You paid cash for everything when you started,so where you in debt?

Discussion in 'Business Operations' started by grandview (2006), Nov 20, 2012.

  1. blakescape

    blakescape LawnSite Member
    Posts: 108

    I paid cash for everything in the first three years of business, but mainly because I didn't have any credit history. I will still buy used trucks if I can get a good deal, but now I will only buy new mowing equipment and finance it. I financed a few mowers in the summer for 0%, 0 down, 48months and the first payment doesnt start until april. On top of that, I can depreciate the full value in the first year of purchase on my taxes without paying a cent on the mowers until next year. I have enough capital saved up to pay off my loans today, but it would be stupid to pay cash when I can borrow that money for free. Even if I have to pay interest on a business loan, I can write off the cost of interest on my taxes. I just don't see why people brag about not having liability/debt and paying cash for everything. Having loans is a good thing if your responsible about it and if you have the cashflow (not just the capital) to pay for it.
     
  2. kyles landscape

    kyles landscape LawnSite Senior Member
    Posts: 331

    most people associate debt with being bad...there is good debt and bad debt i agree with you 100 percent on what you are saying
     
  3. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    If the repo man can't take it back you are not in debt.
     
  4. dstifel

    dstifel LawnSite Senior Member
    Posts: 915

    bought all my equipment for a grand total of 300 dollars. Stihl weed eater john deer push mower and poulan pro hand blower. All used of course. HAd the truck since i turned 14. Paid myself back within the first two months and then bought a echo backpack. Used that the john deere and trimmer rest of the year. The next year bought a wb mower and a truck that was it. This year bought bigger backpack and echo pas system. Still have every piece i started with as a back up in good running condition new carb on the trimmer and new wheels and bagger for the old john deere push mower. I was in debt to my business for one month and haven't been since. I will not buy something if i do not have the money saved up for it unless it is an absolute emergency. If not it encourages me to work harder to buy the nicer equipment trucks etc.
     
  5. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,460

    I figure "good debt" is someone other than me who owes money, especially my competaors.

    Bad debt would be money that I owe, fortunately I dont have any bad debt.
     
  6. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Posts: 2,716

    The repo man might not take it, but when you can't afford the overhead of operating your venture, chances are someone other than the owner ends up with the equipment.
     
  7. matt spinniken

    matt spinniken LawnSite Senior Member
    Posts: 298

    I literally did start with hand tools only, scissors and broom included.
     
  8. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,033

    It's not debt, it's called assests. As long as you still own it, it still has value, minus depreciation of course, which is tax deductible.
     
  9. RSK Property Maintenance

    RSK Property Maintenance LawnSite Bronze Member
    Posts: 1,486

    i also started with a mower my dad gave me, 52" scag hydro walkbehind with probably 3000hrs on it, maybe more. it started right up for the 2 years i used it, until i turned 16 and went out financed a new scag which i paid for on my own in 4 years. and, worked my way up to being able to buy my cheetah and bagger system cash in june, I regret it, because things were tight after that for a month, but more because we had a drought, and I'm not established yet and didn't have many lawns.
     
  10. kyles landscape

    kyles landscape LawnSite Senior Member
    Posts: 331

    i think of bad debt as something thatss a waste or un needed and wont cover itself in cost

    good debt an investment in something like going to a bigger mower from a 21 it will save u and employees time look better in some cases and you can then have more free time to sell jobs or get more.....maybe you cant pay 100 percent for it now but if your steady mowing you will be fine
     

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