How much $$$ to start???

[dapozer]

I am thinking of start up and looking at borrowing some money from the equity in the house. Is this a good plan? what should I look at when trying to figure out how much? I know equiptment cost and ins, gas, maint. But what about extra cash for safety ie pay bills, wages ect.
shawn

[YardPro]

i would imagine at least $25K

[Trinity Lawn Care, LLC]

Shawn, 1st I want to say good luck in your new venture. 2nd: I normally warn folks off from using home equity for starting up their biz. Let me ask you this. If your business fails (and I am not saying that it will and I hope that it doesn't) how will that affect you financially? If using equity in your home and the business fails will you be in a financial position to still pay for the debt that you incur? Would the debt load force you into bancruptcy or even foreclosure? Do you have a solid business plan together with an exit strategy? With that said. If you feel that you have a solid plan the next step that I would take is consult your professional consultants i.e attorney and accountants, and get their opinion on this matter. If they say go for it then go for broke man! This is JMHO. If you are gonna borrow on credit I would just borrow on personal credit. This way if you lose you don't lose everything.. The problem is people do not plan to fail, but the reality is many will. You have to look at the big picture and ask "how with this affect my life". Again, hopefully you will be very successful. I am sorry for the long post I just do not like to see people put themselves in a very risky financial situation without knowing the what could happen's. Again this JMO.

[bohiaa]

I agree,

maybe you should do it part time and see how it goes.

a Lot of us "myself included" started with an ole broken down mower, a line trimmer the was junk, and a rake......"my hedge trimmer was electric"
From there we built up....


My father used to say "they don't hire 20 year old presidents"

getting commercial accounts is tough, and you MUST have a ton of insurance.

Other than that. I would NOT spend a lot of money on fancy equipment.
Not enoulf to have to borrow money.

I'm a computer engineer, when the field went belly up, I just grabbed my tools and went and made a living.....
with the junk that I had...

Good luck

[Spratz86]

I'm new to this, too, but I don't think you should go in massive debt to start a business. Start with what you have, add to it used and go from there. Put 10 to 15% back into the business and soon enough you should have enough to upgrade.

Home equity loans, or any type of loans for that matter, are a fools game. Your just paying interest to people/institutions with money for things you can do without.

My advice - listen to Dave Ramsey!

[The landscaper]

I agree with starting small. Don't kill yourself by digging such a big hole up front. It is pretty easy to get started with lesser grade equipment and you most likely have some at home. Just get by with what you can afford and as jobs start picking up, use that profit to get the bigger and better equipment. This will save you the rish of failing business taking you out financially.

I doubt this is the best way to start every business, but in this line of work, it isn't too hard to get going.

[cwlawley]

I too would start slow. Use what you have and put all the money that you make into savings. As your savings grows use that money to purchase equipment that you need.

If your savings is growing that also means your business is successful, somewhat. If you see yourself wanting to continue in the field look at taking out a home equity later for better equipment.

[jasonnau]

It depends on a couple of things. First of all, do you already have at least a 1/2 ton pick up truck? Preferrably a 3/4 ton? If not, you need one. I started spring last year by trading in the 02 ford ranger for an 04 f250. That put me $28,000 in debt with the negative equity from the ranger. Now, that is a write off, but, I have to pay 462.00 per month on that truck. Next, do you want to plow snow? If so, make that a 4x4 3/4 ton truck. Plan on $5,500.00 for plow and spreader next winter. If your serious, you'll need at least a commercial 48 to 60 inch mower. Hydro prefferably. Look at at least $4500-$6500 for that. Not to mention at least a $300.00 blower, $250.00 trimmer, $1300.00 for a trailor, $200-$600 for a "21 inch mower, And add in at least $600-$800 for small tools, wheel barrows, ect.. But, if you start small, you'll get all of this stuff in time without the immediate overhead. All and all, I bought what I wanted and needed the first year. I made some mistakes. The Ford was a 2 wheel drive, and i wanted to plow snow. Ended up spending $11,000 the same year on a 1998 chevy 3500 4x4 with the plow and spreader. (That was a great deal). Bought a new 60" ex-mark turf tracer, and all new stuff. Including the trucks, I spent at least $50,000 to start. But, I had no problems getting enough work to pay off everything except the trucks in the first two years and make more than enough money to get buy just fine. In fact, after the first year, with write offs, I had enough left over to pay off all of my wife and I's personal debt. Now, we're buying our first house. I'm not by any means rich, but, I'm a hell of a lot better off than I was two years ago.

[jasonnau]

Oh yeah, I used a credit card to finance everything except the trucks. I put $12,000 on that. It's almost paid off 1.5 years later.

[garth1967]

Shawn, 1st I want to say good luck in your new venture. 2nd: I normally warn folks off from using home equity for starting up their biz. Let me ask you this. If your business fails (and I am not saying that it will and I hope that it doesn't) how will that affect you financially? If using equity in your home and the business fails will you be in a financial position to still pay for the debt that you incur? Would the debt load force you into bancruptcy or even foreclosure? Do you have a solid business plan together with an exit strategy? With that said. If you feel that you have a solid plan the next step that I would take is consult your professional consultants i.e attorney and accountants, and get their opinion on this matter. If they say go for it then go for broke man! This is JMHO. If you are gonna borrow on credit I would just borrow on personal credit. This way if you lose you don't lose everything.. The problem is people do not plan to fail, but the reality is many will. You have to look at the big picture and ask "how with this affect my life". Again, hopefully you will be very successful. I am sorry for the long post I just do not like to see people put themselves in a very risky financial situation without knowing the what could happen's. Again this JMO.

heed those words ,good advice. people that borrow to start up are shocked buy the fact that for the first few years money is coming out of the pocket.you know your financial position better than anybody.just remember your initial start up cost is only the start of the costs

[mhaysmow]

start small and be steady and consistant. buy a nice new walkbehind pref. 36inch it will cut any kind of yard you can mow hills gates and even a decent size yard wit a sulky. get like 5 to 10 accounts(or as many as you can handle) the first year pay the mower and trailer if you get one or just ramp it into the truck. the next year you ll start getting word of mouth thats the best way to gain yards... from there you will start to grow quick and have some money to expand your equip. and do bigger jobs.... always try to provide all the services ya can to..fall clean up ... seeding.. hedge trimming, etc..
thats just what i did and its worked good for me im now almost full time and still in scoo never once have i gotten low on my bills never had a loan for equip. other then the truck(typical) and now this next year im gonna go more commercial were the big money is

good luck what ever ya do
if you like mowing you ll make it... if you have trouble gettin out and doing your own yard once a week maybe its not the best thing to just invest so much straight into

[South Florida Lawns]

on what you plan on mowing and your area. I know some have dumped close to 100k in the first year.

[Jay Ray]

The manager at my bank branch really pushes home equity loans and she is excellent at it. You don't even have to give a good reason to borrow the money. Makes sense because the bank appraises the property, tracks your homeowner's insurance, and has no risk. You have all the risk.

The interest rate is usually tied to the prime rate. It can and might go up substantially.

If you have an insurance loss on your house, the insurance company sends the money to the lender, and you have to justify and beg them for your own insurance money to do the repairs. And they can disapprove the contractor. The lender has your insurance money invested for free windfall interest to them, and they are in no hurry to turn it loose to you. There are hundreds of thousands of Katrina victims who just found this out.

Me, I'm small, growing slowly, barely a blip on the radar screen, no bragging rights at all, but I don't have any business loans and am making a few bucks profit. I've been playing defense and running up the middle rather than throwing long. If I had gone out on a big borrowed limb right away, chances are pretty good I would have had to punt.

If you think back about people you knew who lost a business, it is always painful and difficult to live through. We hear most often about the genuises who have the Midas touch, and you may be one, but there are a lot of dead bodies on the side of the road we never hear about.

Don't want to discourage you Dapozer, but only you know what the "sleep good at night" level of risk is for you. Remember that the "just in case, what do you got that we can take?" question is built-in to a home equity loan. And the bank or whoever they sell a loan to is all business, serious $800 suits and ties business. They just care about the money.

Trinity and Bohiia both have excellent posts above.

Mama said "Use what you got." You may have to have a little more than that to get started, but not too much. Just be careful. Pay cash if you possibly can.

[Reliable Lawns]

I am thinking of start up and looking at borrowing some money from the equity in the house. Is this a good plan? what should I look at when trying to figure out how much? I know equiptment cost and ins, gas, maint. But what about extra cash for safety ie pay bills, wages ect.
shawn

As someone stated above, I wouldn't bet the house on it, rather make your start up fees as small as possible by using your existing equipment, or using a credit card with great terms, and get that paid off as soon as poss. As far as wages, are you talking about yourself? or having employess right away?
I used what I had the first year and upgraded from there as the money came in, I haven't paid myself anything yet in 2 years. But I also didn't jump in head first, I still have a full time job, so that is a big difference. I am doing 15 to 20 a week, where you may already have 60 lined up. I hope thats the case, Best of Luck