Ah yes, the power if recurring revenue. A benefit of replicating your work with other humans and/or devices (I prefer the later). A better path to making money that trading your time for a direct wage. This is one of the reasons I got into this business. However, at the early stages, your are like a doctor or plumber - you're on call 24x7. In fact, even on Memorial Day, I've got a business customer to call right now! -RickG
On Mon, May 25, 2009 at 12:01 PM, Marlon K. Schafer <[email protected]> wrote: > In that respect you are correct. But I stand by my statement that many > successful business people work long hours and don't always take 2 days per > week off. Or they are always on some level of stand-by. > > You are very correct that our income is much more predictable and isn't > dependant upon us being there for the generation of every penny. > > Charles is making the point that people can't and shouldn't work without > employees. We shouldn't get ourselves into that spot that we're on call 24/7 > or working 12 and 14 hour days 6 days per week. My point is that no really > successful people work 8 to 5 Monday thru Friday. At least not in the > building stages of what they do. In that regard, big or small, we're no > different from many many other professionals. > > marlon > > ----- Original Message ----- > From: Travis Johnson > To: WISPA General List > Sent: Sunday, May 24, 2009 11:01 PM > Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability > > > Marlon, > > If you think the WISP business is similar to a doctor or dentist or plumber, > you are very mistaken. The best advice I have ever heard actually came from > the son of a very wealthy doctor in our area. He sold his son "find something > that isn't trading your time for money". I heard that about 10 years ago in a > meeting, and it has stuck with me forever. > > A doctor or dentist or plumber all trade their time for money. They bill per > hour (even if it's $5,000 per hour) or per job, but they are still trading > their time for money. The WISP business is nothing like this. It's actually a > very unique business compared to anything else out there. It has recurring > monthly income, yet the expenses are pretty much fixed. Other recurring > income businesses that are similar would be insurance... however, their > expenses vary from month to month depending on number of claims, size of > claims, etc. Right now, if I stopped all my growth, my expenses would be > exactly the same from month to month... and the income would remain the same > as well. > > Travis > Microserv > > Marlon K. Schafer wrote: > ----- 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! 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