How to fail part 2

Discussion in 'Lawn Mowing' started by PROCUT1, Feb 18, 2011.

  1. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    Many businesses fail because of cash flow problems. Expenses are more then income. Whether they can't keep costs down in the beginning or try to grow to fast.


    To take loans to cover operating expenses without a steady profit flow to pay these loans is just gambling. Gambling that the job won't get delayed by weather, material shortage developing, shipping delays, customer has cash flow problem and pays partial or late or they go belly up because the to have been running their business on the banks dime as well.

    There are many here that have been in business for a long time and have grown in size. They did this by keeping costs down, staying out of debt, paying for things with cash.

    This is a business plan for all to follow.

    Who wants to do a $20,000 job that will take 4 weeks to do, $10,000 for materials and $10,000 for labor? If the customer can't/won't pay for the materials up front, and pay $2,500 after each week for labor, with the final $2,500 is paid when the job is completed.

    Are you a landscaper or a bank to your customer?
     
  2. JDUtah

    JDUtah LawnSite Silver Member
    from UT
    Posts: 2,636

    Sure companies need money to grow and expand. DUH! :hammerhead:

    The problem is where that money came from. Let us not loose sight of the goal here. We are NOT out to make the next Wall-Mart, McDonalds, or Home Depot. Sorry guys it's true. Wanna know why? Because we are in the green service industry. Second, because we are coming to this site for entertainment and information. If your goal is to make the next billion dollar company, you might wanna switch industries. And you might want to change where you spend your time. Just saying. (Another note: if a national empire is your goal you may want to research the personal lives of the people who built those empires. Most of them have personal lives that would make me cry myself to sleep every night)

    So if our goal isn't a national professional empire what is it? Our goal should be to have something that will provide our real life (family, etc) with security and enjoyment. That's it. We are here to produce something that serves us, not something that we have to serve.

    With that being said, there is completely zero logic in leveraging debt for time in building your business. Sure an investor (be it a bank, or a shareholder) can speed up the expansion process, but in reality the very moment you pursue this course you become the servant of your company. In more precise words, you become the servant of the new owners of what was once your company. It instantly turns completely backwards.

    Don't believe me? I lead a department for Sam's club (part of Wally-take-over-World) and I can tell you that even the richest company in the world is there to do one thing... serve the ones who own it. EVERYTHING in that company is about profit for the shareholder. Period. Why? That company knows that because it borrowed money from the shareholder, if it doesn't serve the shareholder it is screwed!

    Is this bad? NO! That is a companies job, to serve its owner. The bad part is when we make our own company that is supposed to serve us (the initial owner) and then give that ownership away in 'debt' or 'shares'. As soon as we give it up we don't have a company that is there to serve us anymore, we have a whip cracker that is there to serve its new owners.

    And what are we? We are slaves left to do the exhausting (and now unrewarding) grunt work. And why can't we escape? Because in fooling ourselves to think we needed to expand more quickly, we told the new owners that.. .

    "I will make this company work for you... If it doesn't, I will even put my own assets on the line to guarantee that you will be taken care of. I will do this because I lied to myself and think that expanding this company faster by giving ownership to you will help me own more of it."

    The sad fact is... debt doesn't help us own more... but it helps the company to own us more. Now instead of our company providing us with secure income and a feeling of satisfaction, it demands from us the very things it was there to serve... our personal lives!

    Back to the beginning... companies need money to grow. Duh! BUT that money should come from the past (work we have completed and have been paid for) and NOT from borrowing from the future. If we borrow from the future we are leveraging the wrong things and giving up the very thing we are here to build... our lives.
     
  3. JDUtah

    JDUtah LawnSite Silver Member
    from UT
    Posts: 2,636

    Procut,

    You have proven that you are a courageous, persistent, tenacious, intellectual, humble man of good character. I have no doubt that you will build whatever it is you want to build. I am interested and excited for the rest of your life to play out in all of its joy and happiness!
     
  4. MOturkey

    MOturkey LawnSite Silver Member
    Posts: 2,746

    This is, perhaps, the most intelligent, "real world" post I've read on this site.
     
  5. mcw615

    mcw615 LawnSite Senior Member
    Posts: 473

    MCW615 'Likes' this.
     
  6. jkilov

    jkilov LawnSite Bronze Member
    from MS
    Posts: 1,415

    Yes I understand what the stock market and banking system are for: foundation of companies and financing big projects ... nothing else!!

    Every float is a calculated risk, an enrichment of opportunity ... not a daily business practice! Under loan you're vulnerable, an unforeseen event (customer goes bust, theft, accidents, illness ... anything) can send you bankrupt. It's an ace up the sleeve, use it rarely and visely.

    Like JDUtah pointed out: Every Joe of the hood wanted to become Bill Gates of the block by overinflating and floating his company, stock, real estate and his ar$e if he could. It's greed not ambition. The money isn't there, PERIOD!!! Result: World financial & economical collapse, and congratulations to out disgusting achievement. Now millions of people work like idiots or can't find jobs due to ignorance! Explain your floating business model to them. Shame on us Americans :usflag: for being so greedy :wall and AMEN to that :angel::hammerhead:.
     
    Last edited: Feb 22, 2011
  7. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    I dont think you read the whole thread before you posted.
    Expenses were not more than income
    Costs were down
    There was a steady profit flow to pay off the line
    The job took a week to do. Not 4
    Materials and labor numbers way off
    And Im not a landscaper

    I understand what you are saying and agree with it totally.

    It just doesnt apply in my situation


    Thank You :)
     
  8. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    I was using a generic example. So your statement about the job only taking a week is not the point.

    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?

    And don't come back giving excuses' such I don't have my facts straight such as we didn't use no shovels.

    You then said their was no cash flow problem so why did you not pay your notes in a timely manner?

    Or did the banks come after you because they didn't like you?

     
    Last edited: Feb 23, 2011
  9. weed wacker 2

    weed wacker 2 LawnSite Member
    Posts: 208

    This is a great thread. There are great post on here that can inform young and old business owners. I think that cash flow is king. Every year comes with different decisions to make. Some risk are worth taking if they are calculated risk and not made just on hope. The will to succeed can fool a mans mind to make dumb decisions based on hope. We all have made decisions based on this but we live and learn. Its all part of life. You live and learn. If each one of us could learn from each others mistakes our business and our country would be a better place. Take our country as an example. In my opinion, It should be ran as a business. A business for the people. However: It sure isn't ran like one because it would have went under a long time ago. There are many educated post on this site every day and I enjoy reading them all. Thanks and God Bless!
     
  10. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    I'm not trying to be a dick here. Everyone here knows I have no problem accepting criticism, advice and admitting where I am wrong.

    You didn't read the thread otherwise you wouldn't be asking those questions which are wrong and answered numerous times.

    Those questions that don't make sense to you are the entire point of this thread from the beginning.
    Posted via Mobile Device
     

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