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  #111  
Old 02-21-2011, 05:12 PM
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THIESSENS TLC THIESSENS TLC is offline
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Originally Posted by nobagger View Post
You guys are ridiculous. This is priceless info, maybe not to all of us but I'm sure to many.
I'll agree with that! Good info like that is hard to come by these days.
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  #112  
Old 02-21-2011, 05:54 PM
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JDUtah JDUtah is offline
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I wonder...

The information and lessons can be learned everywhere. Maybe it is the drama related to it that draws and holds interest. Hey, if it gets the point across...
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  #113  
Old 02-21-2011, 06:07 PM
mcw615 mcw615 is offline
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PROCUT - Continuing to read your posts and other users, I do see where you were using your line of credit to purchase your costs of materials, and either you pay for the project with a hold on the payment for 45-60 days or the job goes to your competition. However, I still just can't see any logic going into entering those agreements/decisions if you could not afford to pay that debt from your own liquid assets.

Another scenario... Bank lends you the money as you said, you buy the materials, and as the payment comes in, you pay that loan off, make your profit, and for the next job take that profit and apply to the principle to save on interest with the next job (just as you said you were doing). But what would have happened if one of those 'big jobs' turned into a bad debt, especially with the economy going sour, your line of credit was now maxed with your bank, and the future work orders you were relying off that line of credit to purchase materials is no longer available...now again the wheel of your business gets put to a stop. This easy scenario would put you just into the same situation as the bank throwing a curve ball at you by taking smaller job deposits to pay loan for the big job. All especially at the time of the economy going sour anything could happen to your customers in a 2 month period and now your out, just as your vendors were out when you got put to a stop, you through a curve ball to them and hopefully you did not cause any major strains to them. I'm sure we both can agree your vendors as you said trusted you, who let your employees sign on behalf of you and let them walk out with a $9,000.00 new mower on good faith, but in an instant something that could have been prevented with better decision making changed, and now your vendor is out. Business is just like a chain, you have your: customers, contractors, vendors, employees, and finance resources - one link breaks it effects everyone. Fortunately I understand that concept, I pledge to my customers, employees, partners, and most importantly community that we will always "Walk the high road."--always strive to make the most ethical business decisions because anything like that affects everyone, and sometimes something out of your control can go wrong and now can have a detrimental impact on one of your vendors. But better decision making I believe could have prevented that and taking the strategy to grow a little slower. I was wanted to take advantage of growth, and fast. But I have learned this quote, it is pertinent to both life and business..."LIFE/BUSINESS IS A MARATHON, NOT A SPRINT."

Again, I do not and will never know 100% of the story, but I do think that was poor decision making. With the economy, it is a customer market, they hold the power in many markets..because contractors have allowed them to. But stick with your work on your terms, you said you had plenty of it. Let your competition take a HUGE risk with those sticky customers with crappy payment terms.

I do disagree with you saying you can grow fast as long as you do it smart. When you "leap" up the ladder and "fast", only means when you fall off the ladder, instead of falling one rung down, you as well fall "long, hard, and fast." If I had other work and was doing well, I would turn down a big project like that-because that is a smart decision. I just surely would never go 80% into the negative for 60 days on a project.
For me, I just never enter into an agreement where for any length of time I am putting my own companies money into purchasing materials or would use line of credit to purchase those materials, even if there is a pot of gold profit waiting at the end. My thought process is, what would happen if this big job I finance something happens on their end and payment does not come through, now I AM RESPONSIBLE for that debt, I'm now out of my own money, business time, and the severe impact it will have on your business of a bad debt that you truly do not have an emergency savings fund allocated for.

I do agree keep banking accounts and loan accounts separated with different institutions. But, if they make some changes because of some fine print and now they are after your cash deposits, they will go after it. It likely will not take place instantly with a click like your situation, but all it will take is a warrant of debt on you from that bank and they now own your other bank accounts within a weeks time.
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  #114  
Old 02-21-2011, 06:13 PM
coolluv coolluv is online now
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Originally Posted by JDUtah View Post
I'm split. While I find this thread(s) interesting and informative I can't decide if I should feel pity or the thought that you kind of asked for it. I know this is blunt but it my honest take on this situation.

I feel bad you are in the situation you are in and I agree with others that you are not on your own even though you may feel like it. You sound like a good guy and I have no doubt that you have what it takes to make it again. Learn what you need to and carry on as an even better man than you are now.

The conflict comes when you start to talk like it was other peoples fault that you 'lost it all'. You mention you used credit like it was supposed to be used. That may be true, but had you ever thought that even though you used the tool correctly it wasn't the right tool for the job?

In reality you never owned the stuff you thought you did. Think right now about all the material and fiscal things you are scared of loosing (or have lost). Home, car(s), cash reserves, your business. Being scared of loosing those things is a sure sign that you don't own them in the first place. Yes, you didn't own your cash reserves. You gave that away when you leveraged debt.

The problem with America isn't that lenders let people borrow more than they could "afford". Or that the government has bailed the lenders out. The problem with America is two fold.

First, our lifestyles are so off base. We think need the huge homes that cost too much to heat/cool. The nice cars that we can be proud of owning. The conveniences (aka expenses) of things like 'tivo' and a cell phone for every child. The ease of buying pre-distorted food that you can pop into the microwave, oven, or even worse... comes 'hot and ready'. We have grown to expect things like facebook, youtube, lawnsite; things like air fresheners, makeup, and in style cloths. We think that living the life means that when people find out who we are they say you own that company? The first problem with America is that we are too focused on pointless material things.

The second problem with America is that in order to fill our off base desires for cotton candy we have grown accustomed to borrowing these items instead of earning them. We have the mentality that we worked hard, we sacrificed, we made lots of money, that we did earn these things. The truth is, we did all that for the chance to borrow those things. That's it. all that work just to borrow something to look good or to make life a little more convenient. That is the truth UNLESS we flat out bought them. If we leveraged time at all (IE went into debt) we did not earn them, we just earned the right to borrow them. No if's ands or buts.

The solution America needs is a return to what really matters. Family, character, moral principles. We need to get off this addiction to instant gratification, presentation, and ease of life. Sure those things are nice but we have grown to expect them, and expect them right now. We need to remember and be grateful that we have family, friends, and that there are people who care out there. We need to STOP working to borrow material things and start working to earn them. We need to get a grip and pull our heads out of the clouds. We need to remember that it isn't the governments, or the banks job to get us the nice things in life. It is ours, and ours alone.

Anyways soap box almost over. IMO you have shown that you have tenacity, intellect,and and an ability to perspire. IMO you simply misdirected yourself into thinking (like most everyone else) that you actually had the things you thought you did. Now learn what you need and use your qualities to chase the right things. You still have your family. They are healthy. Now work to actually earn those nice things in life that you used to borrow in the past.
Amen Brotha!

Dave...
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  #115  
Old 02-21-2011, 06:47 PM
HANDYHELPERS HANDYHELPERS is offline
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Originally Posted by jkilov View Post
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I have read both part 1 and 2.

I still can't believe such large companies credit outgoing expenses. It's horrible business practice to work on money that isn't there, gambling liquidity.

The only way out is downsize immediately, sell whatever equipment it takes to have cash on hand for existing and at least one future business.
All companies need money especially the larger they get. This is exactly why companies offer stocks. They need more money to float growth. When they grow enough then they try to buy back stock. Then they repeat the process over again as needed. All companies need money and present day earning, and past savings are not always enough to float future earnings.

As a small business you do not have the luxury of offering stock so you have to turn to a bank to get a loan. Same business practices just on different scales.
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  #116  
Old 02-21-2011, 08:13 PM
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T.E. T.E. is offline
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Originally Posted by HANDYHELPERS View Post
All companies need money especially the larger they get. This is exactly why companies offer stocks. They need more money to float growth. When they grow enough then they try to buy back stock. Then they repeat the process over again as needed. All companies need money and present day earning, and past savings are not always enough to float future earnings.

As a small business you do not have the luxury of offering stock so you have to turn to a bank to get a loan. Same business practices just on different scales.
I say baloney! There was a time when business 101 was keeping 6 months to 1 yrs business expense in the business bank account.....it's called "RETAINED EARNINGS". This would have kept procut from going under BOTH times.

If you need to more money than this to grow.....your growing too fast.
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  #117  
Old 02-21-2011, 09:09 PM
HANDYHELPERS HANDYHELPERS is offline
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Quote:
Originally Posted by T.E.;3905928[QUOTE
]I say baloney! There was a time when business 101 was keeping 6 months to 1 yrs business expense in the business bank account.....it's called "RETAINED EARNINGS". This would have kept procut from going under BOTH times.

If you need to more money than this to grow.....your growing too fast.[/
QUOTE]

Arthur Blank CEO of Home Depot and his partners went looking for money and ended up in Ross Perots office pitching for more money. Home Depot offered Perot 70% ownership for floating their business. Ross Perot and Arthur Blank could not come to an agreement because the Home Depot owners were driving Cadillacs and Perot did not accept that because his people only drive Chevys. To this day Ross Perot says that Home Depot was one of his biggest business mistakes. This is just 1 example of a business needing money.

Every book I ever read about any business talks about needing some kind of financing or stock offering. There is even a tv show called the Shark Tank where business owners pitch investors for money.

I am sure your company had to invest money to buy equipment. You may have been able to boot strap your entire operation, but if you ever want to grow from a 100,000 to a 3 million company, or even a billion dollar company somewhere along the line you will need a little money to float something.
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  #118  
Old 02-21-2011, 09:11 PM
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torotorotoro torotorotoro is offline
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[QUOTE=HANDYHELPERS;3906043]
Quote:
Originally Posted by T.E.;3905928QUOTE

Arthur Blank CEO of Home Depot and his partners went looking for money and ended up in Ross Perots office pitching for more money. Home Depot offered Perot 70% ownership for floating their business. Ross Perot and Arthur Blank could not come to an agreement because the Home Depot owners were driving Cadillacs and Perot did not accept that because his people only drive Chevys. To this day Ross Perot says that Home Depot was one of his biggest business mistakes. This is just 1 example of a business needing money.

Every book I ever read about any business talks about needing some kind of financing or stock offering. There is even a tv show called the Shark Tank where business owners pitch investors for money.

I am sure your company had to invest money to buy equipment. You may have been able to boot strap your entire operation, but if you ever want to grow from a 100,000 to a 3 million company, or even a billion dollar company somewhere along the line you will need a little money to float something.
amen to that
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  #119  
Old 02-21-2011, 09:30 PM
twcw5804 twcw5804 is offline
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Procut thank you for putting both of your threads out there to help some of us from making your mistakes.

I hate to go on a bunch of threads and preach Dave Ramsey, but even if you don't take his advice on not borrowing money people should at least look into have 3-6months of expenses in savings for down periods just like this.

My business will grow at a very slow rate from not borrowing, but I will never have to worry about anything but a house payment.

Your latest story sounds very much like the story of how Dave Ramsey went broke in the 80's. He had borrowed millions of dollars in real estate and then the bank changed hands and they decided to call all his 30 day notes due causing him to lose everything over a few years. If you get a chance read just the first chapter of Finance peace revisited and it will amaze you how much the start of your story sounds just like his.
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  #120  
Old 02-21-2011, 10:41 PM
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GreenT GreenT is offline
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Honestly procut.... I don't know how you put up with this...

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