Spend $ to make $???

Discussion in 'Lawn Mowing' started by Carolina Cuts, Jan 24, 2006.

  1. Carolina Cuts

    Carolina Cuts LawnSite Bronze Member
    Posts: 1,152

    This could be a ridiculous question... but I'll ask anyway. I'm a solo operator... 2nd year in biz. Twenty residential accounts, and I just acquired a nice size commercial 12 month contract. (20,400/yr mostly labor) for those who need to know... with the option of signing a 3 year contract starting in 2007. The question is... is it smart to eat the majority of this years income off this one particular account by buying new equipment? (Thinkin' Write Off-tax purposes) I already have the equipment to do the work, but is it a smart move to purchase MORE equipment ex. a new z-turn, walk behinds, blowers ..etc... maybe keeping it around the $10k range in new equipment?...

    As of right now, I have 2006 F150, 12' trailer, 06' Stihl Trimmer, 06' Stihl Edger, Echo BP403 Blower (ugh), 04' Snapper 52' Z, JD Trimmer, Tanaka Stick Edger...

    Wishlist... New desktop computer, Gopher Software, Giant Vac/Little Wonder push blower, Stihl BR600, 32' WB, 48' WB, Scag Turf Tiger....
     
  2. meets1

    meets1 LawnSite Gold Member
    Posts: 3,781

    2nd year in biz - I guess it depend upon your equipment base currently such as hours on machines, age of machines, your repairs from last year. ( I always keep a log on every piece of equipment, no matter the size or $ amount of repair) This way come next year or during the year - yes that blower, mower truck has to go. If you can get by - I would pocket some money or profit - do a year end tax run with CPA, see if you need to spend $ b/f end of the year.

    But if you need - go buy a new computer, blower or something - "toys" are always fun to work with!
     
  3. Carolina Cuts

    Carolina Cuts LawnSite Bronze Member
    Posts: 1,152

    hmmm.... toys... :blob1: can I write off a 2006 YZ 125? haha j/k
    the PC and software is definate... hopefully next week. Maybe I'll know more by the end of the season... like you said. After speaking with the accountant.
     
  4. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    This will come from a guy that's been spending money to make money now for 17 years.

    Personally, if you can get by with using what you've got, go that route.

    Biggest problem is you're going to pay a good chunk of tax on that money.

    BUT, when you sell out your business, you're going to pay the money anyways.

    Once you start spending to make more, it becomes somewhat of a rut, and it's hard to get out.

    You always want the next "fastest" mower, easier to operate, so you can make more money. Then you need more work to make more money to pay for the mower that you bought to make more money, but now you need more work.

    If I had it to do over again, I'd put more in my pocket.

    THAT, and tell more people no, I'm not interested.
     
  5. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    To answer your question simply and to the point. NO.

    With only 20 residentials and 1 Commercial that is more or less a "part-time" amount so you shouldn't be putting many hours on what you have and you have plently of equipment for those jobs. The only thing I would even consider if I were you and based on what equipment you just listed is a "real" BP blower. Otherwise no need at all to buy new equipment at this point in your case. That is the single biggest mistake new guys make in this business. Land a decent acct and go straight out and start spending that money on uneeded new equipment, because it make them feel "good" and bigger. Also remember two things. 1st, yes you may sign a 3 year extent on the deal OR they may not. 2nd, NEVER, ever buy equipment based on only one landed job as that is the fastest most surefired way to go belly up in this business.

    Remember you are a For-Profit business, not a "For-Equipment look good" business so buy equipment only when "really" needed and when you do buy, buy the very best commercial grade you can possibly afford too, as it will be worth the money spent.
     
  6. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    I would use what you have for now, see how this year goes 06' then make your decison based on that. The equipment you have now is good for 50 Residential lawns, at 20 accounts assuming they are average 1/4 acre and under, you have plenty of equipment. The only thing I could see you buying is a new blower and trimmer. I think you should focus on getting more volume of customers and more$$$ coming in before you start increasing your over head. I would reconsider after the Spring rush is over, that way you can see how many accounts you have and what they are bringing in.

    As for the Gopher software I would say no, because there are other much simpler less $$$ programs out there to help you manage 20-150 accounts.
    I personally use "My invoices and estimates deluxe" you can get it from Staples for $29.99, it is very professional, and keeps track of accounts, when they are late..etc. I would recomend buying the new Turf Tiger before recommending you buy Gopher LOL. It's a great software but it's overkill for the small operator, under 200 accounts.
     
  7. BufalinoLand

    BufalinoLand LawnSite Senior Member
    Posts: 400

    Go big for sure. I have been half assing it for 7 years now, kidding myself that I was going to be a school teacher, subbing and trying to enter the eternal rat race of education. This spring I went for It.

    2005 Chevrolet 3500 4x4 dump

    2005 Scag 52 hydro walker

    slew of other equipment to make things go smoother

    If youre gonna do it for a living get real or go home.


    I just spent 40,000 in the last month

    I am a small operation with 1-2 laborers

    Go for it.
     
  8. Bulldog26

    Bulldog26 LawnSite Member
    Posts: 115

    That's crazy to me! You spend money to try to save on taxes..... hmmmmm Let see I'll spend $10,000 so I can $2500 on taxes, when I could have just paid $3500 and put the $6500 in my pocket. I love new equipment, just buy it for the right reasons. My .02
    bt
     
  9. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    Right but he already has commercial equipment he just wants more, and a different brand. Obviously you already have the work load for what you bought, he is not there yet with 20 accounts, and no help, so it's silly for you to tell him to go for it. He has enough equipment for the work he is doing.
    If would be different if he actually NEEDED the new equipment, but he WANTS the new equipment.
     
  10. meets1

    meets1 LawnSite Gold Member
    Posts: 3,781


    I agree. You either get with the program or forget about it. I tell my guys once in awhile - I am the program - get with it. It kinda motivated them!

    I use my equipment but when I can sell and upgrade I do. I have sold 3 toro Z last year, all with 800 - 1000 hours. These people approached me cuz our equipment always looks "new". I gave them a price - they bought I went out and upgraded our fleet of Z's. Now I have front mount mowers - I'll keep them. Diesel engines, 1500 - 2000 hours - not a problem and still strong. A little polish, armor all, goes a long way to "look good".
     

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