----- Original Message ----- From: "Charles Wu" <[email protected]> To: "WISPA General List" <[email protected]> Sent: Sunday, May 24, 2009 8:56 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
> Marlon, > >>Charles, your numbers are WAY off there. > > You can't base your numbers on the fact that you're willing to be on call > 24x7, work 12 hour days 7 days / week as a function of "normal business > operations" -- it simply isn't sustainable from a long term perspective Grin. Sure it is. That's what a LOT of small business people do. It's also kind of common for doctors, dentists, plumbers etc.... Sometimes is sucks, but remember that we can also give ourselves time off nearly anytime we really want it. I don't miss very many of the kid's baseball games, dance recitles, field trips or anything else. > > Eventually, your wife WILL leave you if you keep this up (on a side note, > one of the biggest reasons I've seen for small WISPs selling out is the > wife factor =) The reasons I've usually seen are that people get in this for a quick buck. When that doesn't happen they burn out/bail out. But that's no different than any other industry I see. And I've seen a lot, I've been doing office equipment repair work since about 1990 or 92. I've always tried to learn from my customers, what works, why etc. Not many bail on a company that's making good money, no matter how much time it's taking. > > If you were to replace yourself with normal employees that work 8-5 and > who make market wages, you'd probably discover that your labor costs will > go up $!0-15k / month (I would argue that you probably personally do the > work of 3 people in your company) Believe it or not, I do the work of less than one most of the time. It's been a bit more than that lately but only because I'm too cheap to hire help and can't afford to replace all the my POS Tranzeo AP's with MT units all at once. Once I get the network running nicer my service calls will drop off a lot. The difference at the sites that are already done has been nothing short of amazing. The rest of the time I'm screwing around with WISPA stuff or helping local orgs of some kind. I might put in a 40 to 60 hour week, but a lot of the time is non esential. Also, if I get too busy I bring a helper along on my installs. 2 guys can usually knock one out in about 1/3rd the time of one person. Not sure why it goes sooooo much faster, but it does. > >>By the time I hit 600 to 800 subs I'm gonna need some help. Hiring that >>person will suck big time because I won't have enough work for them right >>away. That move alone will likely cut my margin down to nearly nothing >>for >>a couple of years. > > After you factor in your time / opportunity cost / resources / overhead / > time spent training -- you will spend an additional 2x an employee's > salary during the first 6 months of employment trying to get them trained > up and productive -- and then, there's a good chance they just don't work > out =) Yeah, that's the part that really sucks. Every time we hire a new person the one that's there drops to half time production for x months. It's a hard thing. Saying your numbers were off wasn't quite fair of me. They COULD be right on the money if a person structured the company that way. But not everyone lives in a market that will allow tens of thousands of customers. Not everyone out there even wants to get that big (if I had a nickle for every business owner that's told me the most fun they had and the most money they made was when it was just them, no employees......) But then again, that's one of the really cool things about this buisness, it's big enough and flexible enough to allow many different business models and operator dreams to bear fuit! marlon > > -Charles > > > ----- Original Message ----- > From: "Charles Wu" <[email protected]> > To: "WISPA General List" <[email protected]> > Sent: Saturday, May 23, 2009 8:07 PM > Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital > Availability > > >> Hi Scott, >> >> Regarding debt...I've found that there's a "scale inflection point" in >> running a WISP (or any business for the matter) that needs to be >> reached -- the main purpose for taking on debt (because due to interest, >> you end up paying more in the longer term instead of buying cash), is to >> accelerate growth so one can progress beyond this point >> >> e.g., if you can organically fund 30 new installs a month with cash, if >> you take on debt, you could leverage yourself and now do 100 installs / >> month >> >> Now, from a business perspective -- in looking at the WISP >> >> As a stand-alone sustainable business -- it costs a minimum of about $30k >> / month to operate a small WISP -- now, I'll argue that that $30k/month >> in >> operations remains relatively constant and whether it's supporting 300, >> 800 or 1500 customers -- however, at 300 customers, the business is >> bleeding cash...at 800 customers the business is just about at a >> break-even, and at 1500 customers, the business is a cash machine >> >> -Charles >> >> -----Original Message----- >> From: [email protected] [mailto:[email protected]] On >> Behalf Of Scott Reed >> Sent: Saturday, May 23, 2009 4:20 PM >> To: WISPA General List >> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >> Availability >> >> So I will take option 4 from a previous post since Travis made the point. >> "Up to 60 months with $1 buyout is the same as a 5 year bank loan." >> I want to run debt free as soon a possible. That being the case I don't >> lease and have not leased to keep debt down. I do have a start-up loan >> that is being paid on a little slower than I would like, but we have >> paid off 1/2 of it in < 5 years and based on our payments, we are cash >> flow positive. >> Granted, my WISP is a lot smaller than many that post here and our >> growth rate is small, but some of that is managing growth to stay >> cash-flow positive. >> I have seen several companies die because they became cash rich, but >> still could not cover the debt. >> >> Travis Johnson wrote: >>> The banks can sell a car with little effort. They already have >>> relationships with dealers and auctions. And often, if the consumer's >>> credit is questionable, the dealer will guarantee to take the car back >>> if the loan defaults. >>> >>> Who is going to buy a $10,000 radio that has been repo'd? Even for >>> $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I >>> know is good and hasn't been fried or broken. >>> >>> The banks will never loan on the equipment alone. There is no security >>> there... but again, why do you need a bank loan for equipment when you >>> can just lease it and get the same results? Up to 60 months with $1 >>> buyout is the same as a 5 year bank loan. What's the difference? >>> >>> Travis >>> Microserv >>> >>> Tom DeReggi wrote: >>>> Maybe when talking about CPE. >>>> >>>> But what about when one is talking about a $10,000 Part101 radio? >>>> >>>> Just like a car, all that the lender should need is to "hold the title" >>>> of >>>> the radio until paid off, and get a down payment of $2000 to cover the >>>> cost >>>> of tower climber/repo man, and a signed letter of authorization from >>>> lanlord >>>> stating the location of the tower gear is installed on and they >>>> acknowledge >>>> that the gear is not abandoned equipment. (So it does not automatically >>>> become property of landlord in 4 months, and teh landlord knows the >>>> equipment owner has first rights to the gear). >>>> >>>> Think about it... Wouldn't repo costs be reduced when the repo man >>>> knows >>>> exactly where to find the radio? A car can easilly be relocated and >>>> hard-to-find, when the owner skips town. >>>> Plus the home likely has an owner with a shot gun or a big dog, which >>>> the >>>> tower/MTU likely does not. The MTU building might even have a security >>>> guard to escort teh lender safely to the roof :-) >>>> >>>> >>>> Tom DeReggi >>>> RapidDSL & Wireless, Inc >>>> IntAirNet- Fixed Wireless Broadband >>>> >>>> >>>> ----- Original Message ----- >>>> From: "jp" <[email protected]> >>>> To: "WISPA General List" <[email protected]> >>>> Sent: Friday, May 22, 2009 11:13 AM >>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >>>> Availability >>>> >>>> >>>> >>>>> In a worse case scenario, a car is probably considerably easier to >>>>> repo >>>>> than the antenna on my roof and radio in my attic. And the car would >>>>> be >>>>> worth a magnitude more money. The installed infrastructure is >>>>> worthless >>>>> if it costs a huge amount to get to it. >>>>> >>>>> On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: >>>>> >>>>>> I've never found a lender willing to lend against using the in-place >>>>>> used >>>>>> equipment as colladeral. >>>>>> It is the biggest double standard. >>>>>> I find it highly ironic that they'll use a car for colladeral that >>>>>> looses >>>>>> 50% of its value the day it leaves the lot, and has a rate of failure >>>>>> and >>>>>> risk of damage higher than just about any product on the market, and >>>>>> it >>>>>> has >>>>>> a huge cash burn (gas :-). but yet lendors won't put equivellent >>>>>> value >>>>>> on >>>>>> wireless gear, that holds its value, Ebay boasting easilly 50% after >>>>>> 3-4 >>>>>> years of use, even after fully depreciated. >>>>>> I'll never understand the lending market. >>>>>> >>>>>> Tom DeReggi >>>>>> RapidDSL & Wireless, Inc >>>>>> IntAirNet- Fixed Wireless Broadband >>>>>> >>>>>> >>>>>> ----- Original Message ----- >>>>>> From: <[email protected]> >>>>>> To: "WISPA General List" <[email protected]> >>>>>> Sent: Thursday, May 21, 2009 1:55 PM >>>>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >>>>>> Availability >>>>>> >>>>>> >>>>>> >>>>>>> Answers in-line. >>>>>>> >>>>>>> >>>>>>> ++++++++++++++++++++++++++++++++ >>>>>>> <insert witty tagline here> >>>>>>> >>>>>>> ----- Original Message ----- >>>>>>> From: "Charles Wu" <[email protected]> >>>>>>> To: "WISPA General List" <[email protected]> >>>>>>> Sent: Thursday, May 21, 2009 8:49 AM >>>>>>> Subject: [WISPA] Quesiton on Funding / Financing / Capital >>>>>>> Availability >>>>>>> >>>>>>> >>>>>>> >>>>>>>> With all the hype being generated by the stimulus bill, we have >>>>>>>> been >>>>>>>> approached by a multitude of third party financial organizations >>>>>>>> that >>>>>>>> have >>>>>>>> a renewed interest in potentially financing rural broadband...now, >>>>>>>> specifically, for WISPs, in the past, equipment leasing has been a >>>>>>>> very >>>>>>>> popular option for financing, but in looking at our numbers over >>>>>>>> the >>>>>>>> past >>>>>>>> year, I've noticed a marked decline in the amount of leasing that >>>>>>>> we >>>>>>>> do - >>>>>>>> that said, I have the following questions for the listserv about >>>>>>>> financing >>>>>>>> >>>>>>>> Assuming that WISPs are still need to buy equipment... >>>>>>>> >>>>>>>> 1. Are you able to just purchase equipment out of cash-flow >>>>>>>> organically >>>>>>>> generated from operations >>>>>>>> >>>>>>> Other than originally starting with our own personal seed money, >>>>>>> that's >>>>>>> what >>>>>>> we've done. >>>>>>> >>>>>>> >>>>>>>> 2. Have you gone to more traditional forms of money (e.g., bank / >>>>>>>> SBA >>>>>>>> / >>>>>>>> RUS loans)? >>>>>>>> >>>>>>> I could not qualify for any of them. >>>>>>> >>>>>>> >>>>>>>> 3. Are you doing more vendor leasing programs (e.g., Motorola 3% >>>>>>>> financing >>>>>>>> deal) >>>>>>>> >>>>>>> Never sought any. >>>>>>> >>>>>>> >>>>>>>> 4. Have you not been able to borrow money due to the credit crunch >>>>>>>> (e.g., >>>>>>>> not deploying as aggressively) >>>>>>>> >>>>>>> My corporation hasn't ever been able to obtain hard money credit. >>>>>>> In >>>>>>> fact, the "credit crunch" start last Fall raised my "30+ day past >>>>>>> due" >>>>>>> amount from a piddly $1200 to at one time to almost $13,000 in just >>>>>>> four >>>>>>> months. That almost put us under, and we're still barely scraping >>>>>>> by >>>>>>> until >>>>>>> our seasonally variable cash flow revives come August, with still >>>>>>> several >>>>>>> thousand on the books that's very slowly getting chipped away at. >>>>>>> >>>>>>> >>>>>>>> 5. Are you holding off on deployments because of the economy >>>>>>>> >>>>>>> No, we're holding off due to lack of cash flow. We have plenty of >>>>>>> people >>>>>>> waiting for us to build infrastructure out to them. >>>>>>> >>>>>>> >>>>>>>> 6. Have you gone to Agility...<cough> Louie the loanshark =) >>>>>>>> >>>>>>> After much discussion, being some of the first people Agility >>>>>>> contacted, >>>>>>> we >>>>>>> have not done any business with them. In my estimation, they >>>>>>> wanted >>>>>>> control over our business and day to day decisions, which we >>>>>>> concluded >>>>>>> was >>>>>>> both unwarranted and unwise. >>>>>>> >>>>>>> >>>>>>>> Or any other thoughts / comments on this topic? >>>>>>>> >>>>>>>> >>>>>>> WISP equipment is not really a "commodity" in that there is almost >>>>>>> no >>>>>>> market >>>>>>> for it outside of the "maker-vendor" relationship. Other than Ebay, >>>>>>> and a >>>>>>> couple of people who attempt to do it piecemeal, there is no >>>>>>> "market" >>>>>>> which >>>>>>> stabilizes the value of used equipment, making them a commodity you >>>>>>> can >>>>>>> borrow against. >>>>>>> >>>>>>> Perhaps it would be more useful, if vendors had the ability to get >>>>>>> capital >>>>>>> and create stable working and short term credit relationships with >>>>>>> their >>>>>>> buyers, kind of like the used car market. >>>>>>> >>>>>>> >>>>>>> >>>>>>> >>>>>>>> -Charles >>>>>>>> >>>>>>>> >>>>>>>> -------------------------------------------------------------------------------- >>>>>>>> WISPA Wants You! Join today! >>>>>>>> http://signup.wispa.org/ >>>>>>>> -------------------------------------------------------------------------------- >>>>>>>> >>>>>>>> WISPA Wireless List: [email protected] >>>>>>>> >>>>>>>> Subscribe/Unsubscribe: >>>>>>>> http://lists.wispa.org/mailman/listinfo/wireless >>>>>>>> >>>>>>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>>>>>> >>>>>>> -------------------------------------------------------------------------------- >>>>>>> WISPA Wants You! Join today! >>>>>>> http://signup.wispa.org/ >>>>>>> -------------------------------------------------------------------------------- >>>>>>> >>>>>>> WISPA Wireless List: [email protected] >>>>>>> >>>>>>> Subscribe/Unsubscribe: >>>>>>> http://lists.wispa.org/mailman/listinfo/wireless >>>>>>> >>>>>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>>>>> >>>>>> -------------------------------------------------------------------------------- >>>>>> WISPA Wants You! Join today! >>>>>> http://signup.wispa.org/ >>>>>> -------------------------------------------------------------------------------- >>>>>> >>>>>> WISPA Wireless List: [email protected] >>>>>> >>>>>> Subscribe/Unsubscribe: >>>>>> http://lists.wispa.org/mailman/listinfo/wireless >>>>>> >>>>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>>>> >>>>> -- >>>>> /* >>>>> Jason Philbrook | Midcoast Internet Solutions - Wireless and DSL >>>>> KB1IOJ | Broadband Internet Access, Dialup, and Hosting >>>>> http://f64.nu/ | for Midcoast Maine http://www.midcoast.com/ >>>>> */ >>>>> >>>>> >>>>> -------------------------------------------------------------------------------- >>>>> WISPA Wants You! Join today! >>>>> http://signup.wispa.org/ >>>>> -------------------------------------------------------------------------------- >>>>> >>>>> WISPA Wireless List: [email protected] >>>>> >>>>> Subscribe/Unsubscribe: >>>>> http://lists.wispa.org/mailman/listinfo/wireless >>>>> >>>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>>> >>>> >>>> >>>> >>>> -------------------------------------------------------------------------------- >>>> WISPA Wants You! Join today! >>>> http://signup.wispa.org/ >>>> -------------------------------------------------------------------------------- >>>> >>>> WISPA Wireless List: [email protected] >>>> >>>> Subscribe/Unsubscribe: >>>> http://lists.wispa.org/mailman/listinfo/wireless >>>> >>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>> >>>> >>> ------------------------------------------------------------------------ >>> >>> >>> >>> -------------------------------------------------------------------------------- >>> WISPA Wants You! Join today! >>> http://signup.wispa.org/ >>> -------------------------------------------------------------------------------- >>> >>> WISPA Wireless List: [email protected] >>> >>> Subscribe/Unsubscribe: >>> http://lists.wispa.org/mailman/listinfo/wireless >>> >>> Archives: http://lists.wispa.org/pipermail/wireless/ >>> ------------------------------------------------------------------------ >>> >>> >>> No virus found in this incoming message. >>> Checked by AVG - www.avg.com >>> Version: 8.5.339 / Virus Database: 270.12.36/2128 - Release Date: >>> 05/22/09 06:03:00 >>> >>> >> >> -- >> Scott Reed >> Sr. Systems Engineer >> GAB Midwest >> 1-800-363-1544 x4000 >> Cell: 260-273-7239 >> >> >> >> -------------------------------------------------------------------------------- >> WISPA Wants You! Join today! >> http://signup.wispa.org/ >> -------------------------------------------------------------------------------- >> >> WISPA Wireless List: [email protected] >> >> Subscribe/Unsubscribe: >> http://lists.wispa.org/mailman/listinfo/wireless >> >> Archives: http://lists.wispa.org/pipermail/wireless/ >> >> >> -------------------------------------------------------------------------------- >> WISPA Wants You! Join today! >> http://signup.wispa.org/ >> -------------------------------------------------------------------------------- >> >> WISPA Wireless List: [email protected] >> >> Subscribe/Unsubscribe: >> http://lists.wispa.org/mailman/listinfo/wireless >> >> Archives: http://lists.wispa.org/pipermail/wireless/ > > > > -------------------------------------------------------------------------------- > WISPA Wants You! Join today! > http://signup.wispa.org/ > -------------------------------------------------------------------------------- > > WISPA Wireless List: [email protected] > > Subscribe/Unsubscribe: > http://lists.wispa.org/mailman/listinfo/wireless > > Archives: http://lists.wispa.org/pipermail/wireless/ > > > -------------------------------------------------------------------------------- > WISPA Wants You! Join today! > http://signup.wispa.org/ > -------------------------------------------------------------------------------- > > WISPA Wireless List: [email protected] > > Subscribe/Unsubscribe: > http://lists.wispa.org/mailman/listinfo/wireless > > Archives: http://lists.wispa.org/pipermail/wireless/ -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: [email protected] Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
