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Pristine PM
01-11-2006, 08:19 PM
Hi Guys,

I just went to a landscape show, and talked to the guys about leasing machines. Does anyone do this and does it work out well?

Thanks,

Jon

kc2006
01-11-2006, 08:32 PM
I wanted to lease mowers after reading an article in turf I believe it was. The only shop around here that would lease mowers wasn't very happy about doing it and tried to turn me off from it. So I haven't had luck finding a dealer that would do it.

Green-Pro
01-11-2006, 08:45 PM
Looking into leasing a skidsteer with buy out option at end of lease, don't know, not completely sold on that one. I am leasing a Z-Spray with a $1 buyout at the end of the lease, they require you to make at least 12 monthly payments before you pay it off. I put about $2K down and will make the 12 payments by mid summer, plan is to have it paid for by season end 2006. They will sock it to you if you stretch the payments out to the full term, just as with anything else bought on time, but this can be avoided by paying it off early. There will still be some over and above the list price coming out of your pocket doing it this way but it can be held to a minimum $ amount IMO. The lease with option to buy will also help build company credit.

Flex-Deck
01-11-2006, 08:59 PM
Hi Guys,

I just went to a landscape show, and talked to the guys about leasing machines. Does anyone do this and does it work out well?

Thanks,

Jon

IMO - Leasing can not be too good, as the leasing company is going to make money - that is why they do it. Go to your bank with a list of customers, a projected income, and projected expense sheet, and get a line of credit. If you cannot provide this info to your bank, maybe you need to assess where you are at. I will guarantee that leasing equip will not save an operation that is doomed due to lack of customers or anything else.

Envy Lawn Service
01-11-2006, 09:10 PM
Oh now guys....

Rather one pays cash, finances or leases really depends on the individual person and the individual business. Likewise, which is best to do for tax purposes varies from business to business.

Jon, it is best you ask a business financial planner or accountant about this. Schedule a meeting to discuss the pros and cons in order to make an informed decision based on what's right for you and your business...... instead of relying on the ill educated opinions of lawnboys to decide.

No pun intended for either party.

hoyboy
01-11-2006, 09:48 PM
Oh now guys....

Rather one pays cash, finances or leases really depends on the individual person and the individual business. Likewise, which is best to do for tax purposes varies from business to business.

Jon, it is best you ask a business financial planner or accountant about this. Schedule a meeting to discuss the pros and cons in order to make an informed decision based on what's right for you and your business...... instead of relying on the ill educated opinions of lawnboys to decide.

No pun intended for either party.




Sorry, but this is wrong. For tax purposes, purchasing will always be better. It will not vary from business to business.

Envy Lawn Service
01-11-2006, 10:25 PM
Sorry, but this is wrong. For tax purposes, purchasing will always be better. It will not vary from business to business.

So let's hear your credentials there Einstein :rolleyes:


PS-> I rest my case...

procut
01-11-2006, 10:33 PM
I've always thought leasing mowers was an interesting idea. You would always have newer equiptment with warrentys, thus downtime would not likely be an issue. Have yet to find any costs or a dealer willing to do it though.

Envy Lawn Service
01-11-2006, 11:34 PM
I've always thought leasing mowers was an interesting idea. You would always have newer equiptment with warrentys, thus downtime would not likely be an issue. Have yet to find any costs or a dealer willing to do it though.

Well that's because it's not pushed, publicized, ect because there are very LCO's who have a clue about it one way or the other, and there is no push to attempt to educate. Plus, contrary to popular belief, we LCO's do not make up the largest sector of buyers... and out of those some might benefit while others would not, while still yet few of them would understand and/or end up going that route.

As a matter of fact, truth be known I actually spent some time consulting the finance manager of a major mower manufacturer about the in's and out's of finance and lease programs as it applies to this industry segment and sales. They did select and implement a lease program that did have good chances for success (for various reasons). How well they followed my total plan for the best chances of end result program success I do not know though. I might be motivated to contact them and see how the numbers panned out. This time next month will mark 18 months.

In the end though, many lease and finance programs are made available to the dealers. They then pick and choose what programs they wish to participate in. A lot of programs, incentives and rebates DO REQUIRE SOME DEALER PARTICIPATION... in the form of dealer costs. Therefore, most offer those that put the most in their pocket, rather it be in the form of zero participation or if they do participate in order to move more volume by incentives to put more money in there pocket overall.

lawn_guy
01-12-2006, 08:23 AM
My company currently leases 5 out of our 6 mowers. They're set up on Exmark's "New Every Two" program....2 year leases. For tax purposes, leasing allows the cost of equipment to be deducted immediately as an expense, just like fuel. Purchasing requires depreciation over several years, unless a section 179 deduction is taken in the first year (write it all off at once), but this is limited to a certain maximum amount each year.

By leasing our mowers, we are able to minimize downtime and maintenance/repairs. As far as cost, we pay about $270/month for a 27 hp 60" Lazer Z w/ striping kit. Our bankers like our limited amount of debt....5 mowers times $8,000 would be an extra $40,000 in the negative. Anyway, leasing is not for everyone, but it works for us.

By the way, if I were driving these mowers myself, I might consider buying instead (possibly)....they would last much longer if I didn't have young guys driving them all day.

Green-Pro
01-12-2006, 09:17 AM
Well I still maintain that leasing has its merits and place. Envy did make a good point though in being sure it is the right way to go for your company and if unsure check with a professional financial adviser. In fact it can be taken a step beyond that statement and broken down on a equipment by equipment basis. Leasing works for us on certain items and not for others. The key to us is the durability factor of the piece of equipment being purchased, early pay off, and low buyout price.

Az Gardener
01-12-2006, 10:24 AM
Leasing -vs-buying is a business strategy. Experts can advise you on the pros and cons of each but its up to you as a owner as to which is best suited for you. As a business your objective should be... what you want it to be. For some its purely making $$ for others it a quality of life and for others its a ego thing. Everything you do in a business takes time, is your time better spent dealing with equipment repairs or selling and doing the work? You cant have it both ways. Equipment is a declining asset period. I have a 2 friends in the industry one in buis for 25 years he owns everything land, crane, skid steers, tractors, In my opinion its a nightmare having a full time mechanic on staff, dealing with schedule disruptions how much does that cost? he has been steady at 1-3 mil a year for 10 years or so. The other guy a business major is only in the buis to make money, put plants in the ground he has over 80 trucks 3 offices in 2 states and does in excess of 100 mil a year. He is in business almost 6 years and used to work for the first guy that owns everything. Guy 1 has a bigger net worth because of the land, I think but if guy 2 decided to sell his company who knows. I am sure guy 2 has had a better ROI and less headaches, but you know guy 1 is fine, some people just wouldn't be happy if everything was easy. Educate yourself and do what you want.

Envy Lawn Service
01-12-2006, 12:20 PM
Alright!!! Some good posts there guys.

That's what it all comes down to really. Rolling up those sleeves and becoming involved in the back office end of your operation like you are with your field operation end, or hiring someone to do that for you if the need and feasabilty is there.

I am fortunate enough to have the time and ability to do it myself. I have found that if you work towards becoming as stratigic in this area as many are about every little detail of the field operation.... well there is a lot things you can do in the back office to make your entire operation more effcient. There is a lot of money to be made and a lot of money to be saved in the office.

This is why I do not mind having little to no field work during the winter and no alternative employment. I rest up physically and work the mental side of the business, which also earns me money in the grand scheme of things.

Green-Pro
01-12-2006, 12:26 PM
Alright!!! Some good posts there guys.

That's what it all comes down to really. Rolling up those sleeves and becoming involved in the back office end of your operation like you are with your field operation end, or hiring someone to do that for you if the need and feasabilty is there.

I am fortunate enough to have the time and ability to do it myself. I have found that if you work towards becoming as stratigic in this area as many are about every little detail of the field operation.... well there is a lot things you can do in the back office to make your entire operation more effcient. There is a lot of money to be made and a lot of money to be saved in the office.

This is why I do not mind having little to no field work during the winter and no alternative employment. I rest up physically and work the mental side of the business, which also earns me money in the grand scheme of things.


With ya 100% on using the off season to really dig into the paper pushing end of things, I also believe this is a great way to stay on top of things, become more efficient, and most importantly add to the bottom line.

Az Gardener
01-12-2006, 07:57 PM
I wish I had an off season :cry:

Green-Pro
01-12-2006, 08:05 PM
I wish I had an off season :cry:

I wish you had the cold weather we had, that and a feather up the wazoo and we'd both be tickled :waving:

hoyboy
01-12-2006, 08:51 PM
So let's hear your credentials there Einstein :rolleyes:


PS-> I rest my case...


Certified Public Accountant. Good enough?

MacLawnCo
01-12-2006, 09:43 PM
just to add, there are many, many types of leases. As one mentioned, leases are ideal to get the liabilities off your balance sheet. However, there are many parts of a lease contract that, if present, will actually force you to capitalize the lease and therefore put it back on your ballance sheet and amortize (bassicly depreciation) the lease over its life... which consequently makes the lease pointless. Just so you all know, a bargain purchase option is one of the clauses that will trigger capitalization and many of you have listed that as parts of your leases. Talk to an accountant prior to signing a lease; it may not accomplish what you hope it to.