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closing shop and working for competition

1/24/15       
Joe D. Member

Hello, I was wondering if anyone could give me some advice on my situation. Here it is; I have owned and operated a custom woodworking business for 21 years but recently closed my business. The main reason for the decision to close was the simple fact that being a one man operation had taken it's toll on me physically and mentally. Recently, I had a business acquaintance propose a scenario and I'm trying to wrap my head around it. He is proposing that I can work for him for hourly pay plus commission, he will provide a separate 1750 sq ft area of my own but I use my own tools, and any business I bring in would be referred to him. The positives are; he provides the heated and cooled shop covering all expenses, semi-steady work load,a helper, handles all business related issues provides materials, liability insurance,delivery, etc.(basically under his business umbrella) and remove the burden of running the business. The only negatives I can see is having to use my own tools and turning over any jobs that come my way over to him although he is taking on all the risk. My thinking is that I will be guaranteed a steady paycheck and still have a shop to work in after hours if needed. Am I a fool for not jumping all over this or am I possibly missing something? Sorry for the long question but any advice would be greatly appreciated. Thanks

1/24/15       #3: closing shop and working for compet ...
Tony Member

Joe, I also just closed a small shop and am looking for my next employment situation. It may be an alternate version of self-employment, but I would welcome working for a good company for a steady check. (I assume you'll be a regular employee with tax withholding, workers comp, unemployment insurance, etc. If this is a 1099 deal, that's a whole different thing.) Sounds like you may have the best of both worlds--some of the independence of self-employment, including commissions on work you continue to get; but the benefits of regular hours and pay and none of the headaches of shop and business ownership. My only other thought is about who decides how and when things get done, quality level, etc. I would presume your new employer will get to call those shots, so that may require some adjustments on your part.
Tony

1/24/15       #4: closing shop and working for compet ...
Joe D. Member

Hi Tony, thanks for your thoughts. Yes I have considered the fact that scheduling and quality will ultimately be my new employer's decision but I have known him for several years and his company has a great reputation for doing excellent work. His business is a little different than mine as he specializes in furniture restoration and refinishing where mine was new construction. Also, we became aquainted through mutual admiration of each other's work so I'm thinking that quality concerns wouldn't be an issue. I'm pretty sure I'm going to go through with it. I just wanted to get some other opinions because it's always great to get advice from guys like you that have been there and done that. Thanks again Tony for responding and good luck with your search for employment!

1/24/15       #5: closing shop and working for compet ...
mitchsuber

Website: http://subercustomshutters.com

Joe, you may have already thought this through with this in mind, but if this was me, I would consider how I would feel and react if there were a few unpleasant scenarios to occur. If there was to be a serious disagreement over something, or if your friend had to come at you as a boss, not a friend, how would that go? I would be absolutely sure that I could take orders from the guy, even if disagreeing, and still follow through with the work. If you can, great! It sure sounds like this could be a good opportunity for you. It is a tough world out there when running a business by yourself, good luck to you.

1/24/15       #6: closing shop and working for compet ...
Joe D. Member

Hi Mitch, yes I think that is the main reason for my hesitance in coming to a final decision. I feel that I handle constructive criticism well and am always open to advice on new and better ways to do things if that arises. At the end of the day, it is his business on the line and he is taking all of the risk. I guess I would have to put myself in his shoes and look at it from his point of view. I think as long as disagreements were handled in a diplomatic way, I can live with it. I'll have to hope for the best in that scenario and if it looks like I've traded one type of stress for another, I'll have to deal with it then. Thanks again for your thoughts. It is much appreciated.

1/24/15       #7: closing shop and working for compet ...
rich c.

Who will do the bidding? What happens if you underbid the work? Will he require a guaranteed profit? Who absorbs the loss? What would bother me is that this really seems like a type of partnership, more than employee situation. I went through a short miserable partnership deal, and it cost me a lot of money to get back out of it. He may be making a mistake putting you on an hourly wage, since he has no control of the profit if you make a mistake on bidding. I'd have a small business lawyer draw up an agreement. Also not sure you will repair from your burnout, doing the same work with a business partner looking over your shoulder. A nice guy will change pretty fast if you are late on a delivery and over budget. I'd guess your past clients will be surprised to see the price of their jobs go up, with you doing them.

1/25/15       #8: closing shop and working for compet ...
mitchsuber

Website: http://subercustomshutters.com

Well Joe, if you were to apply the Ben Franklin method and list the pros and cons, it seems like a go from here. Since you have already closed your business, that decision no longer applies. You will also now become employed by someone, and this guy knows your talents and strengths. Perhaps it will lessen some of the previous struggles. And as I see it, meeting the deadlines and quality expectations of your new employer will probably be somewhat equal to having met them for every customer that came along before. Rich makes some good points that need to be considered.
Also, I believe every new venture should be considered by asking two questions. 1. What if everything goes extremely well? 2. What if they don't? Have a plan and thought process for both, how to grow with the success and also a good exit strategy for when things go poorly.

1/25/15       #9: closing shop and working for compet ...
Joe D. Member

Thanks to all of you for taking the time to respond. Your advice and comments have really helped me in my decision making. I am going to consider all of your advice and make a decision. He want's to start this arrangement the first week of February so I need to let him know this week. Thanks again guys for all your help and I will keep you posted.

1/25/15       #10: closing shop and working for compet ...
Frank D. Jimenez  Member

Website: http://www.cabinetpro.com

Hey Joe,
I applaud anyone who figures out a way to support himself and his family in an economic environment that is difficult. I wouldn't worry about taking orders from your friend/boss, or doing things the way he wants things done - even if they are contrary to what you are accustomed to. Just consider him a "customer" who wants his cabinets built a particular way. How many times did you alter your construction methods to accommodate the wishes of a customer? This would not be any different. Your stress level would go down quite a bit with a paycheck coming in....and there's no monetary value you can put on that.

1/26/15       #11: closing shop and working for compet ...
David R Sochar Member

There is no sham in being a competent woodworker, but not being a business owner. In other words, just because you can successfully support yourself with your work doesn't mean you have to.

I would insure a clear and fair separation agreement be worked out. Just like a prenuptial, it will save a lot of trouble if it comes to that.

1/27/15       #12: closing shop and working for compet ...
John Canary

Joe: Hate to break it to you, but you never had a business! What you had was a job for 21 years. One is considered owning a business when they can walk away from it and it will run without them. Put it into perspective by reading "The E-Myth" or looking up Action Coaching. The deal does not sound too bad, but, will certainly hold some challenges. As far as using your own tools, what are they worth anyhow? Leads to your new employer, so what, let him sell the jobs and you do what you enjoy, that is woodworking! Best of luck. John

1/27/15       #13: closing shop and working for compet ...
Joe D. Member

Hi John, yes I know all too well and I couldn't agree more. I too read the E-myth and other books on the subject. It's one reason I finally threw in the towel. I think one of the quotes in the book went something like this; "working for yourself is the worst job in the world because your working for a lunatic". That always stuck with me. Obviously some people can make it work, but the older I get, the harder it is to for me to justify. Thanks for the opinion. It is appreciated!

1/29/15       #14: closing shop and working for compet ...
B.H. Davis  Member

Website: http://www.curvedmouldings.com

Joe,

All arrangements like this require close scrutiny of all the details. My first nreaction though is this is a total win/win situation for everyone involved.

BH Davis

1/30/15       #15: closing shop and working for compet ...
jerry

I was offered and accepted an hourly position working for what used to be my competition. It hasn't been without its headaches. There are constant issues with an incompetent designer/business manager, who would have been fired by most people long ago. On the plus side, I don't have to look for work, steady paycheck, 40 hours per week with the option to work more most weeks, and other than the designer, the other guys are great to work with. And filing your taxes is a breeze when you're no longer self employed.

1/30/15       #16: closing shop and working for compet ...
SmallShop

don't forget to discuss exit options should you feel you no longer like the situation.

If you enjoy the hands-on work more than you 'enjoy' the business side of it, then it could work out well. running a business can sap the enjoyment out of an activity, maybe this new situation will let you get back to what you actually love doing without all the hassle of running the game daily.


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