new business venture
 

There’s a new business venture my uncle offered my dad and I and wanted to get some input if you guys wouldn’t mind. In detail he works for a guy that owns this contract with the post office. There’s a new contract coming up in (South or North Carolina, I forgot which one) in which he could bid on and get it. The thing is they pay you a monthly amount and from that amount I/We would have to pay for 6-8 box trucks (guessing there from 50-75K), place to keep them, Maint. On them, pay about 4-6 drivers, insurance (which would prob need at least a 10 million dollar policy) which I have no idea how much that would be a month. To me it’s a pretty big risk but from the numbers I’ve been putting together (which might not even be close) it seems worth it. Do you guys (who have any business experience) think those numbers are even close, I’ve just been putting together stuff in my head and looking around on the internet for prices and such
Box trucks – 20k
Rental property -10k
Fuel and maint.-30k
Drivers- 20k
Insurance -20k
Total-100k a month

Unless you'd be bidding against the guy your uncle works for, why not ask him for the numbers that are actuals for his business? Adjust for regional differences and start with that.

honestly know way to know if these numbers are accurate or not. Way too many variables. Box trucks depends on sizes, drivers depend on unions and local labour market, Insurance depends on the partners backgrounds, rental property depends on location (so does insurance), fuel and maint. depends on in-house vs. out sourced and routes etc.

If you have no business experience I wouldn't recommend it. A business with $1.2m in expenses/year is not easy to run.

agreed. this would be the most accurate information you could get.

x2. if you're going to start up a business then you need exact numbers not ballparks, and this is even more true when you have to make a bid for the contract. making a bid for a contract is typically for a company that is already in business with everything in order. it would be EXTREMELY difficult to start from scratch. first you would have to make the bid, and then assuming it is accepted, you would then have to do EVERYTHING. purchase equipment, materials, rent the building, hire employees, consult lawyers, draft legal documents, develop logistics, etc.

it seems to me like you don't quite know what you're getting yourself into. best advice would be to talk to your father & uncle and figure out what you can do to acquire the business your uncle works for, and if you can keep the current owner around as a partner or partial owner of the company so that he can help guide you and transition the ownership of the company and show you guys the ropes.

Get his books and his IRS returns to see if they numbers add up for the last 3 years. See what his net is after expenses. The delivery business is competitive or else USPS would not be contracting it out after years of mismanaging while companies like UPS and Fedex are making big profits.