Get an Investor or Downsize?

Discussion in 'Business Operations' started by MikeTA95, Dec 31, 2013.

  1. MikeTA95

    MikeTA95 LawnSite Member
    Posts: 84

    So, I'm at a crossroads and I am going to ask you guys what you think. What would you do if you were in my shoes, unable to continue on due to money issues and a list of equipment that barely made it this season.

    1. I have an investor interested in helping me buy some more equipment, which I thought was a god send at first except he wants 60% ownership of my company. He wants me to add another crew, and he would want me to bring my gross up by at least 100k next year. The positives are I get to grow my company more, get to add some projects, more guys, more pride, etc. The negatives are having to share my company with this guy who wants me to turn some pretty big numbers which is going to be stressful to say the least. Also, I won't be making much more money for myself.

    2. My other option is sell off the extra trucks and go backwards. Go back to one crew, me and two other guys, and do a the closest/most profitable properties and drop the rest. I figure I can sell off my equipment and get enough together to replace it with decent equipment for one crew. Positives are the lack of debt and I'll get back in shape, better quality of work since I'll be on the job, maybe even have the time to finish college. The negatives are the perception of failure, I'll be taking a pay cut, The stresses of dealing with a much lower cash flow, having to let go of a lot of customers.

    What would you do?
     
  2. First off, you will now be an employee, your not the boss now, sounds like you Need to figure out your finances and reorganize.
     
  3. TuffTurfLawnCare

    TuffTurfLawnCare LawnSite Senior Member
    Posts: 668

    I would go to with option 2. With option 1 you are now growing HIS company. Its no longer yours once you sell a controlling stake. Option 1 you have become an employee.
     
  4. caseysmowing

    caseysmowing LawnSite Bronze Member
    Posts: 1,851

    X2 on that. If you are barely making it now then addin a investor that is going to want to see some profits also doesn't sound like it would work. I'd downsize and regroup and stay focus on your numbers.
    Posted via Mobile Device
     
  5. easy-lift guy

    easy-lift guy LawnSite Gold Member
    Posts: 3,376

    The phrase "except he wants 60%" means you have no ownership of your company, you will be working for the new owner with no prospect of ever retaining any controlling interest in what was once your business. If you don't mind working for someone else and having them calling all the shots in the present and the future your decision is easy otherwise work with what you have and politely tell the investor, no thanks.
    easy-lift guy
     
  6. RedSox4Life

    RedSox4Life LawnSite Bronze Member
    from Mass
    Posts: 1,426

    I agre with these guys. With option 1 it sounds like equal or more work, with all the headaches, but with less pay and no ownership.

    Id be putting in resumes elsewhere before considering that option.
     
  7. jc1

    jc1 LawnSite Bronze Member
    Posts: 1,568

    Of your 2 choices there is only one option, down size.
     
  8. ztman

    ztman LawnSite Bronze Member
    Posts: 1,007

    Option 3, sell him the whole company, become an employee, and finish college
     
  9. WenzelOSLLC

    WenzelOSLLC LawnSite Senior Member
    Posts: 709

    I like option 3. :cool: Is there enough cash flow and client retention year to year to go to the bank and get a line of credit to start swapping out equipment?
     
  10. Glenn Lawn Care

    Glenn Lawn Care LawnSite Silver Member
    Posts: 2,647

    I would choose option #2! Don't lose control of your own company. Down size for a year if you have to, get back to the basics. Save money and see where you are at this time next year.
    Posted via Mobile Device
     

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