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 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 =) 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) >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 =) -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! 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/ >>>>>>> >>>>>> -------------------------------------------------------------------------------- >>>>>> WISPA Wants You! 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/ >>>>>> >>>>> -------------------------------------------------------------------------------- >>>>> WISPA Wants You! 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/ >>>>> >>>> -- >>>> /* >>>> Jason Philbrook | Midcoast Internet Solutions - Wireless and DSL >>>> KB1IOJ | Broadband Internet Access, Dialup, and Hosting >>>> http://f64.nu/ | for Midcoast Maine http://www.midcoast.com/ >>>> */ >>>> >>>> >>>> -------------------------------------------------------------------------------- >>>> WISPA Wants You! 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/ >>>> >>> >>> >>> >>> -------------------------------------------------------------------------------- >>> WISPA Wants You! 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/ >>> >>> >> ------------------------------------------------------------------------ >> >> >> >> -------------------------------------------------------------------------------- >> WISPA Wants You! 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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