Get an Investor or Downsize?

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

  1. THORNTON SERVICES LLC

    THORNTON SERVICES LLC LawnSite Senior Member
    Posts: 405

    Only you know the main causes for your businesses situation , employees? poor investments? Bad Money Management? Poor Pricing? You are were you are at for a reason , it may be one out of your control but its still a problem that needs to get fixed before you move forward , sinking a bunch of money into a sinking ship will only keep it afloat temporarily. In the end option one will be a big failure and cause you a bunch of stress without route causes being fixed , you lose his money and when you are back to where you are now you have to sell everything because he gets 60% OF EVERYTHING YOU OWN REGARDING THE BUSINESS. Is the shop at your home? be careful with this the implications depending on the contract can have pretty big affects on you. If he wants 60 he should do 60% of the work load weather it be office work etc , but most likely you will need more than money, that should be the result of a properly ran business. I am just saying this from my past experience with help they cost me more than they made me I went back to solo and a helper here and there and I am fine in fact I am doing better than I was doing trying to keep a sinking ship aflot , the big advantage to running a big business is being out of the field and with this invester sounds like that would not be the case. only you know whats best the little factors matter so much in these situations. If you go the investor route renagatiate to get a minimum of 60 you 40 them or just offer them interest if they give you a loan so they start getting there money back quick. I would try some different routes but only you know whats best for your company , and best of luck.
     
  2. MikeTA95

    MikeTA95 LawnSite Member
    Posts: 84

    I have some financial issues that are mostly due to the fact I made some poor financial decisions at the start of my company, mostly because I was fresh out of high school and very naive to how difficult paying back loans and stuff would be. I have also considered option 3, Selling completely, but the fact is that I'll get next to nothing for my contracts and I'll be in debt without a buisness, just a landscaping job.
     
  3. Patriot Services

    Patriot Services LawnSite Fanatic
    Posts: 12,449

    Never , ever give up more than 49% stake in your business. Any more than that you might as well just sell him the business outright. Any way that you proceed, use your lawyer to draw up all the papers, not his. Things might seem crappy now, but people farther upside down than you have pulled the nose up without seeling their soul to satan.
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  4. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    I would never accept a partner even if I had the 60%.

    I would down size. Sell off the bare minimum. Avoid debt. Too many new businesses fail because they take on debt.
     
  5. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    Tell us about your expenses and your prices.

    Many people starting out usually under bid.
     
  6. georgialawn88

    georgialawn88 LawnSite Bronze Member
    Posts: 1,075

    option 1 makes me throw up in my mouth a little. whatever you do don't do that
     
  7. Armsden&Son

    Armsden&Son LawnSite Silver Member
    Posts: 2,357

    Chin up kid, it's not all that bad really..... Think about it, if you downsize, work your arse off for a couple years, you could be right back to where you are today but instead you will be posting, "should I go to 2 crews or 3 crews?" If you let this investor in, you do not have a company anymore.... Sometimes capital can be a tempting thing, (that's why a lot of folks go into debt in the first place) But in a couple years when you are back on your feet, your OWN feet, you will be thankful for sticking it out yourself...
     
  8. Utah Lawn Care

    Utah Lawn Care LawnSite Bronze Member
    Posts: 1,304

    Go down to 1 crew. If you have too many clients for 1 crew to do - that's a great problem to have. Increase your prices by 5-10 bucks/week and let several weed themselves out. Don't be the one to tell them you don't want them, let them decide for themselves. If you're too expensive, that's fine. You will be left with good profit margins and noticeably more money per hour. The sales of your truck(s) will probably be enough to get equipment and have a new refreshed start. I also will point out that 2 people per truck is more efficient than 3. Less gets done per hour with 2, but when traveling there are only 2 people being paid for doing nothing instead of 3. Also, it's rare for 3 people to get done at exactly the same time. There is usually some goofing around waiting for the last guy. I really would look into raising your prices though. The worst that happens is that you lose some clients, and earn more from the people that are left. Take a look at your routes and make them as efficient as possible. Be more frugal in your personal life. Pretty much evaluate your personal life, and business life financially and figure out how you can improve, be more efficient, and a better businessman.
     
  9. CNYScapes

    CNYScapes LawnSite Senior Member
    Posts: 917

    I am suspecting your prices are probably too low, as that is one of the most common reasons people in this business are not profitable. zzThe only other thing to look at is overhead. Get rid of it!! Get it down anyway you can. You have to bring in more than you send out. Most guys dont have any idea what there numbers are, take a step back and look at all the numbers and stick your pride in your pocket to make the tough decisions you need to make to be a profitable company. Good Luck
     
  10. What are the reasons you found your seif in this position? Only you know or may be you don't.Do you have a system in place that tracks and shows you what's working and what's not working? Are you a low baller? Not trying to chop your legs off just trying to give you some ideas and some fixes.With out knowing do you do Commercial or residential work with Three man crews? Do you have a bunch of primadonnas that don't get of the mower and wait for the other two guys to finish before they would grab a edger? The best thing I ever did was install G P S on the trucks,I know where and when and how long every job takes to complete, when something takes longer than usual I ask why, also change up the crews you would be amazed what that does,If you have some property's that are not profitable, or traveling time is counter productive,raise the rate or just give them notice that they should find some other LCO that serves there area.I don't like the fact that you have allowed all your equipment to become subpar sounds like poor planing? The bottom line is not what you gross or how much business you do,it's what's left over after the dust settles. I would advise you to down size, regroup and re build.
     

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