Small guys ?

Discussion in 'Business Operations' started by Bunton Guy, Sep 14, 2002.

  1. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Posts: 1,760

    Just out of curiousity for you guys who are running dry or " hand to mouth " what do you do when you have nearly no money to your name and you land a landscape project that will cost you $950.00 in materials and you have lets say 150 bucks to your name and there is a new bill in the mail for you to pay...? how do you guys get through times like that. I personally have saved just enough money here and there to set up a seperate account for landscape/mulching projects so this will never happen but what do you guys do in this case do you set up a account with a landscape plant material supply yard or do you ask for money upfront ? I perticularly dont like asking for money up front.
     
  2. heygrassman

    heygrassman LawnSite Senior Member
    Posts: 509

    $950 in material would lead me to believe that the total project is in the $2500 category. Asking for a 1/3 upfront is not unreasonable. I am asking for 1/3 to be paid or placed in an escrow account to ensure payment on any job over $1500(unless I know them personally). I am fortuante in that the material are not typically a problem but I do not want to get stuck. Most of the bigger folks around here are requiring 1/3 to reserve the schedule date.

    Also, you may have the opportunity to open 30 day accounts with some of your suppliers. This will buy you some time.

    Good Luck!!
     
  3. Anyone who can't come up with $950 to service the contract really needs to get out of the business and get a job at wal-mart or maybe burger king.
     
  4. The Mowerdude

    The Mowerdude LawnSite Senior Member
    Posts: 372

    This reply is a little "hard-lined" but probably not far from the truth. Sometimes we need to face the facts.

    I can't tell you how many times I've been in situations where I knew how I could make money, but I didn't have the coins to "Prime the Pump" so to speak.

    Bunton Guy, I can relate to your situation big time. It really rubs me wrong to ask for an advance (draw) on a job because we feel like bums sometimes. However, the alternative is to pass on the job altogether. Our "self-employed" mentality really chafes at the idea of turning away good work too.

    So, many times, we think that there is a 3rd or 4th solution that we surely must be able to find, but in reality, there isn't. There are only 2 choices. Get a draw, or pass.

    So Lawn Chopique is not wrong. If your shoe string is that thin, then you'll have to pass until you can, by working your tail off, put together the money you need to have the cushion to bid these jobs.

    One word of warning. I'm not saying that your customer is a dead beat, but if you bid multi thousand dollar jobs and then work without a draw AND then the customer stiffs you, not only will you lose the money on the job, but you'll have lost your own money that you put into it and chances are, you won't have the money to start legal proceedings. And if you have any other minor emergency such as a truck break down or accident, you could be right out of business and into the poorhouse.

    On the other hand, if you get a draw and the customer stiffs you, you've only lost your labor. At least the draw paid for materials. And the job didn't take any money that you may have had ear marked for something else. Getting a draw on the larger contracts is SOP (Standard Operating Procedure) in many businesses, lawncare and landscape included. If you ask for a draw and the customer refuses, there is a good chance that he wasn't planning on paying you anyway. Asking for the draw helps screen deadbeats from the serious and honest customer.

    So go and get your draw. Then go back and re-read Heygrassman's post. It's dead on.
     
  5. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    Most companies don't 'go under' because they are not making a profit... they go under due to lack of adequate cash flow. Also, lack of operating capital is due to poor cash flow.

    That's the problem here... no cash flow to sustain operations.

    Do what you have to (legally) to increase cash flow..... if that means asking for a deposit, do it. Forget the "what will the customer think of me" attitude and have a more businesslike approach to it. Mowerdude is right on too.... if the customer stiffs you later - you're REALLY screwed.

    We're considered (by most) to be a fairly large company. We get deposits on every single design/build landscape installation project we do. Period. Like all companies, we need adequate positive cash flow.

    While we are all assuming the risks of being in business, we need to limit the exposure as much as possible. For what it's worth... IMO get the deposit or walk away from the job.
     
  6. John Gamba

    John Gamba LawnSite Fanatic
    from ct
    Posts: 10,812

    Also If you have a hard time gettig a deposit Now.

    You Can imagine if theres Is a problem How hard it would be to collect then.

    John.
     
  7. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    By not getting a deposit up front your are loaning them money. Your extending them credit and taking money out of your business at the same time. If its in the contract your both protected.
     
  8. Casey

    Casey LawnSite Member
    Posts: 142

    I agree, getting a deposit up front is just good business. Not too many of the remodel (constrution) contractors will even start a job without a deposit. I think you should have a set percentage and try to stick to it even if you have the money to fund the job yourself. Just good business.
     
  9. Henry

    Henry LawnSite Senior Member
    Posts: 549

    I always ask for 1/3 at acceptance of contract with another payment when the job starts. The banks will not give you a loan unless you give them something first, why should we be any different?
     
  10. ScotLawn

    ScotLawn LawnSite Senior Member
    Posts: 309

    Well then it looks like 75% of LCO's need to get a job at walmart or burger king. If i have 950 worth of materials on a job I have to get before i start, I"ll be DANG if i'm going to foot the bill for it and have to wait for the client to pay me maybe a month later even if I have the cash. Money is tight for us part timers and even some full time guys. Does that mean we should quit and go to work at walmart. Lawn choupique get off your high horse and let reality sink in. Alot of dependable, reputable LCO's don't have that kinda cash flow that can be put out for 30 days or longer before repayment.

    Like 65Hoss said. I'm not going to loan one of my customers almost a grand for 30 days or longer and take a chance that they will pay me. On large jobs, I always ask for a deposit which usually is the amount of my materials for the job.

    Scot
     

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