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Young guys - I need help/suggestions

Discussion in 'Business Operations' started by MikeTA95, Feb 25, 2010.

  1. MikeTA95

    MikeTA95 LawnSite Member
    Posts: 84

    My company is a year old, and I'm only 21 with little credit history. I need a loan for equipment. I've tried to go on a cash only basis in regards to buying equipment but that just doesn't work out. I end up settling for lower quality equipment or spending much more than I should all at once on one thing, and I'm unable to purchase other things I need. I've applied for loans at banks, loans from family, lines of credit, and credit cards and I've been rejected over and over due to my lack of history, even though my short history has not one missed payment. What have you other young guys done to over come this issue? I'm beginning to feel desperate because I made a good name for myself amongst my clients last year, and the new clients are already starting to call me because of recommendations, before I even begun to advertise! It's a mixed blessing because I am really excited I am being received so well and that people want me to do work for them, but I know my equipment isn't going to be able to keep up with the increasing demand, and that in some cases my equipment is also limiting my abilities. I'm really looking for any suggestion I may have over looked. Thanks guys.
     
  2. S&S Outdoor Services

    S&S Outdoor Services LawnSite Member
    Posts: 170

    My dad co-signed my first two loans and I paid one off with in 2 months and my credit score shot way up. It only took about 6 months to get a decent credit score and the last two loans I was able to have in my own name. My original bank turned me down even with my Dad as a co-signer and eventually we switched to a credit union, they are way better in my opinion. - Sam
     
  3. Daily Lawn/Landscape

    Daily Lawn/Landscape LawnSite Senior Member
    Posts: 694

    First off, have you sat down and figured out how you are going to pay for this equipment if you must borrow to get it? My guess is "NO". Not meaning to bust your chops, but you are heading down the wrong road. How much did you set aside in the past year for equipment upgrades. if the answer is nothing, you need to sit down and work out a financial plan so you know where your money is going to be spent, or what most of us call a budget. Based on what business you already have now you should be able to figure out how much extra you have to work with this year. You might have to just buy some used equipment to get you buy for a while, or go to a dealer and get some financing no longer than 6 mo SAC.
    One thing that concerns me with you borrowing money to buy equipment is the comment you made in your post.
    "I end up settling for lower quality equipment or spending much more than I should all at once on one thing, and I'm unable to purchase other things I need"
    If you find someone that will let you borrow money, you might get carried away on buying and find yourself out of business in a year and then who will your customers count on? I know there are people out there that will say, you can't grow without borrowing money. Well I can tell you from experience that you can. I have been in business for 9 yrs and the longest I have financed anything was 6 mo.If I could not pay for it in 6 mo or less I was not going to buy it. Today I have no business debt and I have 2 year round employees. Most of our business income is made within 10 mo. and I have a financial plan set up to make sure I have enough money to upgrade equipment and pay employees thru the winter.
    Hope this helps. If you have to borrow, make it short term and know how you are going to pay it off on time before you do it.

    James
     
  4. Scagmower48

    Scagmower48 LawnSite Senior Member
    Posts: 430

    If thats your T/A, then sell it. Problem solved
     
  5. MikeTA95

    MikeTA95 LawnSite Member
    Posts: 84

    I did that when I started the business to get my truck.
     
  6. Scagmower48

    Scagmower48 LawnSite Senior Member
    Posts: 430

    What equipment do you currently have now and what do you want to buy.

    How many accounts do you have now and how many do you want to have?
     
  7. MikeTA95

    MikeTA95 LawnSite Member
    Posts: 84

    You make very good points. I understand that getting into a payment situation can be either disastrous or very beneficial. I am not looking for a huge loan, the things I really want to finance are the "big things," I really wanted to spend the money on two brand new wright stander mowers and a dump trailer. I think this will solve my two biggest issues: unreliable used walk behind mowers that are slower and more tiring and therefore slowing us down, and a dump trailer which will save me time at the dump, and will give me the ability to move more than 2 yds of mulch or other material at a time (my 14' single axle rubs the inside of the fenders whenever I put material on it.) With the right maintenance these things will last a long time too and definitely bring in money. There are other things we need too, such as upgraded blowers, edgers, a few new hand tools. Those I know I can replace in cash without issue. The "big things" require a lot of saving, and a big cash hit when you buy them. I feel more comfortable spreading out the cost a little bit at a time over a longer period, especially since the equipment can pay for itself, instead of me having to work all summer to buy the equipment, spending all my cash on it, then have it sit in the garage all winter while I'm broke until 2011. I really don't want to have to start turning people away, I've already had to do it to a couple large properties, it's a really negative thing to do, especially as a new company.
     
  8. MikeTA95

    MikeTA95 LawnSite Member
    Posts: 84

    Right now I have one reliable mower - 36 inch scag walk behind belt driven mower that I bought in cash mid summer brand new. I also bought a used bob cat 48 inch belt drive mower which ended up costing me a bunch of money in repairs, but runs fine for now, also in cash. I started out with two Craftsman 33's, and they were a complete waste of money, I ended up having to combine them into one ghetto machine, their pieces of crap (also bought in cash brand new.) I want two mowers that I can rely on, wont completely wear me out, and will provide quality cutting.

    Last year I had 51 mowing accounts, varying between $30 and $45 cuts. I also had one rich guy with a large property who liked me, and paid me by the hour to cut his huge lawn with my scag (because it's the only one with an adjustable deck.) so far this year, I've retained all 51, I've picked up two town homes, another $35 lawn, and a good friend of mine has 10 people lined up for me, all of whom apparently had the same guy last year and all of which were unhappy with him, plus her for a total of 11 (I'm giving her a huge discount for recommending her entire block though.) I haven't even began my advertising either. My goal was 75, it looks like I'm already at 65 weekly lawn mowing customers with plenty of potential to grow. I only mow in three tightly knit neighborhoods, and the people just spread the word to each other like wildfire. I think reliable equipment is important, because these people obviously talk a lot amongst each other, and it's important to keep everyone happy, since their like one big family almost.
     
  9. Daily Lawn/Landscape

    Daily Lawn/Landscape LawnSite Senior Member
    Posts: 694

    have you put together a budget for the year based on the accounts and figured out your operating cost per hr on all your equipment?

    James
     
  10. Scagmower48

    Scagmower48 LawnSite Senior Member
    Posts: 430

    Wow, I did not realize you were up and running. I guess my only suggestion would be (I know this doesn't answer your question) to establish a way to save money and buy your equipment.

    With that many lawns, you got some decent cash coming in.

    Good Luck this season.
     

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