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From idea to replacing full-time salary in 4 months

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Re: From idea to replacing full-time salary in 4 months

#111

Post by robomartin »

When someone suggests a business idea like this one I come back with this:

"It's a great business idea. It will provide you with the freedom to choose which 20 hours of the day you want to work, including weekends."

Here's the reality: He gets huge points for going out and "getting into the game". Who knows? This might be what he loves and ends-up thriving despite the hard work and long hours. There are lots of businesses like that. And, frankly, the fact that they don't scale matters not to a huge percentage of business owners.

The greatest thing about this is that you have a (presumably) young man learning about the realities of business. Succeed or fail, he will be better for it. And, should he choose to move on and do something else he'll be a million times better prepared to make the right decisions and do well. He will succeed, regardless of whether this first venture does or not.

Re: From idea to replacing full-time salary in 4 months

#112

Post by runjake »

"It's not scalable."

"He's going to burn out."

"Let's see what he has to say in a year."

Am I on HN?

It's interesting that what used to be a site full of risk-takers and entrepreneurs is tearing every little detail of this guy down.

The gentleman tells you it's a fly-by-the-seat-of-his-pants learning experiment. He doesn't need you to tell him every little detail he's getting wrong. He's learning by actually doing it.

Further, it seems a lot of commenters aren't actually reading his posts and comments -- a lot of the criticisms are already documented and addressed on his posts. Even edw519 (who I love).

I was drawn to HN because of the risk-loving hackers who dared, not the naysayers who only feed my internal risk-adverse naysaying thoughts.

Edit: Since I posted this comment, a large discussion around 1099s has bloomed, and I'm not referring to this excellent discussion. I'm specifically referring to the knee-jerk naysaying.

Re: From idea to replacing full-time salary in 4 months

#113

Post by mgkimsal »

ricardobeat wrote: post #88
mgkimsal wrote: post #60

Earlier quoted context omitted.

"in my pretty ideal world the workers should have enough of those skills, or the ability to subcontract them." They are subcontracting those skills out to the person who is marketing and getting them the jobs.

At a very high cost (100% over their pay).

In this particular case, probably. But that's an issue because the workers don't quite have a 'i run my own company' mentality (even if it's not a company).

I saw a comment here months ago that said something like "I treat myself as an independent contractor, I just sub out all the work like getting clients/projects, taxes, billing, collections, hr and management to other people (my company) so I can focus on development". I've liked that mentality, and try to get others to think that way. Even if you don't adopt it, it's an interesting perspective.

Re: From idea to replacing full-time salary in 4 months

#114

Post by septerr »

yeureka wrote: post #92

My mom started a cleaning business some time ago. I wanted to try Javascript and promote her business so I wrote a quote calculator that takes into account number of rooms, number of bathrooms, area size, etc... (shameless plug) If you understand portuguese have a go at: http://abelhinha.net/calculadora.html

Nice.

Re: From idea to replacing full-time salary in 4 months

#115

Post by ceejayoz »

runjake wrote: post #112

"It's not scalable." "He's going to burn out." "Let's see what he has to say in a year." Am I on HN? It's interesting that what used to be a site full of risk-takers and entrepreneurs is tearing every little detail of this guy down. The gentleman tells you it's a fly-by-the-seat-of-his-pants learning experiment. He doesn't need you to tell him every little detail he's getting wrong. He's learning by actually doing it…

Some risks are bigger obstacles than others. HN has always been valuable to me for legitimate, honest feedback, including negative feedback.

Re: From idea to replacing full-time salary in 4 months

#116

Post by personlurking »

neonkiwi wrote: post #56
edw519 wrote: post #53

This time next year on reddit: "From working my ass off 90 hours per week running a business that wouldn't scale to nice salary/benefits for 40 hours. I'm taking home the same net and I feel like I'm on vacation." I don't want to sound too snarky and I really admire OP's initiative and ability to make things happen, but this just doesn't smell right. It's easy to get excited by nice revenue in the beginning (as he sh…

It does seem to be generally true that running a business has a worse payout than a normal job, but in this case, the OP says he's spending seven hours a week on the maid business: http://www.reddit.com/r/Entrepreneur/comments/sblc6/from_an_...

Interesting because my ex-girlfriend basically did what the OP did and she worked like a crazy woman from 7AM to 8PM with no days off, dealing with her team, clients, etc.

Re: From idea to replacing full-time salary in 4 months

#117

Post by _sentient »

bhousel wrote: post #97
tptacek wrote: post #76

He's not withholding. Chances are good his workers aren't paying taxes either. According to the manual the IRS uses to train its worker classification auditors, the three most important factors are: Instructions to workers: Your worker is probably an employee if you require him or her to follow instructions on when, where, and how work is to be done. This is a very important factor. However, if you tell your electric…

You are correct that the maids are employees, but since he only just started this business, it seems like a very fixable problem to convert them to employees. I ran some numbers on a free paycheck calculator site (paycheckcity.com) and assuming the following: Washington DC, wage of $20/hr, 30 hrs/week, married (2 exemptions), the numbers come out to: Weekly Gross Pay $600.00 Federal Withholding $29.81 Social Security…

You're forgetting workers' comp, which can be very expensive for this particular type of business. I'm in the industry, and can tell you from experience that it can cost between 20 - 25% of a workers' gross pay. There goes his profit margin.

Re: From idea to replacing full-time salary in 4 months

#118

Post by Androsynth »

ricardobeat wrote: post #7

It's a nice personal achievement, but I can't help myself cringing at business models of this kind. It's plain old extraction of surplus-value, adding very little to the economy as a whole. The workers would be better off operating as a cooperative, I wish they had the education to know that from the outset, and the means to implement it.

It's plain old extraction of surplus-value, adding very little to the economy as a whole.

This guy took the risk of starting his own company and has literally created 8 jobs that did not previously exist in our economy. The 8 people that work for him are better off than they were before (otherwise they wouldn't be working for him).

However it sounds like the IRS will eventually come in and destroy those 8 jobs, all in the name of 'protecting the workers'.

Also, there are problems with coops. They tend to be inclusive, hoarding jobs for the few who get in. They tend to drive up prices for the work they do, destroying some amount of value across society as a whole. (basically the same problems as with unions).

This one man will be able to offer more jobs and provide better services to more customers than any coop could ever hope to provide. That is why he gets paid more than his workers.

Re: From idea to replacing full-time salary in 4 months

#119

Post by bhousel »

runjake wrote: post #112

"It's not scalable." "He's going to burn out." "Let's see what he has to say in a year." Am I on HN? It's interesting that what used to be a site full of risk-takers and entrepreneurs is tearing every little detail of this guy down. The gentleman tells you it's a fly-by-the-seat-of-his-pants learning experiment. He doesn't need you to tell him every little detail he's getting wrong. He's learning by actually doing it…

You have a point. I think many of the criticisms you'll read here are coming from people who have "been there, done that" with their own businesses.

The 1099 vs W2 issue is very real but (imo) totally fixable in a few days with a decent accountant and a meeting with your staff and some paperwork.

He was probably fine for FY2011 to pay his maids on a 1099 for work done between when he started the business in November 3 and the end of the year. (He even stated that doesn't still work with all of them, some really were just temporary staff that didn't work out and weren't trained).

He definitely needs to convert them to employees for FY2012, but it's only April and these are relatively small amounts of money. I'm pretty sure he's not trying to stick his workers with a huge tax bill in 2012. People who are suggesting that this is his "business model" are way off base.

The most interesting part of this story, which nobody is talking about, is how he is using his website to allow clients to pick and choose these Godaddy-style addons (cleaning refrigerator and closets and so on). It totally makes sense for service-oriented business like cleaning and lawn care.

He could probably follow the Godaddy model and operate the rest of his business at small margin and make the bulk of his money off those addons that other cleaning businesses haven't yet thought to offer.

Re: From idea to replacing full-time salary in 4 months

#120

Post by enjo »

edw519 wrote: post #53

This time next year on reddit: "From working my ass off 90 hours per week running a business that wouldn't scale to nice salary/benefits for 40 hours. I'm taking home the same net and I feel like I'm on vacation." I don't want to sound too snarky and I really admire OP's initiative and ability to make things happen, but this just doesn't smell right. It's easy to get excited by nice revenue in the beginning (as he sh…

I think you are being a bit harsh on his ability so cale. Anecdote time:

I own a lead-generation business. We focus primarily on home services, and over the last couple of years I've gotten to see a lot of businesses on this guys scale operate. My favorite is an air-duct cleaning company that we work with out of Colorado Springs.

When they started working with us they were brand new. A single truck that was just trying to make ends meet. However, one of the owners is a natural on the phone. When we provide a phone call she closes that business something like 80% of the time. Over a two year period they've grown to 10 trucks, and 15 employees. They are providing service 7 days a week. They are turning a solid profit per truck, and the owners are really happy.

Yes it's a long ways away from being a billion dollar company, but that's not to say it never will be. They've cracked the sales cycle and their growth is only going to continue as the push out into more and more areas.

They won't be huge overnight, but over a 10-15 year period there is no reason to think that they won't grow into a hugely profitable business that makes their owners very rich.

It'll be hard work, and they have a lot of hurdles ahead (learning to manage a larger business) but that doesn't mean it's not rewarding or worth their time to try.

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