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  #31  
Old 02-18-2011, 04:11 PM
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Lugnut Lugnut is offline
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Interesting topic, glad you're putting your pride aside and posting this for everyone procut. By the way, im right across the river from you in new windsor.
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  #32  
Old 02-18-2011, 04:26 PM
TMlawncare TMlawncare is offline
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Originally Posted by LushGreenLawn View Post
Theres already a vary large post where you went through all your misfortunes in the lawn care business, why do we need another?
You can not be serious. His previous post on failing at lawncare needs to be read and taught in all business college classes. We get to hear straight from the source of how and why sometimes this happens. This new thread is also priceless, it is showing right before our eyes of how you think everything is going well, planning for the future and such and all the sudden the rug is pulled from beneath you with no warning. That info is almost priceless for someone in the same business facing the same problems.

This post get down business. This post is far more important then "what color mower do you like" threads.
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  #33  
Old 02-18-2011, 04:39 PM
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PROCUT1 PROCUT1 is offline
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Originally Posted by coolluv View Post
I have a few questions. First, how can they just pull a line of credit away from you without any prior notification and then turn that line of credit into a loan that must be paid immediately and take money from your savings account to pay off the line of credit. With good credit, why wouldn't one of the local community banks bail you out?

You answered the question yourself. There was the line in the agreement that said essentially that the bank at anytime for any reason could close the line, at which time it converts to a loan and becomes due and payable immediately. The bank may use any assets on deposit as payment. Including my personal accounts because I personally guarenteed the line.

Now I know that they pull $hit like this all the time but in your situation I don't see how its legal, and I don't see how you would not have a legal case against them for ruining your business. unless that line of credit that you signed for had those stipulations in it.


The other question I have is, why if you have been in business as long as you have been would you grow to the point that you needed that much of a credit line or should I say that you needed to use that much of the credit line. If you were making the money you say you were making you should of accumulated enough in savings to cover material cost and payroll etc. Like you said you were not to the point that you could eliminate the bank and have the credit line as an emergency.

Youre right here also. But I didnt see the need to. I had customers wanting the work done. I had the ability to do the work. Most large companies utilize credit lines and vendor lines. I didnt see anything strange about it. It was a tool to be used exactly how I used it. It never crossed my mind that it would be pulled unless I defaulted on it.

I attempted numerous local banks. Got turned down at all of them. They tightened up like everyone else.

Also going to a bank in a panic, flat broke, begging, is not going to get them to open up. The old saying of banks lend to people who dont need money is pretty true.


So it sounds like you may have made the mistake of trying to grow too large to quickly, which is the same scenario playing out again.

I understand the use of the line of credit, but I think you got used to having it and relied on it too heavily to keep the doors open. Couldn't you talk to your vendor and have them sign a release relieving the company you did the work for from any liability with the promise of paying them when you get paid? Or have them come with you when you pick up the check and cash it and then pay the vendor. I'm sure you could work something out so the customer pays you.

I did work it out. Got paid. Paid the vendor. Unfortunately the trail of destruction wasent solved as easy

I'm not saying your not telling the truth about everything, but something don't smell right.

Believe as you choose.
Just asking.

Dave...
.............................................................
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  #34  
Old 02-18-2011, 04:42 PM
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Originally Posted by NicholasMWhite View Post
I'm interested in this thread and will be following it. I also appreciate you sharing this information with us. I do have one question. Would spreading your money/line of credits over multiple banks have helped your situation? Naturally they all would have eventually cut or lowered your line of credits, but it seems, assuming they didn't do it all at the same time, you would have been in a better place to handle the coming credit crisis.
Theres things I could have done different.

If I had any doubt as to the stability of the line, I could have definitely better prepared.

I had always thought, it was there unless you did something wrong.

Again. I was only doing what millions of other businesses do.
That used to be the purpose of business lending. Money to expand and grow.

It was working just fine.
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  #35  
Old 02-18-2011, 04:51 PM
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PROCUT1 PROCUT1 is offline
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Originally Posted by mcw615 View Post
First, I will make clear that I am not in your shoes and know every detail of everything, your market, clients, etc.

I do have a couple two cents to put in from your experience in the last 5 years.

One: Payment Terms. $18,000.00 in immediate materials and labor burden with a 45-60 payment to reimburse those expenses plus provide you with your profit. That right there to me is a huge red flag. I learned this lesson from charging customers 'per mowing'. Ex. Month of May mow account weekly, June 01 send invoice for services rendered from May 01-May 31, payment due June 30. At the beginning of each year there was always a struggle for money, a large overhead in labor, costs, mulch materials and having your accounts receivable on those terms. I went bold last year and said I am only offering maintenance contracts (contract is only way to set a solid price to invoice customers MONTHLY DEPOSITS), I did my calculations and knew I would loose 10-15% of my customers just because it 'seems complicated', but in return I knew I would be gaining more business from my customers by adding additional services. As far as projects go, I have payment terms (which are somewhat negotiated with the client) but 50% down 2 weeks before the start of the project to begin ordering/paying for materials, at 50% project completion a 25% payment is due; then immediately at the completion and 'walk-through' the final 25% is due. I have found this is completely fair, it is not forcing clients to pay for project before it is completed and they understand it is not making me have to buy the materials.

What happens when you do a $30,000.00 seal job and that customers check bounces? They may have had the 30k in the bank when they signed the contract, but 2 months later anything could have happened. I would never put my or my company at risk like that, just because they signed the paper to pay you whats due, does not mean that will happen 100% of the time, putting my companies profit out there like that to pay for materials with good-contract-faith to get paid in a near 60 days..YES, the bank screwed you over, but if you had good contractual payment terms, you would have had your money to pay your suppliers and not be relying on a line of credit for the mean time waiting on money to come in.

Two: Where's your profit? You said after materials, labor, and overhead was paid for you were left with 12k profit-job/week...and only $20,000.00 in the bank? Like I said, don't know the in's and out's of every detail, but sounds as though you grew to operating off line of credit and were profit spending savy, when you should have been working to get out of relying off the line of credit to keep the engine of your business going.

Hope most of everything has recovered well, look forward to hearing more of the story.
All good points.

I was growing and expanding fast. But I was comfortable with it.

As far as payment terms......Youre absolutely right. I went into some of these contracts biting my nails.

MY TERMS have always been 50% deposit. Payment on completion.
Sometimes with progress payments.

Usually I was able to negotiate the payment terms if theirs and mine didnt match.

In some cases, like above, I was given a "take it or leave it" offer.
I had to make the choice and either take it, or let my competition have it. The companies I was dealing with, I was comfortable enough that I would get paid. I didnt like it. Didnt want to make it my practice. But I made the choice to take it.


This all happened within a relatively short period of time. I didnt hit periods like this every single week from the start. This was all within a year or two.
I was heading that direction, but wasnt banking huge amounts free and clear every single week.
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  #36  
Old 02-18-2011, 04:55 PM
hackitdown hackitdown is offline
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I guess a line of credit to buy materials is ok, but we now understand the risks. There is a simpler solution.

On large projects, I usually ask for a 33% deposit when work commences to cover my material costs. Most customers expect to pay it. Those who won't pay set off an alarm in my head. Sometimes another 33% is due halfway through. The final 33% is due on completion.
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  #37  
Old 02-18-2011, 04:55 PM
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PROCUT1 PROCUT1 is offline
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Originally Posted by grassman177 View Post
exactly, and why did we put more RED necks back into office?

you just made me fightened even more by someone else confirming exactly what i think on the subject
You know. Ive called myself a Democrat. But the democrats completely blew it.

They had the president, both houses, and a public that was behind them to "sweep in and change washington"

We were fed up with the bankers and the bailouts and the catering to the top 1%

What we got were democrats that were no different than the people we threw out. A spineless president that has never met a billionaire he didnt want to bend over for.....And we're worse off now than when they started.

The rich have given up on this country. They dont need it. They and the politicians only plan is to suck up whatever crumbs are left and then work on the rest of the world.

Its clear as day to us common people what they could have done to help people and get the country rolling again if they wanted to. But they dont want to.
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  #38  
Old 02-18-2011, 04:59 PM
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Quote:
Originally Posted by hackitdown View Post
I guess a line of credit to buy materials is ok, but we now understand the risks. There is a simpler solution.

On large projects, I usually ask for a 33% deposit when work commences to cover my material costs. Most customers expect to pay it. Those who won't pay set off an alarm in my head. Sometimes another 33% is due halfway through. The final 33% is due on completion.
Thats the way it should be.

Ive noticed a trend change lately. It has a lot to do with the lowballer discussions we have here.

There are a lot more guys out there competing for the same work. Every one willing to chop their price to get it.

Owners know this. To them, its easier to wait until the job is done, then pay for it. They dont want to worry about deposits and if the contractor pulls it off. They want zero risk.

Years ago, if they wanted to deal with a reputable contractor. Most all contractors had the same payment terms, and the customer accepted that.

But that changed. The owners say "take it or leave it" and some contractors leave it, others take it.

This isnt all customers or all situations. Many paid me on my terms without a hesitation.
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  #39  
Old 02-18-2011, 05:08 PM
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Puddle of Oil Puddle of Oil is online now
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I get paid to keep the property looking good. It is not hard what we do like anything else in life, added will power, desire and the ability to look for solutions not excuses then you will succeed.
Stay focused and leave distractions for those who will fail in their ventures
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  #40  
Old 02-18-2011, 05:27 PM
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ohiogreenworks ohiogreenworks is offline
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Great thread, love the high tempo you type with, makes for a great read! Thanks for you willingness to tell your story, keep the updates coming!
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