Young guys - I need help/suggestions

[MikeTA95]

Yeah I guess I am just trying to avoid a situation where I am not able to keep up or I loose customers over bad equipment. I am thinking this stuff will pay for itself this season.

[Kickin Your Grass]

Do your self a favor and don't get into debt!!!

[lawnlandscape]

Originally Posted by MikeTA95

My company is a year old, and I'm only 21 with little credit history. I need a loan for equipment. I've tried to go on a cash only basis in regards to buying equipment but that just doesn't work out. I end up settling for lower quality equipment or spending much more than I should all at once on one thing, and I'm unable to purchase other things I need. I've applied for loans at banks, loans from family, lines of credit, and credit cards and I've been rejected over and over due to my lack of history, even though my short history has not one missed payment. What have you other young guys done to over come this issue? I'm beginning to feel desperate because I made a good name for myself amongst my clients last year, and the new clients are already starting to call me because of recommendations, before I even begun to advertise! It's a mixed blessing because I am really excited I am being received so well and that people want me to do work for them, but I know my equipment isn't going to be able to keep up with the increasing demand, and that in some cases my equipment is also limiting my abilities. I'm really looking for any suggestion I may have over looked. Thanks guys.

Hey, without credit, its going to be almost impossible to get off the ground. I am 24 years old, and started my company 3 years ago. At the age of 21 I had a credit score of 720. I had many credit cards and was responsible with them, and I also paid off a car loan. I currently have $45,000 worth of bank loans that I bought all my equipment with, I also just bought a house, AND HAVE NO COLLATERAL to back any of it up. Currently my credit score is a 785.

Banks are not lending my ass. That's just want the media tells you, you just have to be responsible, and HAVE CREDIT. If you don't have credit, I strongly suggest you get a couple of credit cards and start working on it. Not a very good way to start a business, but maybe you could start it with a credit card.

Sorry, but I don't have any good advice for you unless you have a family member that believes in you to loan you some money.

[Daily Lawn/Landscape]

Originally Posted by lawnlandscape

Hey, without credit, its going to be almost impossible to get off the ground. I am 24 years old, and started my company 3 years ago. At the age of 21 I had a credit score of 720. I had many credit cards and was responsible with them, and I also paid off a car loan. I currently have $45,000 worth of bank loans that I bought all my equipment with, I also just bought a house, AND HAVE NO COLLATERAL to back any of it up. Currently my credit score is a 785.

Banks are not lending my ass. That's just want the media tells you, you just have to be responsible, and HAVE CREDIT. If you don't have credit, I strongly suggest you get a couple of credit cards and start working on it. Not a very good way to start a business, but maybe you could start it with a credit card.

Sorry, but I don't have any good advice for you unless you have a family member that believes in you to loan you some money.

WOW! $45,000.00 in business debt. Hope you don't ever have a hiccup, or the bank will own it all.
Do you have a business plan and a budget you work off of?
How long will you pay on that equipment? Hope no more than 3-5 yrs, because you will have to borrow more to buy new equipment.
I would be curious to hear how much your monthly payment is.
I'm guessing $800-$900 mo. At that rate even if your making a surplus of $25 an hour after all our expenses are paid, if your just doing mowing, you would have to work 32 hrs a month just to make that payment. Tell me that's using your money wisely.
Another thing to think of when using credit cards. These loan sharks are looking for every reason now to stick it to you with all the new government regs. put in them this year. If all of you reading this are smart you will get rid of all the plastic except your debit card. If not you will regret it some day.

James

[lawnlandscape]

Originally Posted by Daily Lawn/Landscape

WOW! $45,000.00 in business debt. Hope you don't ever have a hiccup, or the bank will own it all.
Do you have a business plan and a budget you work off of?
How long will you pay on that equipment? Hope no more than 3-5 yrs, because you will have to borrow more to buy new equipment.
I would be curious to hear how much your monthly payment is.
I'm guessing $800-$900 mo. At that rate even if your making a surplus of $25 an hour after all our expenses are paid, if your just doing mowing, you would have to work 32 hrs a month just to make that payment. Tell me that's using your money wisely.
Another thing to think of when using credit cards. These loan sharks are looking for every reason now to stick it to you with all the new government regs. put in them this year. If all of you reading this are smart you will get rid of all the plastic except your debit card. If not you will regret it some day.

James

No hiccup's here! Last year with everyone talking about how bad the economy was, we doubled our business. $300,000 in sales vs $45,000 in total bank loans = great.

Everything I buy always has a 3-4 yr loan term. My payment on my loans is about $1,300 per month. I'm not just a one man show though. Over the winter I have 2 employees, and come spring, I will have 4-5.

I'm also not just cutting grass. We do landscape design/installation, lawn mowing, lawn fertilization/weed control, retaining walls, tree/shrub removal, spring/fall cleanups, aeration, dethatching, mulching, stump grinding, gutter cleaning, snow removal, and complete grounds maintenance.

Getting rid of plastic would be the worst thing you can do if your looking to establish credit.

Personally I have 9 credit cards, and 3 for my business. I have $100,000 in available credit in credit cards alone. Banks love to see that when its managed properly. Having access to tons of credit, and being responsible with it, is a big helper.. it does not hurt.

If I was not able to get loans.. there would be no way I would be to this point with my company right now. My sales could drop by 66% and I will still feel comfortable with my payments.

[lawnlandscape]

btw, who designed your website.. im jealous! lol

but.. i noticed you do "Fertilization and Week Control"

Weed

[Daily Lawn/Landscape]

Originally Posted by lawnlandscape

btw, who designed your website.. im jealous! lol

but.. i noticed you do "Fertilization and Week Control"

Weed

Thank you for pointing that out.
I had a local company put it together.

James

[M.M.A. Mowing]

I say whatever works best for you is your best option. Trial and error has worked for me. A little financing, and some saved cash. After 1 year I've gained 25 accounts, made a little money, and paid 50% of my loans off. The other 50% was just purchased today (2011 wright stander rh 36" 18hp). Always safe to have a credit card for backup as well as credit builder as long as you are responsible with it.

[MowMoney]

Originally Posted by lawnlandscape

No hiccup's here! Last year with everyone talking about how bad the economy was, we doubled our business. $300,000 in sales vs $45,000 in total bank loans = great.

Everything I buy always has a 3-4 yr loan term. My payment on my loans is about $1,300 per month. I'm not just a one man show though. Over the winter I have 2 employees, and come spring, I will have 4-5.

I'm also not just cutting grass. We do landscape design/installation, lawn mowing, lawn fertilization/weed control, retaining walls, tree/shrub removal, spring/fall cleanups, aeration, dethatching, mulching, stump grinding, gutter cleaning, snow removal, and complete grounds maintenance.

Getting rid of plastic would be the worst thing you can do if your looking to establish credit.

Personally I have 9 credit cards, and 3 for my business. I have $100,000 in available credit in credit cards alone. Banks love to see that when its managed properly. Having access to tons of credit, and being responsible with it, is a big helper.. it does not hurt.

If I was not able to get loans.. there would be no way I would be to this point with my company right now. My sales could drop by 66% and I will still feel comfortable with my payments.

DailyLawn, Keep in mind that not all of the $1,300 loan payment amount is expense. Part of it goes towards the principle. All of it actually if its a 0% interest loan. That said, in general I agree with you. I've been on both ends of the spectrum. It sucks having to pay for yesterdays expenses (debt) with today's and tomorrows earnings (profits). Like I said, been there done that. But for the last 6 years I have run completely on a cash basis, with exception to truck purchases, and have managed to generate up to 700k in revenue. It can be done, and it feels great doing it. But it does take discipline.

As for the original poster, take the advice of others and put a plan/budget together. You won't regret it.

For credit, you may want to try obtaining credit from the manufactured. I believe Wright offers credit. Sheffield Financial is another source for equipment financing. When you find yourself in a position of having some cash, you may want to make your purchase with a partial down payment, say 50% and finance the rest. Just make sure you don't spend the cash elsewhere. Then just make payments over the next 3 to 6 months. Also get yourself a gas station credit card and purchase fuel with it even if you have cash to pay with. Again just make sure not to spend the cash elsewhere. Pay off the card regularly and on time.

Another tip. put yourself on payroll and cut yourself a check every pay period. Lenders prefer to see paycheck stubs verses a self employed individual with only tax returns to prove income. These few things will help you greatly, if you manage your finance well.

One last thing. Don't spend the cash elsewhere!!

Good luck!

[bj1bmx]

im 26 and have had my business for 6 years now. i started off with mowers that were 5-10+ years old, an old f150, $500 trailer, etc while i was in college. bought this with cash that I had saved up since I was 12.

it is difficult to take on a larger amount of work with sub-par equipment but you have to be totally confident that this is the right business for you and that you will pay off your investment in new machines.

i used my old stuff for several years before upgrading to newer mowers, a dump truck etc. i continued to expand each year by setting money aside off of the previous years earnings.

it wasnt until i began to buy equipment on credit that I started to become stressed out and upset with the way my business was beginning to own me.

grow at the right pace for you. dont get over your head and maintain what you have.