I have a similar quote I read once that stuck with me. "If you're going to go into business, build a business, not a practice."
Randy Travis Johnson wrote: > 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" <c...@cticonnect.com> >> To: "WISPA General List" <wireless@wispa.org> >> 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" <c...@cticonnect.com> >>> To: "WISPA General List" <wireless@wispa.org> >>> 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: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] 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" <j...@saucer.midcoast.com> >>>>>> To: "WISPA General List" <wireless@wispa.org> >>>>>> 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: <rea...@muddyfrogwater.us> >>>>>>>> To: "WISPA General List" <wireless@wispa.org> >>>>>>>> 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" <c...@cticonnect.com> >>>>>>>>> To: "WISPA General List" <wireless@wispa.org> >>>>>>>>> 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! 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Join today! >>>>> http://signup.wispa.org/ >>>>> -------------------------------------------------------------------------------- >>>>> >>>>> WISPA Wireless List: wireless@wispa.org >>>>> >>>>> 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! 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