Paying cash is a mindset

Discussion in 'Business Operations' started by muddywater, Sep 3, 2012.

  1. PerfectEarth

    PerfectEarth LawnSite Bronze Member
    Posts: 1,734

    Oh, and by "good debt" (which is an actual term) I meant this- yes, copy/paste front the interwebs. :)

    "There can be good debt as well as bad debt. Good debt can be described as debt that helps you build equity or increase your net worth. For example, education loans usually are considered good debt because in the long run more education generally translates into higher earning power. Most people borrow money for a mortgage to get a home—if the home purchase was a wise investment that increases in value and adds to your net worth, then it would be considered good debt. Another example of good debt might be loans to run a small business—for example, if you borrow money at 7 percent and use that money to make a 15 percent or 20 percent return, then it would be considered good debt because you are using the loan to increase your net worth. Good debt includes loans that help to build your financial future.
     
  2. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    I like that way also. I feel uncomfortable holding people's money when I haven't done anything. I think it makes the client feel safe and secure AND know they are dealing with a stable contractor.
     
  3. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    I am somewhat comfortable on debt for real estate. At least it is borrowing on an asset that doesn't depreciate... at least that is the way it used to be. And when you pay it off, you have something tangible that is still worth something... not a beat up wore out piece of equipment.

    I think borrowing money for an education is probably not a good idea. I hear stories of college educated kids owing 100k and come out of college making 30k. And now an education at a local college is very good. And some states have scholership programs that make it very affordable.

    Small business loans is one hell of a risk. The guy that owns the shop next to me fell into a predicament with one of those. Had a short term loan to buy materials for a government job, and they dragged their feet paying him. He ended up losing everything... his shop, trucks, equipment, and his business.
     
  4. PerfectEarth

    PerfectEarth LawnSite Bronze Member
    Posts: 1,734

    Ha, that's exactly the way I feel. They give you a deposit and next thing you know the phone is ringing and they're standing over you. I don't want that! I want the leverage at the start of the job.

    It's worked great for us so far. Start-up cash in March gets rough though.... that's a very tight period after winter salary and January tax.

    SNOW!!!!! lol
     
  5. nepatsfan

    nepatsfan LawnSite Gold Member
    Posts: 3,142

    That is why you put up a deposit and have a bill of sale.
     
  6. C Jovingo Landscaping

    C Jovingo Landscaping LawnSite Senior Member
    Posts: 436

    I think Grandview is refering to construction jobs, not commercial. I worked at a painting/caulking company for 12yrs & they took monthly draws of percentage completed on jobs. Currently i work fulltime for caulking company & they take monthly draws on percentage of job completed.
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  7. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    Might work sometimes and would be a pita if it is 3-4 hours away.
     
  8. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    I have never encountered draws on landscaping jobs.
     
  9. C Jovingo Landscaping

    C Jovingo Landscaping LawnSite Senior Member
    Posts: 436

    I bet if you have a job that is longer then a month, you could take a draw if you submit billing for percentage of work completed at time of billling. We are currently finishing caulking on a school that we have been on for 18 months. Long time to go without income if they didn't allow draws. Landscaping does fall at end of job so maybe it is different. But I'm sure if it is a 2 month job, you can bill halfway through the job. Might want to check into it

    Edit...You can also bill for materials on site when you get a draw.
    Posted via Mobile Device
     
  10. zak406

    zak406 LawnSite Bronze Member
    Posts: 1,519

    Im sold out for the year my man, we started march 31 and still cut grass 2 days a week. In a week or two ill be on the road every other weekend for games. Weekends in between im home. Game days are automatically no work days. Hockey is the job at hand those two days. The other three school is at hand. :usflag:
     

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