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  #131  
Old 02-23-2011, 10:26 AM
bobw bobw is offline
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Quote:
Originally Posted by 32vld View Post


Why did you have to finance the materials instead of the customer before you touched a shovel?

Why did you not have the customer pay off as the job progressed?



Have you ever actually done large commercial projects before?

Around here are no deposits in commercial work. If a project is big enough, you can do some progress invoicing, but even then you'll be waiting 30-45 days for the check to show up.

Try working on new construction projects... builder doesn't pay the general contractor, well, then you don't get paid. That is the way the commercial world works.

Don't like it? Well then, stick to residential and small scale commercial stuff, somebody else will take care of the big stuff.

Getting a company to the point that it can be a legitimate contender at the large commercial level is a heck of a challenge. You can do absolutely everything right and still end up screwed.

Did Procut make mistakes? You bet. But how many of you actually READ the forms the bank put in front of you when you opened your accounts? or all the fine print when the dealer financed your last piece of equipment? Did you take them to your lawyer for review? or are you an expert at reading legalese?

/end rant
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  #132  
Old 02-23-2011, 11:26 AM
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PROCUT1 PROCUT1 is offline
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Deposits and progress payments are the "right" thing to do.
A huge portion of my work, I always have done that way.

You know what it is? Some really large management companies and owners have a different view as to what is a "big job"

They build apartment complexes, they do huge renovations. Theyre used to paying millions for these projects.

$30,000 to them for some maintenance work, is not a major project. Its a short term item that they just see as a "work order"

They dont want to complicate it.
Its like a regular customer asking you to trim their bushes.
They operate on a different level. A level where $30,000 is not a lot of money.
They would rather deal with a contractor that they dont have to write multiple checks to for a "tiny little job"
Just do the job and send us the bill.

Now....For a contractor like me, thats a HUGE amount of money.
Especially when I do one complex, send a bill, and already they ask me to do 2 more.

Yes. There is an element of risk. And I took that risk. There is the risk of not getting paid but, I knew these companies well enough, did enough research on them, that I wasnt worried about it. I felt the chances of not getting paid were razor slim.

Again.....I had the choice.....I could have said no to the work...

But I had done jobs in the past, always got paid, used the credit line like I was supposed to, and this was just BUSINESS AS USUAL.
I had the line for years. This wasnt a new thing.

I didnt miss payments. I wasnt late. And it had nothing to do with the bank liking me or not.

Im sure you've caught the news over the last couple years.....I cant imagine you have missed the "CREDIT CRISIS" in this country. How small businesses are going under left and right because of it. This is a local example.

It was an across the board decision. Nobody reviewed my individual line. It was done at the corporate level.

Every single one of my friends in business had the exact same thing happen. Some went under because of it, some were lucky and it didnt affect them much.

The ENTIRE POINT of this discussion is based on the surprise of the line getting pulled and the lack of reason behind it.

Im sure there are guys out there right now that are under the impression that as long as they make their payments on time, they are fine.

Thats what I thought.
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  #133  
Old 02-23-2011, 11:26 AM
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JDUtah JDUtah is offline
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Guys,

While I clearly agree that debt is not worth using let us not quickly judge Procut for THE BANK'S decision to cut his line of credit.

I was watching the Ray Lucia show last night (a national financial planning show) and they discussed how THREE of the FOUR people talking about it on that show had their line of credits cut just like Procut. One was cut form 80,000 down to 8,000. One was cut from 102,000 down to 2,500 (the amount he had on his loc).

In the same way as procut, they were not informed of this bank change until month(s) after. In the latter case the guy found out by his state tax check bouncing.

Here are 3 financial guru's that ran into the same problem as Procut. The banks slashed people's LOC across the nation. Perhaps because they wanted money, perhaps because they felt they had over lent. Either way, the only thing I think American's could have done differently is not to have relied on the LOC's at all.

Last edited by JDUtah; 02-23-2011 at 11:31 AM.
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  #134  
Old 02-23-2011, 12:32 PM
BestImpressions99 BestImpressions99 is offline
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To quote Puff Daddy (when he was actually good at music)... "The more money we come upon, the more problems we see".

One of my long time friends owns a very successful window washing business, quite like you PROCUT. He had credit out the wazoo and could pretty much do anything he wanted. A buddy of his wanted to go into the race car starter business. He said sure... but ~150k on his American Express. Long story short, his buddy moved the business to GA, leaving my friend with 100k on his AmEx card and the cashflow wasn't there anymore.

He learned his lesson. Cut up his cards, paid almost everything off. Grew his window washing business to two crews, high rise accounts and nearly ~200k a year in profits. He comes to me and wants to sell the business because he needs to move to Arizona (for his wifes health). I (seeing lots of movies... and also having a business degree) ask to see his books and he hands me three sheets of paper with the profit/loss break down of the past three years.

I look at him and ask to see his books. He says, that's what I've got. That was a HUGE stop sign. To me the guy was seeing where things were heading and was getting out while it was good. I caught up to him a few months ago (about a year between him approaching me and this) and he still owns the business, lost a $30k acct.

A bit of a long story, but the jist is... This guy didn't learn from his mistakes, credit bit him in the butt.

I've also gotten in to trouble three times with credit cards. Credit lives off of your mistakes, bottom line. I really am truly sorry the credit crunch bit you in the butt PROCUT... but hopefully you allow this to help you learn more about the challenges of working off credit. (think about this too... The day after Leihman Brothers went under... NO ONE got credit, not even guys like JP Morgan Chase, so none of us would be any different).
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  #135  
Old 02-23-2011, 11:43 PM
32vld 32vld is offline
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Quote:
Originally Posted by bobw View Post
Have you ever actually done large commercial projects before?

Around here are no deposits in commercial work. If a project is big enough, you can do some progress invoicing, but even then you'll be waiting 30-45 days for the check to show up.

Try working on new construction projects... builder doesn't pay the general contractor, well, then you don't get paid. That is the way the commercial world works.

Don't like it? Well then, stick to residential and small scale commercial stuff, somebody else will take care of the big stuff.

Getting a company to the point that it can be a legitimate contender at the large commercial level is a heck of a challenge. You can do absolutely everything right and still end up screwed.

Did Procut make mistakes? You bet. But how many of you actually READ the forms the bank put in front of you when you opened your accounts? or all the fine print when the dealer financed your last piece of equipment? Did you take them to your lawyer for review? or are you an expert at reading legalese?

/end rant
"Guys,

While I clearly agree that debt is not worth using let us not quickly judge Procut for THE BANK'S decision to cut his line of credit.

I was watching the Ray Lucia show last night (a national financial planning show) and they discussed how THREE of the FOUR people talking about it on that show had their line of credits cut just like Procut. One was cut form 80,000 down to 8,000. One was cut from 102,000 down to 2,500 (the amount he had on his loc).

In the same way as procut, they were not informed of this bank change until month(s) after. In the latter case the guy found out by his state tax check bouncing.

Here are 3 financial guru's that ran into the same problem as Procut. The banks slashed people's LOC across the nation. Perhaps because they wanted money, perhaps because they felt they had over lent. Either way, the only thing I think American's could have done differently is not to have relied on the LOC's at all. "


"One of my long time friends owns a very successful window washing business, quite like you PROCUT. He had credit out the wazoo and could pretty much do anything he wanted. A buddy of his wanted to go into the race car starter business. He said sure... but ~150k on his American Express. Long story short, his buddy moved the business to GA, leaving my friend with 100k on his AmEx card and the cashflow wasn't there anymore.

He learned his lesson. Cut up his cards, paid almost everything off. Grew his window washing business to two crews, high rise accounts and nearly ~200k a year in profits. He comes to me and wants to sell the business because he needs to move to Arizona (for his wifes health). I (seeing lots of movies... and also having a business degree) ask to see his books and he hands me three sheets of paper with the profit/loss break down of the past three years.

I look at him and ask to see his books. He says, that's what I've got. That was a HUGE stop sign. To me the guy was seeing where things were heading and was getting out while it was good. I caught up to him a few months ago (about a year between him approaching me and this) and he still owns the business, lost a $30k acct.

A bit of a long story, but the jist is... This guy didn't learn from his mistakes, credit bit him in the butt.

I've also gotten in to trouble three times with credit cards. Credit lives off of your mistakes, bottom line. I really am truly sorry the credit crunch bit you in the butt PROCUT... but hopefully you allow this to help you learn more about the challenges of working off credit. (think about this too... The day after Leihman Brothers went under... NO ONE got credit, not even guys like JP Morgan Chase, so none of us would be any different). "


All these posts point out that sole proprietorships, even if you incorporate, go LLC, or LLP, the banks will still and always treat you as a solo proprietorship and not want to lend you the money that they do large "meaning real corporations" not individuals trying to get the same legal advantages as the big boys (corps).

When Donald Trump was having a financial collaspe, which I think was brought about due to him divorcing Ivana, he stopped paying the loan on his yacht and then told the bank he was no longer going to pay the insurance on it.

The banks response was to make the insurance payments until the yacht was sold.

The lesson here is that banks will always lend the big players money and then lend some more to protect their loans from going belly up.

To me $30,000 is a big job. Not to the developers building these large projects. They dangle a big pay day in front of a subcontractor. Enough temptation to cause these small to mid size subcontractors to willingly take the risk to go into debt and be a bank to the big boys.

In a way these subs are undercutting the banks just the way the illegals are undercutting the legit contractors.

Why do work for someone that will not pay promptly?

When I bought my home in the summer before the economy colapsed, right after I got my mortgage, my credit card company raised my credit limit from $20,000 to $50,000. The thing is I knew that I could not even pay off $10,000 credit card debt at that point and was determined to keep my CC balance at $0.

I think the credit got so loose before the collapse because the banks were trying to maintain their volume of loans and profits.

I knew as an individual to stay away from this easy credit. After the economy colasped and banks started restricting credit accross the board. My CC limit was reduced to $8,000. All why trying to not use it or carry a balance.

I'm glad I did because at the end of '07 my income colasped with the economy.
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  #136  
Old 02-24-2011, 08:27 PM
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torotorotoro torotorotoro is offline
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pro cut please save this thread, it is turning into a train wreck.i really want to read more about your situation. and how you coped with it, and the steps you took to keep the doors open. i dont need to read page after page of how credit is bad, we know it is a nessary evil. but i always like to hear about how people overcome obsticles.
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  #137  
Old 02-25-2011, 01:51 AM
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stuvecorp stuvecorp is offline
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Procut, thanks for sharing. Never made it as good as you but have gotten close to as low and it sure opens your eyes on some stuff. Credit is a great tool but is so easy for it to get out of hand. I agree with the guys that say pay cash for stuff but when you have nothing to start with you need the equipment and trucks to grow and credit is about the only avenue.
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  #138  
Old 02-25-2011, 09:07 AM
32vld 32vld is offline
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One does not need to offer full services when starting out.

One does not need a zero turn professional mower to start out.

One does not need a truck when starting out, one can buy a Harbor Freight 4x8 trailer pulled behind most cars for $300.

If one is a home owner then you should have a mower and basic equipment and tools or is young and has parents with a home one can use their equipment with the offer to do all their landscape work in exchange.

One does not need to into debt.

One choses to go into debt.

The people running big corporations use credit all the time. And why not? Before the company goes under they sell their stock options, and retire to one of their many second homes because they will not be personally held financially liable.
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  #139  
Old 02-25-2011, 09:17 AM
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TJLANDS TJLANDS is offline
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Quote:
Originally Posted by torotorotoro View Post
if you live in your parents basement and mow 50 lawns a week could you please refrain from posting your take on saving money in your little piggy.it is messing up the flow of a great read.
By far the best post in the first 10 pages.

Hows it going Procut, I see you have started a little cult again.

It is fun following, I knew I only needed a couple posts to see Dave Ramsey's name brought up, some people will just never understand.

I give you credit for dealing with the stupidity of some of the posts.

ps. When are you moving?
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  #140  
Old 02-25-2011, 09:39 AM
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PROCUT1 PROCUT1 is offline
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The advice about not using credit is correct. Other guys in the business laughed at me because they're pulling rigs with brand new shiny f-550s and I spend my weekends in the shop painting the wheels on my early 9o's Chevy's.

The fact that I own all my equipment and trucks is the reason I'm still in business. No matter how bad it got I could still sleep at night knowing when I got to the shop in the morning all my "old junk" would be parked right where I left it.

Many of those who busted my balls can't say the same. I know a lot of guys in the area that have become well acquainted with the repo man. So many times I was tempted. I'd get those 20,000 checks rolling in, a truck would need work and I'd get frustrated. I'd think to myself.......its a few hundred bucks a month......peanuts......get a brand new truck.....no problems....

I luckily always stopped myself. Guarenteed if I didn't, I'd be out of business now.

No matter how slow things were since I had my equipment I always found something to do.

A couple hundred dollar linestriping job may not have paid the bills but it bought groceries.
another one kept the electric on.

Being self employed, owning equipment, I had options.

Ill get on with the story in a bit. Off to a meeting.
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