Thinking of Starting a New Business

Jnr202 on 16/12/2018 - 08:56
Last edited 16/12/2018 - 09:32 by 1 other user

Hi OzBargainers,

I'm thinking of starting my own business. I am currently a technician working for a company that services residential properties. They provide services to properties that are rentals through partnerships with real estate agents. As a technician, I service and install smoke alarms so that properties comply with the building codes and we offer a certificate of compliance to the landlords after works are completed.

I would be starting by myself and would not be able to take on rental rolls or anything like that. I was thinking of offering the same service but to owner/occupiers. I know a lot of people will say its a waste of money and that its easy to change a battery and push a button, but it's a little more than that. Many people do not realize that smoke alarms are quite often installed in the wrong locations by builders, properties don't have enough alarms, or alarms are no longer loud enough. There are many things to consider.

The company I work for provides an annual service for around $85 just to service, installing a 9v alarm to comply costs around $40 and then to replace a 240v alarm or install one requires a visit from our company electricians and I'm unsure of the costs then.

I'm only a technician so I can service alarms and install 9v where required. If I come across a 240v alarm that is faulty or out of date, I can finish my service of the property and inform the owner they would require a sparky to replace the alarm/s at a latter date. I would provide a certificate of compliance to properties to assist them in the event of fire to deal with their insurance companies. (They have been clamping down on payments for properties that burn down without proof of working smoke alarms).

So it's only early days, I know I'm probably missing a lot of info for you guys to make a judgement. Basically I would provide the same service for $55 and install alarms for $30, it could just be a one off service or I could do it annually.

My questions are, would you use a service like this? are the prices fair and reasonable?

Any ideas or advice would be great.

Education & Work

Comments

  • poboy on 16/12/2018 - 08:58
    +9

    Aren't these services primarily for body corporate? I suspect your average residential customer would just do it themselves, like they have for the last 20 years.

    • Jnr202 on 16/12/2018 - 09:12

      No. Nosy corporate look after building alarm systems, they are the sprinklers and common area alarms. Each apartment is responsible for their own smoke alarms. Your right, most people do it themselves. It's more a service for people who want peace of mind, the elderly or otherwise incapable of doing it themselves, or just for people who are unsure on positioning and type of alarms.

  • pjetson on 16/12/2018 - 09:02

    Would you be able to issue a certificate of compliance yourself? I'd assume that you'd need some kind of registration or something to be able to do that.

    • Jnr202 on 16/12/2018 - 09:15

      Yes, i would provide the certificate myself. The certificate would just outline what alarms are in the property, the ages of alarms, the locations and weather the property meets the building code. Basically proof of service in case of a fire.

      • pjetson on 16/12/2018 - 09:17

        Unless there's some legitimate basis behind the certificate, it might as well be written in crayon by a child. It's not proof of anything.

        • Jnr202 on 16/12/2018 - 09:22

          Not really. It's proof that a company that provides a service certifies that the property complied with smoke alarm legislation. If i was to not do the job correctly, liability would be on me. If done correctly, the information provided by the service is proof that all alarms and the property met code at time of service, thus satisfying the insurance company.

          • [Deactivated] on 16/12/2018 - 09:27
            +1

            @Jnr202:

            liability would be on me.

            Then make sure you have insurance

            • Jnr202 on 16/12/2018 - 09:29
              +1

              @[Deactivated]: Yea I'd be getting public liability and maybe even professional indemnity insurance.

          • pjetson on 16/12/2018 - 12:12
            +1

            @Jnr202: If that was how things work, I should be able to issue vehicle roadworthy certificates or Test and Tag certificates. Cool.

            • D C on 16/12/2018 - 16:59

              @pjetson:

              I should be able to issue

              Smoke alarms need to be installed by a sparky (hard-wired ones anyway), but AFAIK any yahoo can 'inspect' them.

              Sounds even easier than 'tag & test', you don't have to stand there printing out stickers and wrapping them around cables. Or even should up for the 'training' course.

              I think I'll start up a thermostat inspection service or something.

              • pjetson on 17/12/2018 - 15:08

                @D C:

                AFAIK any yahoo can 'inspect' them

                But can "any yahoo" issue a certificate of compliance? One that's worth anything, anyway.

                I think I'll start up a thermostat inspection service or something

                My grandkids are pretty good at colouring, so I think I can get them to come up with a pretty decent looking certificate for you to issue.

                • D C on 17/12/2018 - 15:26

                  @pjetson:

                  But can "any yahoo" issue a certificate of compliance?

                  Is there such a thing for inspections? Installation yeah, but after that?

                  I think I can get them to come up with a pretty decent looking certificate for you to issue.

                  Excellent. They'll be doing it for gratitude or the exposure of course (https://www.ozbargain.com.au/node/424871), start-ups like mine don't have any cash to spare. And they'll need to provide the paper & crayons.

            • Chandler on 17/12/2018 - 11:06

              @pjetson: I believe those two cases have existing regulations. Don't quote me, bud I'd say for Roadworthy you would need to be an Approved Inspection Station (link is for QLD)

              For Test & Tag I believe you need to be "deemed competent", which is a given if you have an electrical / restricted electrical license.

              • pjetson on 17/12/2018 - 15:10

                @Chandler: I think we're on the same page, Chandler. A "certificate" isn't much good without some kind of legal standing behind it.

  • Quantumcat on 16/12/2018 - 09:55
    +1

    Is there even any penalty for an owner occupier to not have their alarm in the right place? What money are they saving by having you check?

  • Jnr202 on 16/12/2018 - 09:59
    -1

    No, there's no penalty. If the house burns down the penalty would be losing everything and not getting insurance pay out.
    I think your looking at it from a savings point of view (of course,we are ozbargainers). Think of it as a piece of mind service, at the end of the day our homes are usually our biggest costs which houses our most important asset, our family.

    • [Deactivated] on 16/12/2018 - 11:17
      +1

      piece of mind

      Just in case you start a marketing campaign for your new business use the phrase peace of mind.

      • Jnr202 on 16/12/2018 - 11:20
        +2

        Haha yea. otherwise people will give me ma piece of their mind. Thanks.

    • BOGOF on 16/12/2018 - 14:01
      +1

      I don't believe that is correct. I assume OP is in Victoria?
      "Smoke alarms are compulsory and must be installed in every residential building".
      and
      " A fine can be imposed on an owner who fails to comply with the smoke alarm requirements of the Regulations".
      http://www.vba.vic.gov.au/consumers/smoke-alarms

      • HighAndDry on 17/12/2018 - 02:38

        Not a good sign for OP lol.

    • HighAndDry on 17/12/2018 - 02:39
      -1

      If the house burns down the penalty would be losing everything and not getting insurance pay out.

      Do you have a single recorded case of an insurance claim being denied solely due to smoke alarm noncompliance?

  • Gandalf the Thrifty on 16/12/2018 - 10:08

    In Qld any new/replacement alarms need to be mains connected with multiple alarms linked together. All properties will need be compliant sometime in 2020s.

    If your state follows that then not much your company could technically work on unless sub-contract electricians?

    • Jnr202 on 16/12/2018 - 10:11

      Yea Queensland is often the most strict in this area. I'm in Victoria where any property build after 1st August 1997 require 240v alarms, which I can service but not replace. If I get busy enough, subcontracting may be an option.

  • wordplay on 16/12/2018 - 10:10

    how long does it take to do a house alarm inspection and how many do you normally do in a day?

    • Jnr202 on 16/12/2018 - 10:13

      At the company I work for, each technician for which there are around 25, we each do roughly 15 to 18 jobs a day. Each service usually takes around 20 minutes

      • wordplay on 16/12/2018 - 10:26

        ok wow, must be close together or doing long days. I would not have thought you could fit many into a day to make it worthwhile. I think beating your current workplaces price by 35% is a great deal for the customers, provided that you can point them in the direction of cheap electricians if needed so that any potential savings are not blown by having to pay more for them than through your current employer. why are you not able to do rental properties?

        • Jnr202 on 16/12/2018 - 10:32

          Thanks. They are long days usually 7.30am till 5pm with unpaid breaks during the day. my sticking point at the moment is regarding a job that will require a sparky to attend after me. I guess my company does the same and charges for a standard service and then a sparky to attend on another visit. They are a big company and charge a lot more than a normal sparky would charge to replace alarms.

          I'm probably not able to do rental properties as i would start off working for myself part time. Rentals usually involve a contract between the agency and my company where they provide the properties, we provide the service and bill the agency who then add there share and bill the landlord. Its probably too much work for me to take on this early. I could start with a small agency that isn't already tied to the bigger smoke alarm service companies.

  • azur on 16/12/2018 - 12:06

    By way of comparison, the R/E agent arranges an annual smoke alarm inspection/service for our rental property and charges $99 to the landlord so your proposed charge of $55 is quite reasonable.

    • Jnr202 on 16/12/2018 - 12:48

      That's the aim, as I'm smaller, i can reduce the price but give the same level of service.

      • azur on 16/12/2018 - 15:47

        It's great to see that you are planning for your own business - very admirable!

        Some comments/queries for your consideration:

        1. Have you checked as to what the competition charges? Is price going to be your main differentiator? No point going too low as per the other comments you've received below.

        2. Have you thought about what you can offer customers in terms of service to differentiate yourself from the competition? ie. availability - w/e / after hours, smoke alarm range, partnering with electrician/s so you can provide referrals/recommendations to customers who don't have a sparky, etc.

        3. Can you target strata managers for work? This would allow you to offer your services on a w/e (at least whilst you are still at your f/t job & getting your self established) and you can get access to multiple residences at the same location which would cut down on your travel time/expenses.

        • Jnr202 on 16/12/2018 - 16:01

          Thanks!

          1. yes most of the competition charges around $99 for an annual service, not including installations. I dont want to go to low but i also want to be priced well that it makes it affordable for people who think they dont need it. Sparky partnership may come down the line as i get busier.
          2. Service from all the big companies is pretty similar, they all work to the same guidelines. Weekends will be my point of difference as i work during the week to start, after hours will also be an option that the big guys dont offer, usually last job is 5.30pm.
          3. Have slowly begun invoices/certificates etc.
          4. Not as yet, still trying to think of one that isnt taken..please feel free to make a few up.
            5.Admin will be pretty standard, paperwork to start, invoicing via email or face to face and all data kept on the computer.

          With the price ranges i have suggested,would you have this service performed at your property and feel comfortable paying that amount?

          • azur on 16/12/2018 - 16:39

            @Jnr202: We crossed over between edits!

            I think you're OK price-wise as long as it makes business sense.

            Service offering is a huge selling point for me - esp. availability after-hours and this would be for most people who work f/t as it's all about convenience.

            I just asked a couple of friends who all owner/occupiers and they would be interested in taking up your service offering. None of them knew that this was available though as they've always self-mantained their own smoke alarms. One couple asked whether your pricing schedule will allow for any reductions for larger homes (think mcmansions) with multiple smoke alarms ?

            • Jnr202 on 16/12/2018 - 16:42

              @azur: Nice work. Great to get early feedback. Yes the $55 is for a service of 1 alarm or 50(never seen more than 16). If they required many installations then I'm sure we could work out a discounted rate. I was thinking of doing a discount for seniors and stuff like that.

    • SlickMick on 17/12/2018 - 10:37

      do you pay that? We once got hit for a fee I think more than that - they had outsourced what they should have been doing as part of their property maintenance (shouldn't be paying extra for it!) and I think the monitoring company had replaced detectors.
      We told agent to undo it, give us our money back, and if they weren't going to look after the smoke detectors themselves we'd find another agent who would. They sold the business soon after and we never got our money back, then sacked the new agent and look after it ourselves now.

      No way I'm paying $99 or $55 to replace a battery and press a button.

    • Ken1977 on 17/12/2018 - 12:30

      You will find that in that $99 annual fee they will install any new 240v smoke alarms required if you don't have any. Good luck fitting that in your $55 fee.

  • Ocker on 16/12/2018 - 12:09

    Exactly what service(s) would you provide for $55.00, and does the $30.00 install price also include the actual detector?

    • Jnr202 on 16/12/2018 - 12:36

      Service would include property inspection, to make sure there are enough alarms and they are in the correct positions. Service of alarms, change batteries, clean, smoke test. $30 would include the smoke alarm, which are usually $15.

  • Ace Ventura on 16/12/2018 - 12:24
    +2

    How are you going to secure a customer base?
    Each new client pays you $30 per alarm, lets say average install is 10 alarms (I'm assuming that's above average, but going for best case) at $300, you see that client again one year later, for an additional $55

    To give us a pretty low revenue of $70k pa, you need 233 new customers in your books for the year, , that's pushing one new client per day if you work 5 days weeks.

    The following year, you will have 233 clients on your books, but they will only return $12,815 as the service is at a much lower return, if you can maintain your one a day new client ratio, you will now be turning over numbers in the 80k range, but that's on 100% client retention, which is unrealistic. I'd suggest 50% client retention may be achievable, but I'm spitballing.

    Maintaining the new customer growth will be much harder. Owner occupied housing will be a harder market than rentals as they do not have the ongoing scrutiny and requirements to maintain compliance. Although they should, in some states, maybe they do, and it's defiantly important, but there is no check system in place, the council isn't door knocking and checking everyone's systems, so the immediate NEED to comply isn't there. Perhaps the new home market would be more viable, but that market is likely established already and you would have high competition.

    As such it is a harder sell for yourself. Selling to the rental market is much simpler as you can approach agencies and you may secure multiple properties in one hit. However then you have the other companies to compete with, which likely tender for contracts and you would need to beat their already established quotes.

    Selling to owners means approaching the owners as individuals, which is not an easy task, door knocking would yield low responses. So we need to look at marketing, which obviously incurs substantial costs. You would need substantial market research to determine if you fit out revenue, vs your marketing costs, vs the marketing response rate, returns a viable strategy.

    Now once we account for hard costs, marketing, insurance, compliance, and tax, I would suggest our meager $70k first year revenue is not leaving much to pay your own wage.

    • Jnr202 on 16/12/2018 - 12:47

      Great response, thanks for taking the time to help me out.

      Client base would start very slowly, I would be still working at my current employment while trying to transition into purely running my business full time. Client base would basically start with letterbox drops, social media etc. I know it would start slow but that's fine. I would start in my surrounding suburbs and see how i go, then with social media hopefully adding jobs further out. Then I'd like to target rural areas such as Bendigo and Ballarat where i may then have a crack at the smaller real estate agents. The client would pay the $55 as the base first service then agree to pay $30 per alarm if they are required. Even doing 5 jobs a week to start off with is fine by me, i would likely be doing them on the weekend. Obviously as time goes on I'd like to have more than 5 jobs a week.

      There is no immediate need to comply, but i know from my job there are a lot of people out there who have no idea weather there alarms are in the correct location and working. Even new estates, alarms are positioned wrong and require additional alarms as building surveyors often overlook alarms. Owners is definitely a tougher market, but easier for a start up business. I don't have the resources of business development managers that are able to meet with real estate agents and negotiate contracts to service there rental roles which may go up to the 1000's. Would be great, maybe one day, but i see it as almost starting again as the company i work for once did, paper based work, minimal overheads, small staff number and small client base. Number wise most jobs would be just the $55, in my current role, i install approx 5 alarms a day.

      • [Deactivated] on 16/12/2018 - 13:06

        I would be still working at my current employment while trying to transition into purely running my business full time

        What does your current employer think of that idea?

        • Jnr202 on 16/12/2018 - 13:09

          What i do in my spare time should not affect them. I would in no way use any of their stock or products or information. I would only be using my experience gained from working there. In no way would my personal business get in the way with my current employment. If i was to get to busy for full time employment, i would leave.

          • [Deactivated] on 16/12/2018 - 13:11

            @Jnr202: Ok. Only asking as I need permission from my employer to work anywhere else or for myself.

      • Ace Ventura on 16/12/2018 - 13:07

        Also worth checking if you can operate such a business while employed with your current company.
        There may a covenant not to compete in your contract. Even if there isn't, they may make life difficult for you if you do. But other wise, extra cash is always handy. Can only try.

        • Jnr202 on 16/12/2018 - 13:17

          From memory, there's no suggesting that i can't unless I'm using there name and equipment to run a side business. I know a few other technicians that run cleaning business's on the side, one has since left as he got to busy to do both.

  • [Deactivated] on 16/12/2018 - 18:27

    I used to a run business visiting homes to repair computers, based on my experience doing that I would say you are not charging enough. If you are doing anything visiting peoples homes you don't want to be charging less than $125, unless of course you can line your jobs and work a particular area so you have minimial driving time, but it doesn't like you will be doing that.

    In WA smoke alarms are the domain of electricians and only an electrician can issue a certificate that a house is OK. Most people resent all these BS certificates they have to get and only get them because they are legally required to, people aren't going to get one if they don't have to and if it is a meaningless certificate. Seems weird you cant change out smoke detector, most of them have a base that is hard wired and then the detector fits onto that, I know they are not standard like light bulbs, but if you carried a few of the major brands then you could swap them over without getting an electrician in. I also don't think people are going to bother getting someone in when they might have to get a sparky in if there is a problem, they would probably just go straight to the sparky.

    I don't really see this would be succesful unless it became law that the certificate was a legal requirement, in which case you could be quite succesful.

    I really don't imagine your current employer would be OK with this, and you should run it by them first, lest they find out and decide to fire you.

    • Jnr202 on 16/12/2018 - 18:34

      Yea generally the clump the jobs close together to save on travel time but its not always the case. You are required to change the whole alarm, base and head as they are only meant for 10 years, changing the head to make it last another 10 years is a little dodgy. This service is good for people who don't want to spend $250 for a sparky to come out when its not needed, it may well be, but most properties will just require a service.

      Success is based on weather i can get enough clients that care for their home and safety to get it done, because they want it done, not because they have to.

      How long did you spend at each job though?

    • Zachary on 17/12/2018 - 21:03

      $125 an hr? Damn Didn't know techs earn this much…

      • AncientWisdom on 18/12/2018 - 01:55

        Probably $125 a visit, but could be wrong

        • Zachary on 19/12/2018 - 05:16

          oh, so $125 minimum call out fee then? And so they don't necessarily need to charge that amount per hour? Who would even bother with you if you call out others and they have less of a callout fee or no callout fee?!

          • AncientWisdom on 21/12/2018 - 04:16

            @Zachary: That's the tricky bit, how to average $125 a visit without a minimum call out fee etc. I think people running their own businesses are in a different situation than say bigger companies that have technicians working for them for a wage but that is the nature of the competition.

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