We will lease (usually borrow from the bank but I've done both) hardware for
my end. Never for the customer end though. Other than my line of credit
that is.
Has it hurt our growth? Sure. We were already deep in debt though. I
already know what a loosing battle that can turn into and how fast it can
get there.
If you work really smart and have little or no bad luck, leasing can be a
good thing. So can owning the cpe. What are you gonna do when it's time to
forklift upgrade 500+ subs though? Or what are you gonna do with the guy
that comes in and offers $20 service against your $50 service? Especially
when that happens (as it most likely will) when you are just getting ready
to put new hardware out there. You know, the faster cheaper stuff.....
In another year and a half almost everything we have will be paid for. And
we'll have good loyal customers. And we'll be in a position to ward off all
but the most idiotic competitor's price wars.
Things are still more than tight here. We're still trying to kill off debt
that predates the wireless business. But it's all coming along. We're able
to cashflow larger and larger network upgrades. And we've been getting the
cc cards paid down (oh so slowly though). Another 24 months and it'll be a
bright new day here. With NO need to run out and borrow more money for the
next upgrades!
life is good
Marlon
(509) 982-2181 Equipment sales
(408) 907-6910 (Vonage) Consulting services
42846865 (icq) And I run my own wisp!
64.146.146.12 (net meeting)
www.odessaoffice.com/wireless
www.odessaoffice.com/marlon/cam
----- Original Message -----
From: "Tom DeReggi" <[EMAIL PROTECTED]>
To: "WISPA General List" <wireless@wispa.org>
Sent: Tuesday, October 17, 2006 3:59 PM
Subject: Re: [WISPA] Are you making money?
The problem with Leasing, is that you ahve to keep your clients longer
than your leases.
Historically, WISPs make logrithmic growth with each year having more
growth than the year before.
Usually the profit from old business (subs with paid off leases), rarely
covers costs of growth, as the growth in later years is so much grander.
Sure leasing helps growth and makes the books look good. But what happens
in your last year? The one where you potentially could loose all your
subs?
The year that you just had your largest growth, and largest amount of
dollars on Leases for reoccuring liabilities. Will your business then
last 3 more years to pay off those leases?
The problem with Finance, is it gives people a fake sense of success, and
while deferring payment, it allows upfront moneys to be spent more
wastefully because it is there to spend.
There is always a grand plan of how that money will be used to improve
business, but do things always work the way they are planned, and do you
ghet your money's worth? There is something to be said for the business
man that believes in old fasion values of a dollar earned and a dollar
that can be spent, apposed to spending tommorrows dollar today and
deferring todays liabilties to tommorrow. It order not to loose your butt
leasing, one must predict accurately the date of their end came, so they
know when the leases have to be paid off.
What if you aren't bought, as predicted at the end game? One of the things
I've learned is that when you are eating fat (money available), people get
lazy. When you are hungry and wondering how you are going to pay
tommorrow's bill, all a sudden their is an urgency to succeed that not
only is urgent but essential. Its amazing what a person can accomplish
when they are backed against the wall and have no choice but to do it. Its
amazing how much someone can save when they ahve a tight budget to conform
to, and they know when the money is gone the money is gone. Wether it
makes sense to lease is not the golden question. The golden question is,
how will you spend the money that becomes available because you leased.
That is what will seperate the winners from the loosers.
One of the most basic concepts there is in accounting is, its much more
beneficial to reduce your costs $100, than to make $100 more income,
because the $100 income have additional costs that grow with it. I think
leasing makes sense if you get good terms, and are short on cash flow, but
if you are not frugal in spending along the way, one is just deffering
their death by leasing.
Whats important is that the money spent, has something tangible and of
value (holds its value on a reoccuring basis). Things like high salaries
that are spent and gone, or technology greater than one's need in a
business with falling prices and rapid advancement, are monies spent that
have little value after the fact.
Disclaimer, this comment does not negate the importance to determine the
amount of capitol (cash) that will be needed and securing it before
progressing with a business plan.
Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message -----
From: "Rick Smith" <[EMAIL PROTECTED]>
To: "'WISPA General List'" <wireless@wispa.org>
Sent: Tuesday, October 17, 2006 3:48 PM
Subject: RE: [WISPA] Are you making money?
exactly the mistake my company made. Shoulda, woulda, coulda leased...
'cept in NJ, it's $125 contract labor, and $244 for installation (199
install / 45 first month), oh and no free towers, they're all (16 of
them)
$500 / month / each at LEAST....
No free lunch. So to answer the previous question #3, no you will not be
making tons of money - you will be eating your shirt :)
-----Original Message-----
From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On
Behalf Of Travis Johnson
Sent: Tuesday, October 17, 2006 3:24 PM
To: WISPA General List
Subject: Re: [WISPA] Are you making money?
Hi,
Although he has spent some time and efforts, many of his numbers are WAY
off:
$50 installs (contract labor)
customers paying $360 for installation
$40 per month ARPU (for a startup WISP is not realistic today with $15
DSL)
Just taking the installation numbers away completely changes this
sheet...
we are doing $99 installs and include a free Linksys wireless
firewall/router. So now instead of making $15 per install, he will be
losing
$246. So now after 2 years, the company is making $11,736 per month
profit
but still shows $42,000 in debt (from the first 2 years) and hasn't paid
anything back to the investors, banks, etc.
Now, if you use the same sheet, lease the CPE ($5/mo per customer) and
still
buy the Linksys router for $40, the company is making $18,800 per month
profit and has $98,000 in cash after 2 years. ;)
Travis
Microserv
Brian Rohrbacher wrote:
http://www.dslreports.com/forum/remark,17086669
I have not got to the spreadsheet, but the post was well worth the 5
minute read, and I'm looking forward to getting some numbers down on
the spreadsheet. I think this could help some of us.
Brian
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