Originally Posted by CowboysLawnCareDelaware
Paying cash isn't debt, it's an investment in your future. If you think of it as debt you shouldn't run your own business of any style.
I think the problem when talking about the cash vs using others money debate is that if you're a business that has $25,000 in the bank and choose to purchase a new dump trailer for $7500 with cash, no big deal you've still got money in the bank. I think too many are in the opposite place. They save up $7500 and purchase the same trailer with cash and it leaves $0 in the bank with no operating money. Sorry but I believe this is the majority of people living the second case. If cash is king, then having it in the bank account is paramount and not totally liquidating it into a piece of equipment.
The other part of the problem is a lot of guys want to have a solo job vs a large business. As Sean stated in order for most business to get over the growth hump they need to borrow. So if you're a solo arguing with a 30 employee company about borrowing it's really apples to oranges. If its solo vs solo or large company vs large company then we have a better debate. And I said this in another cash vs finance debate thread. I read an article about this very topic in a landscape publication that compared 3 companies.
Company A.) Everything cash, keep old equipment, hire a mechanic
Company B.) Lease everything
Company C.) finances new equipment and trades it in every 2-4 years.
Three VERY different styles of running a business and each has one thing in common.…they were ALL very successful. But again they weren't comparing a solo job vs an employee run business. It was comparing equal size businesses.
Here's my last thought. People cry about the "repo man". Well if you've got the money in the bank in place (vs spending it all with cash) then covering payments in a down time shouldn't be a problem. Just like the guy who spent all the cash for the equipment and has no payments. Both can sell their equipment too. Also if you're leveraging EVERYTHING you're a knucklehead. I'm not against cash, and use it to buy things all the time just as others who finance agree they use cash too. It's the cash guys who fight til the death about financing. Good grief.
Posted via Mobile Device