Anyone started their own automation company?

[Control-Freq]

I have been thinking of starting up an automation company recently. I would like to hear from anyone who has already stepped out on this particular limb.

[dracula]

1. Plan: Write a simple business plan with all of you costs including all needed salary for yourself, and definately all of the insurance (no insurance means you won't even be looked at by the folks that really pay for controls).

2. Put a year's worth of working capital into the bank (do it on a shoe string, and you most likely will crash and burn, badly).

3. Sell, Sell, Sell, Perform, Perform, Perform. No sales = no chance to perform. Many a great technician fails because they just don't get this single most important factor. Once you have sales down, always perform beyond customers expectations. It brings them back for more every time.
And sell every day, regardless of how damn busy you get, it makes all of the difference between success and failure.

Sounds simple: best and most profitable controls business owners I have worked with have had very common qualitys and they are listed right up there.

The most profitable clients that use DDC controls and like to use smaller more customer oriented service providers, take a bit of time to pay their bills (like 60 to 90 days), but the margins are excellent. If you do not have the staying power, or the working capital (green cash money in the bank) to hold you over, keep your day job.

In the beginning expect to work 7/24/365 until you sock away some of the profit, and build up a backlog of maintenance contracts. DO NOT CHASE THE LOW BID CIRCUIT, you will just be making others rich. DO NOT BITE ON THE "GIVE ME A LOW PRICE NOW, AND I'LL GIVE YOU THE NEXT JOB AT A BIG PROFIT" LINE OF BS, IT HAS TANKED MANY A CONTRACTOR.

I speak from experience. 1st business I made all of the mistakes, and lost everything. Second time, I used all of those expensive lessons and made a bunch of money and had alot of fun. I am now onto my third business, and the rest of the story is just unfolding.

Do not be afraid to try. It is better to have tried to do something with your life, rather than just be a paycheck stub collector.

Oh, and by the way, you had better be one of the best at the controls industry, it isn't for hackers or wantabees, it is technically challenging and getting more so every day. It helps to be an expert in HVAC and electrical systems, or all the controls capabilities and fancy graphics won't help you make a name for yourself.

Anyway, just my two bits for you to process. Hope you are single with no kids, that helps when you are waiting to get paid.

[sysint]

I think you need a team. Sales, engineering (programming/graphics), and installation/startup. You should have enough cash to go a year with those three positions. Otherwise, I'd forget about it.

[steves4]

Here are a couple of ideas that may help.
1) Be very serious about the business plan but also treat it like a living and evolving document. What looks good on paper does not always reflect reality. You need to have a target and goals and the business plan helps you to set your sights on these. After actually running your business for a reasonable time you may need to adjust the business plan to reflect the realities of your market and incorporate your lessons learned. Set a regular schedule for reviewing the business plan and possibly adjusting your directions.
2) Don't be afraid to try new directions or approaches. More importantly, don't be afraid to admit to yourself what works and what doesn't. This allows you to make small mid course corrections instead of waiting until it is too late to recover. Learn from others experiences as well as your own.
3) Financial management is just as important as delivering the technical skills and services to your customer. Stay on top of this part of your business so there are no surprises. If you keep this part of the business in order it gives you more time to take care of your customers.

[Control Man]

All the above info is very informative and truthful, here is a bit of advice to go along with it.

Do not put all your EGGs in 1 BASKET so to speak. Its great to align yourself with 1 big customer , but that can also be your down fall. Its the small in / out get the $ jobs that keep you going the big projects with the forever HOLD BACKS can put you under when you 1st startup.

Have seen others startup and do great until that MAIN customer either drops them , does not pay or decides to go into controls on their own, easy to lose 75% of their income in 1 swoop and thats hard to survive.

Make sure you have direct access to the products you need not through a friend or contact , too easy to be shutout on certain well paying jobs.

And regardless of how many of you current customers ( through your employer ) who tell you " If your ever on your own count on us to get you to do the work " do not count on 90% of them the day after you hang out your OPEN sign.

[smokeout]

oops, wrong thread. Please delete.

[innocon]

I did it 10 years ago, and have hit all the pitfalls mentioned in this thread. You guys are spot on regarding everything.

• You do need to go into it with a mountain of cash, because you won't get any bank on earth to lend you any money for 3 years. A year's worth of expenses is a minimum.
• It definitely helps to go into it with some contracts in hand. I was fortunate to leave a sales job to start my own business, which was related to serviceing the products that I was selling. My last day on the job, I wrote my new company $250K in purchase orders. Having a wife at the time 8 mos. pregnant, that gave me tremendous peace of mind.
• Because I set my company up to service the products I was previously selling, I started off with only one customer. It stayed that way for 5 years, and then that relationship went into the toilet. The next 2 years just about killed me, but I was able to re-invent my company, and now our sales are diversified across about 20 customers.
• Watch the expenses, particularly in the first couple of years. I can't tell you how many companies I have seen in the last 10 years that started out with a new 3500SF office, fancy new fleet of lease trucks, latest laptops and computers, great looking uniforms, state-of-the-art telephone systems, and no sales. These guys are no longer with us.

One last personal note - If you are leaving your current employment because there are parts of it you don't like, don't do it. At some point or another as a company owner, you have to do EVERY job, and you HAVE to do it. No boss is a big lure for people to start a business, but your customers are like having 20 of the most irritating bosses you will ever have.

If I havn't scared you off (and I really do not intend to, I am just being honest), then good luck to you.

[jogas]

After 29 years in the HVAC trade, and 14 of those years working for a controls contractor, I do not see how any one man can perform all the roles required to successfully create, grow, and maintain a controls company.
I think you need to assemble a team of trustworthy, passionate, self-motivated individuals who can fulfill ALL of the roles required without being babysat.
You can get away with multiple-role individuals on the team, but to ask one person to do it all seems impossible to me.
Remember: No Quotes = No Sales.
jogas

[dracula]

Many a small contractor starts this way until more work comes in. Yes one person may not be as good at each one of these tasks, but it is a good way for a new business contractor to start to learn.

In a perfect startup plan, bringing the whole team would result in a very good takeoff, but the risk of cash flow shortages could be substiantial until enough projects are under way.

Once you have learned controls, engineering, programming, installation, troubleshooting, etc., it is completely possible to learn the other jobs.

Sales is a well documented and trainable skill as are business management and the other G&A skills.

I actually incourage a newbee contractor to stay involved in all of these activities as the business grows.

But as the business does grow, do not fall into the trap of micro managing your team members efforts, or your business will suffer.

[jogas]

Many a small contractor starts this way until more work comes in. Yes one person may not be as good at each one of these tasks, but it is a good way for a new business contractor to start to learn.

In a perfect startup plan, bringing the whole team would result in a very good takeoff, but the risk of cash flow shortages could be substiantial until enough projects are under way.

Once you have learned controls, engineering, programming, installation, troubleshooting, etc., it is completely possible to learn the other jobs.

Sales is a well documented and trainable skill as are business management and the other G&A skills.

I actually incourage a newbee contractor to stay involved in all of these activities as the business grows.

But as the business does grow, do not fall into the trap of micro managing your team members efforts, or your business will suffer.

I agree that it is possible.....but highly improbable in the present economy. Money is not growing on trees right now. It's a dog-eat-dog trade where the lowest bidder either missed something or found a spec loophole.
We see it every day when we are asked to straighten out screwed up buildings that never functioned properly since handed over to the customer.
There just isn't enough time in the day to compete against a fully staffed shop that is allowing each team position to grow/improve their specific skill set, all at the same time....verses one person running around trying to do everything.
I'd pick a better time/economy, unless I already had a confirmed customer base that I could count on to begin with.
In my position, I see both sides of my company, office and field. Both traditionally think the other has it made. The truth is, both office and field bust their *ss every day to keep the machine (company) going.
My 2 cents,
jogas

[howard melvin]

A lot of what has been posted you can read in a business startup book. You certainly don't want to have a company that tries to imitate the larger co's. I think one person can have a control company, but it has to fill a niche. You willl probably have to create one, I've always thought this was doable. I've worked for the large and smaller controls companies in the Philly market. Another suggestion straight from the Startup Books is to market yourself and create the biggest network of people you can. This industry is huge, there has to be some money out there to be made by a one man band. Not an easy road to travel. Do you enjoy cold calling? There are a lot of different ideas to finding this work, I've been brainstorming this for a while.

[jogas]

A lot of what has been posted you can read in a business startup book. You certainly don't want to have a company that tries to imitate the larger co's. I think one person can have a control company, but it has to fill a niche. You willl probably have to create one, I've always thought this was doable. I've worked for the large and smaller controls companies in the Philly market. Another suggestion straight from the Startup Books is to market yourself and create the biggest network of people you can. This industry is huge, there has to be some money out there to be made by a one man band. Not an easy road to travel. Do you enjoy cold calling? There are a lot of different ideas to finding this work, I've been brainstorming this for a while.

Good comments.
Here's more of mine:
-While the one person (shop) is out cold-calling, with a 20% chance of a
second customer contact, nothing else in the company is getting
accomplished.
- Fulfilling a niche not provided in the companies present market is key.
- Finding and becoming proficient in that niche would be advantageous
BEFORE starting the company.
- Reputation opens door, and builds a loyal customer base that the weekly payroll can count on.
jogas

[innocon]

- Finding and becoming proficient in that niche would be advantageous
BEFORE starting the company.

jogas

This is how I started my company - providing installation, engineering, and startup services for the company for which I was previously selling product. I highly recommend having a few birds in hand before cutting it off with your current employer. Many guys right now are going freelance doing Niagara work for Trane, JCI, and Honeywell. That is another example of finding and becoming proficient in a niche. Regardless, if you start with nothing, you won't cash any checks for 12 to 18 months.

As far as one guy doing it all, it isn't like you are going to start with $2M in construction and you have 10 years worth of projects for a service base (unless you are really, really lucky!). When you first start off, work will be slim, so it is quite possible to sell, engineer, project manage, administer the company, do the payroll, and swab the toilet. As the business grows, you will start to figure out which of these aspects are for you and which ones you should hire people to do for you. Then, the business will grow.

[absolutefrigid]

Dracula- What was/is businesses you were in? What were some of the mistakes that you made and how did you apply them toward your 2nd business? Why are you in your 3rd business?

[Old Gasser]

Do you mean developing your own product or becoming a rep for an existing product line?