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Discussion in 'Business Operations' started by FFMED74, Feb 6, 2004.
No matter if you are big business or small debt and overhead kill your bottom line.
I must state again how much I am enjoying hearing all the info on how we all started. It is nice that a large number started small and now are big. I only hope that with each piece of info I glean from here will be one step closer to more my goals!
Charlies ..I don't care how he is paying for it, unless of course he is in the habit of just giving away his personal money for no gain. Equipment costs need to be recovered... fact is I'm having a hard time keeping my mouth shut because It seems we are only involving lawn mowers here... You should not put equipment under overhead. If you do you will be recovering it on every job you do...jobs that your not even using that piece of equipment, and that could put you out of the ball game.... again..im not talking about grass cutters here. Im talking about skid steers etc. You should be IMO be using a multiple overhead recovery system.
Kris, I believe in paying Cash for everything I buy. This is the one sure way to keep your overhead to a minimum.Everything I spend on the business is overhead, including my paycheck and your correct it has to be recovered. I don't have to add interest charges as overhead, because I don't pay interest. It doesn't take any rocket scientest to understand that paying cash is the only way to keep overhead to a minimum. Plan, save,execute. We should all be taking a % off the top for tomorrows needs first. The old saying,"pay yourself first".Pay your business first. Why should I let the bank own my business. Let your business live with in its means. Everything we do to make money is done to recover overhead and make a profit. I don't know, maybe I don't understand what it is that bothers you about this.Feel free to e-mail me and maybe we can both learn something. firstname.lastname@example.org.....Always up for a lesson.
Lou ..it's early morning and I haven't got a lot of time right now... I did get your PM.
Let me put this thought in your head before I go... Thats great that you pay cash and nothing wrong with that but think about this.... just because your not paying interest on your equipment why should your customers benefit from that? Since when did you become a banker? and letting them use your equipment interest free .... consider adding interest to your equipment costs regardless ... and another thought to think about.... are you recovering your equipment costs at TODAYS cost to replace? More later Lou.
I think you both are right in that cash is the best way to go, because you are now making that money right away, instead of paying out part for the loan/debt. I also aree that you can "add on" a bit for future expenses, but that is up to each person. I bought my Landscaper supply w/b on a 90 day SAC, so there was no interest acrued when I payed it off. That was overhead, but I now look at the fact that I am debt free in the biz side as a better place, not that I wont be there again(soon I am sure) . My whole point was to see what each person thought about the facts of high dollar vs good or even used equiptment. I just thought it made more sense dollar and cent wise to start with good equipt then 10k in debt and then try and grow.... Each his own lol