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Old 05-01-2002, 02:48 PM
John from OH John from OH is offline
LawnSite Member
Join Date: Mar 2000
Location: Northern Ohio
Posts: 144
Credit is a business tool that must be used wisely. If you know your costs, you can easily calculate whether you will be able to pay back a loan. Corban mentioned $250 a month in payments to save 2 hours per week. In this case, 8 hours of billable time per month would be available. Aauming $40 per hour times 8 hours equals $320 in additional revenue per month. The length of your season comes in to play. Figuring a 8 month season (24 weeks) would yield an extra $2560 in revenue. 12 monthly payments creates a cash outflow of $3000 per year. In this case there is no immediate gain. Downtime with existing equipment, fuel economy, depreciation, and other incidentals also have to be considered. Will your present mower last the next 3-4 years?

A 10 month season would make this deal look better with $3200 in increased revenue versus $3000 in payments. At an additional 75 billable hours per year this deal breaks even on paper. This is a very simplified version of how to check equipment purchases for their financial benefit. Work your numbers or have your accountant work you numbers.
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