How much debt is safe to carry?

Discussion in 'Business Operations' started by 32vld, Jul 5, 2013.

Thread Status:
Not open for further replies.
  1. 94gt331

    94gt331 LawnSite Bronze Member
    Male
    Posts: 1,692

    I carry a decent amount of debt, I have a small sized company with 4 fulltime employees we are going to hit $300,000 in sales this year. My debt isn't extremely high but it's higher than it should be. But I save alot of money as well. I like to keep alot of money in my savings acount even know I could pay off debt, messed up I know but it's my comfort zone. If I can aford to make those payments each month and still put money away in the bank. Truely what does it matter if you have debt or not. As long as your using that debt to make money and your profiting in the end that's all that matters. I grew my buisiness by taking risks. And it's paying off. Don't be scared of alittle debt. Just be responsible about it, that's what seperates the succesful and the rest. If you are worried about buying a $9,000 mower on a finance plan you don't have enough work to buy it anyway. You can get a new mower for $300 a month think how much you can make off that mower if your mowing 70 yards a week. Or would you rather be the guy with the old beat up mower constantly fixing it costing you more than it's worth because your afraid of taking a loan out for a mower. :waving:
     
  2. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,274

    Ive alaways wondered why a company that has been in business several years cant afford to buy a lawnmower. If you have payroll and mower payments aren't you close to going out of business?
     
  3. vegandude

    vegandude LawnSite Senior Member
    Posts: 450

    We have substantial savings, no payroll, no debt and yes I can go out and get whatever mower I need new, but I won't do that. I won't work with employees which means I am one serious injury away from hard times. I plan New equipment purchases and set aside a certain amount of gross every month that's saved for equip and maint. I don't like paying interest as that's just giving away my money. That's my comfort level. I just kinda think that the less you owe to somebody else, the less that can get messed up. I know that it isn't for everybody but oh well.
     
  4. 94gt331

    94gt331 LawnSite Bronze Member
    Male
    Posts: 1,692

    Just because you have payroll and mower payments, why would that mean they'd be going out of buisness? I know the mowing buisiness gets tight sometimes but a good operation should be able to swing a mower payment without going out of buisiness lol. I agree with your first sentence also:waving:
     
  5. JBNC

    JBNC LawnSite Member
    Posts: 200


    Since you mentioned Dave Ramsey it seems like you like his way of doing things. I'm a big fan of his. His baby steps for personal finance can translate into business pretty easily. The first thing I would do is save a little "emergency fund" (he recommends 1k, I would maybe save a little more for a business). After you have probably 2-3k in the bank w/ easy access I would start paying off the debt in the way you mentioned, smallest to largest. After your debt free save up a bigger emergency fund, and start sinking funds for equipment & trucks. The reasoning for saving up a few thousand to start off with is to put a buffer between you and life, it will fix a mower or pay for a broken window so that you don't have to go into debt to fix small issues that come up.
     
  6. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,274

    Numbers on paper and real life are almost never the same.

    Having debt increases your RISK, its that simple. A good mowing operation should be able to pay for a lawn mower, other wise someone isn't making very much money.
     
  7. RWI

    RWI Banned
    from GA
    Posts: 125

    You need to talk to a good insurance agency and get workman's comp.
     
  8. RWI

    RWI Banned
    from GA
    Posts: 125

    A "good mowing company" pays cash for mowers. I spent 20k in mowers last year and 12k in mowers this year... cash.
     
  9. RWI

    RWI Banned
    from GA
    Posts: 125

    If you don't have half your "gross sales" in a bank account... you are not going to be around long.
     
  10. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,520

    What? You have got to be kidding.
     
Thread Status:
Not open for further replies.

Share This Page