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Finance vs. Cash?

Discussion in 'Business Operations' started by HighMaintenanceLLC, Jun 14, 2013.

  1. HighMaintenanceLLC

    HighMaintenanceLLC LawnSite Member
    Posts: 7

    My partner and I started our part-time lawn and landscape maintenance business in February, and we're just curious as to what the opinions are of whether we should finance any new equipment or just save up and pay cash.

    As an overview of what our mission is and our equipment situation, we're just looking to have 8-10 (small) yards that we cut on a bi-weekly basis; this is a pretty realistic expectation for our situation. I know a lot of our competition won't crank a mower for anything less than a $65 yard, so we've been targeting VERY small yards (1500-2500 sq. ft.) in our own cookie-cutter neighborhood for around $30-$35. We're currently only working with two 21" pushers and an Echo commercial edger, trimmer & backpack blower. We are currently borrowing one of our father's 5' x 8' tilt trailer, which we keep nearly 100% of the time. We can afford to target these smaller yards because a.) we each work full-time and aren't relying on this income in any way; this is more of a "hobby" really, and b.) we really only have the capacity at this point to target small yards.

    I'm thinking our first purchase might need to be our own trailer, but I'm torn between this a a bigger mower since there really haven't been any conflicts with us borrowing the trailer. A bigger mower (maybe a 36"-48" walk-behind) would allow us to target slightly larger yards in nearby neighborhoods, but we would have the cash for a trailer long before we would a mower at this point.

    So, my question is, given our brief background, how should we proceed from this point? I'm torn between trying to finance a new trailer & mower and just chipping away little by little and paying cash. We're not looking to build a multimillion dollar business; just a nice vacation every year or so would be nice.

    Thanks for your input!
  2. ztman

    ztman LawnSite Bronze Member
    Posts: 1,007

    If this is your hobby , and are making $300-350 every two weeks, split between two guys, I wouldn't finance anything
  3. slowleak1

    slowleak1 LawnSite Senior Member
    Posts: 532

    You shouldn't be buying anything at this point, period. Y'all should be able to do 15 yards a day with the equipment you have now. All of that equipment will fit in the back of a pick up truck so you really don't even need a trailer, which will save you money on gas
  4. TuffTurfLawnCare

    TuffTurfLawnCare LawnSite Senior Member
    Posts: 668

    For as few lawns as you want and as small as they are I don't see the need for a big mower. I am not afraid to finance equipment as long as its 0% interest for the life of the loan. However, since you have a partner, I wouldn't finance anything. When (not if) one of you gets sick of the other, someone is gonna get stuck holding the note on the equipment. If you were solo and going for more and bigger lawns, then I would say finish this year then look into equipment for next year.
  5. ztman

    ztman LawnSite Bronze Member
    Posts: 1,007

    After looking at your web link, I see my post should have referred to "two gals" not two guys, sorry.
    BTW, one gal has an MBA so I assume you know what to do re purchase vs finance
  6. HighMaintenanceLLC

    HighMaintenanceLLC LawnSite Member
    Posts: 7

    No worries, and yes; I was just curious to get some real-world opinions. Of course, instant gratification comes in to play---"I want the new, shiny equipment and I want it now!" :usflag:
  7. ztman

    ztman LawnSite Bronze Member
    Posts: 1,007

    Me too, so go get it. Makes more financial sense to not finance, but people do it all of the time for instant gratification. I would rather have something new, but don't finance. If you shop around there should be some zero percent deals out there, but if you give up your "hobby" you will be stuck with payments.
  8. slowleak1

    slowleak1 LawnSite Senior Member
    Posts: 532

    Been there done that...reality has finally set in for me and while I could easily afford my purchases they weren't exactly justifiable. I'm to the point now where I actually use an older smaller mower to do the majority of my cutting, and while it takes me a little longer to cut, I save in the long run on fuel.

    If you are doing this as a way of relaxation and want the new shiny toys, go for it. I did, and now I sort of regret it. Just think about the long run.
  9. HighMaintenanceLLC

    HighMaintenanceLLC LawnSite Member
    Posts: 7

    Thanks, guys. I think I'm definitely leaning toward purchasing a trailer first (cash) if anything, but I don't know if we'll even do that this season. That's something that would be useful for other things rather than just business-related tasks, so I can justify that more easily (the more I think about it) than purchasing more equipment. From personal experience/mistakes, I really don't want another payment!

    Thanks, again, for the advice.
  10. GVL LLC

    GVL LLC LawnSite Member
    Posts: 154

    If I were you two gals, I wouldnt buy anything this year and just build up the cash and then buy a nice used 12 ft. trailer and a nice new or slightly used 36 or 48 inch walk behind ( depending on size of target accounts that you go after) next year.

    Also like another person said I wouldnt even use the trailer you have now this year to save gas and time. You can fit two 21's a blower trimmer and a few other things in any 6 ft. truck bed (assuming you guys use a pickup truck).

    I have a couple accounts that only require using a 21 blower and trimmer so i do all of them on the same day and dont even bring my trailer because its a waste of time hooking and unhooking and a waste of gas.

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