The Rise & Rise of the Celebrity Electrician

[Dustydazzler]

So in recent months I see Tom Nagy , Nick Bundy and now Artisan have all upgraded and got proper office space and storage units etc etc

I am pleased (yes genuinly) to see so many fellow traders to be kicking on and building up their business empires

My old boss in London started his business from a sh!tty old unit in Fulham in the late 60s and now runs an electrical contracting business employing about 45 full time staff (about 5 office and 40 sparks last time I spoke with them)

Keep it up lads

 

[Electrics]

I'd expect his vehicles are leased and can't comment on how profitible his business is, but it's clear that he's working to a plan.

Come to think of it; I saw one of his videos a few months back were he talked about using debt in order to expand.

That's what every successful business does.

 

[nicebutdim]

That's what every successful business does.

'Successful' is a relative term. It would certainly be usual for large businesses, if for no reason other than keeping their accountants' blood pressure in check.

 

[mattg4321]

For every business that is successful when using debt to expand there will also be those that end up going bust.

 

[nicebutdim]

For every business that is successful when using debt to expand there will also be those that end up going bust.

Especially when expanding quickly - high risk, with the possibility of high rewards.... or bankruptcy.

 

[UNG]

I'd expect his vehicles are leased and can't comment on how profitible his business is, but it's clear that he's working to a plan.

Come to think of it; I saw one of his videos a few months back were he talked about using debt in order to expand.

When debt is cheap it works but a sudden hike in interest rates and it can all too easily fall apart

The other issue is how over exposed to default the bank or lender feels they are in that situation and they could decide to call in the loan or loans

 

[nicebutdim]

When debt is cheap it works but a sudden hike in interest rates and it can all too easily fall apart

The other issue is how over exposed to default the bank or lender feels they are in that situation and they could decide to call in the loan or loans

I've seen a number of large local, family run businesses bought out and run, by what appear to be, accountants. In short order, old plant that was owned outright is sold off and replaced with leased equipment. Interest rates are less of an issue in such circumstances, but this model is dependant on constant turnover - a few quiet months and there isn't the cashflow to maintain everything. At least when goods are bought and paid for, there's a better chance of weathering periods of financial uncertainty.

 

[Electrics]

For every business that is successful when using debt to expand there will also be those that end up going bust.

Fact is all successful businesses leverage debt. Avoidance of debt is what those with zero business acumen practice.

It's the reason really rich people pay no tax while poor people complain about them paying no tax.

 

[UNG]

Fact is all successful businesses leverage debt. Avoidance of debt is what those with zero business acumen practice.

It's the reason really rich people pay no tax while poor people complain about them paying no tax.

ALL successful businesses don't neccessarily leverage debt. I know of a couple of businesses that operate without any debt because of the niche markets they operate in

 

[LukeD]

ALL successful businesses don't neccessarily leverage debt. I know of a couple of businesses that operate without any debt because of the niche markets they operate in

I follow that thought .I owe no one anything

 

[Electrics]

I follow that thought .I owe no one anything

If you run a business, the business is a legal entity and has nothing to do with 'you' legally speaking. If you run a company and owe tonnes of money your company owes it not you.

Fact is even paying suppliers at the end of the month is a form of debt because you don't pay straight away, you owe it.

 

[mattg4321]

A credit account paid off at the end of each month is stretching the limit of a company being in debt to the extreme.

Plenty of successful businesses don’t use debt, but most very large ones do admittedly. It’s horses for courses though.

 

[Gavin John Hyde]

I'd expect his vehicles are leased and can't comment on how profitible his business is, but it's clear that he's working to a plan.

Come to think of it; I saw one of his videos a few months back were he talked about using debt in order to expand.

Companies house says he has a decent amount of money in the business. that said micro accounts tell you next to nothing in real terms as I have nearly 20k in my company which counts as a liability to myself so reduces the overall picture...

 

[suffolkspark]

David's uploaded a 56 second gem this afternoon if any of you are bored

 

[nicebutdim]

David's uploaded a 56 second gem this afternoon if any of you are bored

@Julie. posted it in another thread - a quality installation.

 

[Electrics]

A credit account paid off at the end of each month is stretching the limit of a company being in debt to the extreme.

Plenty of successful businesses don’t use debt, but most very large ones do admittedly. It’s horses for courses though.

'being in debt' and 'leveraging debt' are not the same things.

Having a credit account and making your payments every month is debt. If you didn't build your company on debt it means you pay for everything outright and upfront which is why i said no successful company avoids debt completely.

 

[mattg4321]

Think you're splitting hairs to be honest mate

 

[UNG]

Companies house says he has a decent amount of money in the business. that said micro accounts tell you next to nothing in real terms as I have nearly 20k in my company which counts as a liability to myself so reduces the overall picture...

A decent accountant can make your accounts look as good or as bad as you want them to be

 

[Electrics]

Think you're splitting hairs to be honest mate

Nah, there's a pretty decent although subtle distinction between the two which like i said normal one man bands don't understand but those who are rich and successful most certainly do.

I am neither but i know an awful lot about how to set up a business properly, and let me tell you that buying vans outright so 'i owe nobody anything' shows a complete lack of knowledge about the subject.

Was just trying to educate a bit.

 

[nicebutdim]

Nah, there's a pretty decent although subtle distinction between the two which like i said normal one man bands don't understand but those who are rich and successful most certainly do.

I get the point you're making about leveraging debt, which is common amongst big businesses, but it's not the case that 'all successful businesses' do this.

 

[Electrics]

I get the point you're making about leveraging debt, which is common amongst big businesses, but it's not the case that 'all successful businesses' do this.

Depends how we define success i guess. If you pay everything up front all the time but have your van on HP you are using debt to fund your company. I don't see many people buying a £20k van outright because they 'don't like debt'. Mostly everyone of any decent sized business at least has their van on tick.

 

[pirate]

Always different ways of looking at this, and I think it depends a lot on the type of business too.
I ran my business as a debt-free concern, owing nothing to anyone.
When the crash of 2008 arrived, we lost 70% of our business for several years, and in fact it never fully recovered even after 5 years.
Many similar businesses made massive redundancies or went bust. We retained all of our staff, they took a small reduction in wages for a couple of years, but were glad to have a job. I, and my fellow business owners took no income for a few months, then gradually we did pay ourselves a little, but not every month, until things improved. Having no borrowings at all meant we survived intact, albeit our standard of living was somewhat reduced. The other similar businesses which ran on overdraft, with leased equipment and cars, suffered badly. Thus, I repeat, it depends on your business to some degree.
As for a business model, just because you have an entity does not always protect you from debt. We were certainly an "entity", but we were a "firm"...that is to say, a standard old-fashioned partnership, so the partners were personally liable for any debt.
Having a limited company "may" protect you, but only if you don't have any personal guarantees to the bank. Some banks will only lend with personal guarantees, especially if you are a small business.
Other business models are available...a good accountant is invaluable if you are contemplating a change.
Being debt-free helped enormously when we sold the business on retiral. The purchasers got a clean sheet, we got top dollar and the whole deal was done in a few weeks.
I know it is not always possible to be debt free, but I am simply saying that it is not always a daft way to run the show. No sleepless nights, no repossessions, just tightening the belt in difficult times. On the other hand, properly managed debt can be an ideal way to run and grow a business, especially in these days of minuscule interest rates.

 

[nicebutdim]

Depends how we define success i guess. If you pay everything up front all the time but have your van on HP you are using debt to fund your company. I don't see many people buying a £20k van outright because they 'don't like debt'. Mostly everyone of any decent sized business at least has their van on tick.

Indeed most companies now use finance for capital purchases or lease agreements for company vehicles, but there are, and will remain, a percentage of very successful companies who don't do so for a number of reasons.

 

[Electrics]

Always different ways of looking at this, and I think it depends a lot on the type of business too.
I ran my business as a debt-free concern, owing nothing to anyone.
When the crash of 2008 arrived, we lost 70% of our business for several years, and in fact it never fully recovered even after 5 years.
Many similar businesses made massive redundancies or went bust. We retained all of our staff, they took a small reduction in wages for a couple of years, but were glad to have a job. I, and my fellow business owners took no income for a few months, then gradually we did pay ourselves a little, but not every month, until things improved. Having no borrowings at all meant we survived intact, albeit our standard of living was somewhat reduced. The other similar businesses which ran on overdraft, with leased equipment and cars, suffered badly. Thus, I repeat, it depends on your business to some degree.
As for a business model, just because you have an entity does not always protect you from debt. We were certainly an "entity", but we were a "firm"...that is to say, a standard old-fashioned partnership, so the partners were personally liable for any debt.
Having a limited company "may" protect you, but only if you don't have any personal guarantees to the bank. Some banks will only lend with personal guarantees, especially if you are a small business.
Other business models are available...a good accountant is invaluable if you are contemplating a change.
Being debt-free helped enormously when we sold the business on retiral. The purchasers got a clean sheet, we got top dollar and the whole deal was done in a few weeks.
I know it is not always possible to be debt free, but I am simply saying that it is not always a daft way to run the show. No sleepless nights, no repossessions, just tightening the belt in difficult times. On the other hand, properly managed debt can be an ideal way to run and grow a business, especially in these days of minuscule interest rates.

Every single one of the richest people on earth use debt to their advantage. The mindset of don't use debt is one that has been taught to the lower classes. There's a reason Elon Musk etc have billions in net worth but can't pay small fines because they have no cash flow.

The problem isn't debt, the problem is that people don't know how to use it properly. This thread is a prime example.

Anyway the point is Nagy isn't a fool for chucking his repayments down the road - it's actually a very smart business decision.

 

[pirate]

I respect your right to your opinion on this, but I am a little concerned with your terminology of "the lower classes" as i feel this is an unnecessary discrimination/subdivision with no boundaries defined and possibly offensive to some. You have absolutely no idea of my "class" nor what my business was, nor my outlook on life. I have and never had, any vision of being super-rich, but I'm ok!
Thus, in my opinion, a debt - free business model is a perfectly viable option, it suits some, but not everyone. That's my point, and I hope you respect it, even if you dismiss it as a model for your own circumstances.

 

[mattg4321]

Indeed most companies now use finance for capital purchases or lease agreements for company vehicles, but there are, and will remain, a percentage of very successful companies who don't do so for a number of reasons.

Think you’re wasting your time trying to argue this point ??

I’m sure Amazon would have a new CFO if Jeff Bezos ever came across this thread!