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Old 09-02-2006, 12:00 PM
LB1234 LB1234 is offline
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Location: Central Jersey
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We took out a loan so we can establish credit.

When we started our business...and then years after we would purchase equipment with money we had. Basically, we never had debt. However, as our business grew (the landscaping side) we needed to have a larger purchasing power for our jobs. Our credit card wouldn't provide us with the increase we needed. Reason, we don't have an established credit history. LOL, in other words its not bad, we just haven't proven to them that we can make payments on a loan.

So, when we purchased our 3rd mower we took out a loan. I'm making the payments on it. I'll pay it off nexty spring after a year into the 3 year loan. That way, I can establish credit.
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Old 09-02-2006, 12:59 PM
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Good point also. To grow your business you need to establish good credit.
This way when an opportunity comes along you have the credit and the purchasing power to grow using little if any of your own money.
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Old 09-02-2006, 01:34 PM
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rodfather rodfather is offline
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There is absolutely nothing wrong with financing equipment
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Old 09-02-2006, 01:51 PM
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HOOLIE HOOLIE is offline
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One good bit of advice I heard from a financial advisor on the radio...when things are going well, that's a great time to establish a line of credit for your business. Even if you have no immediate need for it. For the simple fact that typically in good times, your credit scores will be pretty good, making it easier to get credit, and get credit at good rates. Then when things are not going so well, or you just need to finance something large, you have the credit available already.
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Old 09-02-2006, 03:43 PM
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ProStreetCamaro ProStreetCamaro is offline
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Other than your home/property, there is NEVER an excuse for financing anything - even autos, lawn equipment, vacations, etc.

Yeah because everybody has the money sitting around to go pay cash for a 40K SUV or what have you. I agree about the house and vacations but for 99% of the population they simply do not have that much cash to drop on a new car or new equipment.
2013 Gravely 460Z 29EFI
2011 Gravely 36GR
2008 Gravely 160Z
2004 Gravely 34Z
1998 Lazer Z HP 48 (old faithful)
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Old 09-03-2006, 02:34 PM
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indy2tall indy2tall is offline
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Location: Indianapolis Indiana
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Originally Posted by bigjeeping
There should be only one man on this board who doesn't believe in financing.. a muslim. Otherwise we are all business owners and should know that start-up capital isn't always handed down from ma and pa's estate. Starting a new business almost always goes hand in hand with financing, loans, etc.
Bigjeeping, perhaps you can go into more detail and explain your first line. I am certainly not Muslim but I think if you can avoid going into debt to start your lawn business that is how you should do it.
I suppose it depends on the scale in which you wish to begin business. If you plan on having employees from the beginning and will need multiple trucks and/or trailers not to mention mowers and such then financing would be necessary. However if you only plan on mowing part time with some used equipment out of a used pickup that is different.
Almost anyone should have a couple thousand set aside for emergencies, use that to get started and use your remaining credit as a backup that first season for equipment or truck breakdowns or other emergencies.
I don't disagree that many, if not most, successful people use credit in their businesses but I also know that the majority of new startups fail in the first year and having too much debt is often one of the reasons.
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Old 09-03-2006, 11:30 PM
Precision Precision is offline
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Location: Cocoa Florida
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Originally Posted by jtf40
Other than your home/property, there is NEVER an excuse for financing anything - even autos, lawn equipment, vacations, etc. Yes, I have financed tens-of-thousands of dollars of "stuff" over my lifetime. However, other than my mortgage, I owe nobody nothing. It took many 70 hr. workweeks to get out of consumer debt but now, I can sleep at night - 20 years ago I couldn't.

In summary, try to save to buy what you want. Remember the 22nd. chapter of Proverbs - "The borrower is slave to the lender."

"Debt is dumb, cash is king, and the paid-off home mortgage HAS taken the place of the "BMW" as the status symbol of choice." Dave Ramsey
that is just plain stupid.

My gravely Pm260 cost $8100. I financed it at 6 months no interest and 1.9% there after. So over the 2 years I had the loan out, I paid $180 in finance charges. And lets say I had the money in the bank at 3% interest, I would have made over $340 AND had the reserve cash in case of emergency.

Debt is not a bad thing. bad management of debt is a bad thing.

Proper use of debt is what helps to keep the divide between the rich and the poor a huge chasm. The rich know to use someone elses money to make money. The poor use their own money and pay cash.
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Old 09-04-2006, 02:32 AM
par69 par69 is offline
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Location: Albany, Oregon
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Not having payments is GREAT!!

I started my lawn care business in 1988. Working at Oroweat bakery at night and mowing lawns during the day for one year. Buy then my equipment was payed for and I had enough accounts to live on.

I have payed cash for everything. Except my new John Deere 757 w/ mulch on demand that I love. It was $10,000. I had the cash but wanted to use it for a vacation. NO not all of it. JD has 0% for 12 months.

My house will be payed for in a year. I can't wait. An extra $1000.00 a month in my pocket. And no mortgage. If something happens and I can't work anymore. I have a house to live in. By the way its worth $300,000.

I lost close to $400,000 in the stock market a few years ago. So I do invest but my house will always be mine.

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Old 09-04-2006, 04:48 AM
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Envy Lawn Service Envy Lawn Service is offline
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Location: North Carolina
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I always have mixed feelings about financing/debt.
The reasom being is that it strongly depends on the mentality of the individual.

I think business debt can be a fantastic tool for those using it as a tool and it does make managing cash flow sooo much easier. But a lot of people fall victim to the easyness. They look at a mower as only a $200 per month expense instead of a $10,000 investment that is depleating by the day...

Also, just to be honest about it, a lot of people only use financing because they are spending money they don't have on something they want. Therefore, they enter into a debt cycle they can't afford to escape. The reason being is that they can't save the money to buy that next new mower or that next truck or whatever because they are too tied up making payments to be able to set aside that caliber of money during the useful life of the item they have financed.

I've known some guys who couldn't afford a new ZTR who ran out and financed one, only to see them loose it because later they couldn't even make the payments. I've also know guys to take advantage of those nice low or no interest deals for 3 years. Then two seasons in the mower is ragged out/worn out, not worth payoff, there are still like 12-18 payments left... and here they need another new mower.

You just have to be careful. If you can use business debt as a tool, use it to invest in your business for things that can provide fast returns, then that's good.

Early on as a young adult just starting out, I carried a lot of business and personal debt. It was the easy way to get started in life, business and other investing. It allowed me the ability to get the things I wanted and needed, and the ability to 'pounce' on other things that came my way.

I used it extremely wisely... but I'd be lying if I said that it didn't reach a point where it was a lot of pressure and affected my decision making. Some people can owe a million dollars and not give a crap if the bottom fell out tomorrow. The pressure doesn't get to them. Me... well it did in the back of my mind... and I already had enough to be concerned about.

After going through a divorce, I put myself in a position where I could wage war on debt... and essentially started all over from scratch. Some years later I was out from under all that debt. Since then I have basically paid cash for everything. For several years I have been at a point where most people owe more in credit card debt that I owe in business and personal debt combined.

It is NOT easy to do things this way. It's NOT easy to manage things were you can afford to pay cash for things and have it be sustainable. Each purchase also hurts your feelings a lot more too. But one thing is for sure... I'm certainly NOT walking around with any false sense of security about how I'm doing, nor are my business numbers skewed in a way that makes things look better than they REALLY ARE.

"If you place a low value upon yourself, rest assured..... the world will not raise your price."

"The bitterness of poor quality lingers on long after the sweetness of cheap price is forgotten"
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