretty likely and would add a good chunk to the cost. Especially with interest rates where they're at. It's not that it's only too expensive. But building where we're at and having to build a detention and leach field almost completely eliminates any yard space we'd have. It would make getting a semi truck around to unload steel all but impossible. Like airplane avionics, building a new building is apparently cheaper if someone else already built it. But finding a 10k sq ft building with 400 amp 3ph service AND 18-20' clear span already standing is all but impossible.

Unfortunately I'm not a newly minded CPA. Frankly if I was, I'd have an itch on the back of my head only a gun barrel would scratch. I do however know my industry and where my bids need to be at to get jobs AND be profitable. Do I get every job? Absolutely not. Do I think we could be more selective and decline some work? Absolutely. We get a lot of repair jobs that we have to quote. Sometimes you just don't know what you're digging into until you dive in. Sometimes a frozen cylinder on a municipal truck is easy. Sometimes it turns into an absolute cluster. I wouldn't call this hard labor. I've learned what equipment and tricks that make jobs "easy". Is it hard to find a skilled fabricator? Or any skilled labor? Absolutely. There's a lot of geometry and math that goes into fabrication. And then all the tricks to use some of the tools to make things work without making a birdsmouth an 1/8" too deep and ruining a piece of stainless pipe is sometimes sorcery.
 
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I don’t think I’d shut down your business for a lease. There’s no guarantees that they would pay or be in business during the next downturn. Plus, it’s frankly a lot of work to be dealing with this headache and to move shops especially when it is a large space.

I’d say pass on this tenant.
 
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