Buy now or wait till new year

Discussion in 'Starting a Lawn Care Business' started by Hotty Toddy, Oct 10, 2018.

  1. Hotty Toddy

    Hotty Toddy LawnSite Member
    Messages: 122

    Hello. I am getting my business LLC established this week. I only have a few hundred dollars in my business account. I will be getting a business CC with no interest for 6 months.

    I need a new mower. My current mower will get me through the remainder of this year (with a little help from a loaner mower). Is there any advantage to waiting until 2019 to buy the new mower from a business/tax standpoint? Any pros/cons for buying it now?

    Penny for your thoughts.

  2. That Guy Gary

    That Guy Gary LawnSite Silver Member
    Messages: 2,412

    I'd buy used this time of year and new at the beginning of the season.

    The second that new mower goes out the door the clock starts ticking on that warranty, and lets say you have a 3 year warranty and something major fails after 3 seasons, right as your wrapping up for the year. If you bought this time you might be up a creek with the warranty expired, while if you wait until next season it's still covered and you're not paying out of pocket for the repairs.
  3. Ohio Landscaper

    Ohio Landscaper LawnSite Member
    Messages: 49

    My take on this is a little different than most, but that's because I don't go in debt.

    If you're looking to buy used, buy in the late fall/winter time period. Folks will be offloading their equipment for Christmas money, so they don't have to store it over the winter, the warranty is finished, etc.

    If you're looking to buy, do it in the spring right before mowing season. Dealers usually run sales and whatnot and you could probably get a good deal.

    Now for the part that you won't like, but needs said because truth hurts sometimes:

    You only have ~$300 in your business account and are looking for a new mower, which I'm assuming will be a $2,000 - $4,000. You're hoping your mower will make it the rest of the season which is telling me that you don't have high hopes of increasing your business account by the thousands until then. I know we're close to the end of the season, but still, work is easy to come by.

    Because it's not sounding like you're hopeful on making a lot of money, what necessitates you to go buy a new mower? If the repairs are not more than a mower payment and you can do them yourself, you'd spend more money on a new mower than the money you could save with your current.

    A business that's not in debt can't go belly up. When you aren't in debt, ALL of your profit is YOURS to sink back into the business and GROW. Folks don't understand that if you do business debt free from the start, you'll have much more profit over time. The start is slow (took me 4 years to be able to buy any equipment I wanted), then after you save and get top of the line equipment, you sell more services because you do the work better and faster, which means more profit. Now, you can do the same while in debt, but you're busy paying the bank for items that aren't worth what you're paying.

    March 2019 will be my 10 year mark. I've NEVER had a loan, credit card, etc for my business. Everything is purchased with a check and it's a great feeling!

    I know that's pretty straightforward and not filtered, but if you have an open mind, it will help.
  4. Glwenzl

    Glwenzl LawnSite Senior Member
    Messages: 588

    I bought mine December 12th.

    First shop had his stuff put away and no discount. Next guy up the road took the price from $11,800 to $9780. I said I’m on my way.

    They offered 6 month same as cash and I took them up on it because my dad went with me and he wanted me too. He was not doing well in his old age before he passed and I wanted him to be happy about having a little advice.

    Although I had it set up on auto pay I ended up paying it off in March because it bothered me. I had the cash saved up for two years but couldn’t decide on the best mower for my needs.

    I didn’t consider the warranty part... something to consider.

    Whatever you do try to pay cash for everything and stay out of debt.
    THIESSENS TLC, hort101 and sjessen like this.
  5. OakNut

    OakNut LawnSite Platinum Member
    Messages: 4,379

    Spring often brings 0% financing offers.
    Not sure what kind of "mower" you are looking to buy, but that's how I bought my 36" walk behind.
    All the advice given to me was "buy used - AND PAY CASHHHHH!!!"
    Great advice - if you have three grand burning a hole in your pocket. (I coudn't find any of these super-cheap-awesome-condition mowers that I hear about all the time - everything I looked at for $2,500 looked like it was ready for the scrap yard)
    I didn't have the money to buy used - all I could afford was new.
    Three year zero percent financing gave me a brand new mower that I could easily afford payments on. (don't forget to factor in payments during the off season)

    Yes, I financed a mower (gasp!) and I don't care what anyone thinks about it.
    That Guy Gary likes this.

    JLSLLC LawnSite Fanatic
    Messages: 12,983

    So, where do you see yourself next season? Does it justify buying a commercial mower?
  7. Hotty Toddy

    Hotty Toddy LawnSite Member
    Messages: 122

    These are wise words and a good reminder to remain debt free if possible. Personally, we are debt free. Makes sense to run the business that way.

    The mower I plan to buy is a walk behind Honda, $729.00. I could pay cash for it now; I could more comfortably do it next year.

    Good, sensible words.
    Ohio Landscaper likes this.
  8. Mumblingboutmowers

    Mumblingboutmowers LawnSite Senior Member
    Messages: 375

    From a business/tax standpoint, the answer is wait until after January to buy one if you are going to pay in full. I say this because it sounds as you've made very little this year with only a few hundred in the business account, and you might need that write off next year if you have a good year. If you would be financing, it probably won't matter in that respect.

    Honestly, you should wait, sounds like your spread thin now, you don't want to make matters any worse with mowing season coming to an end.
    Hotty Toddy likes this.
  9. Rockbridge Lawn Care LLC

    Rockbridge Lawn Care LLC LawnSite Bronze Member
    Messages: 1,077

    easy fix...don't apply or get the credit card until later on (late January/February) then go out and scour the showroom floors for 2018 models that dealers will want to move before the spring rush to build up their 2019 model inventory....

    don't even look at purchasing a mower unless your business income can pay the mower in full with in 6months or a season. (about $650 month net income)

    Try QUE Sales or other Exmark leasing centers for good deals on commercial models with 850-1200 hours ready to go fleet maintained (many cases from Brickman and the like)

    Not all debt is created equal, but the math has to make sense
  10. hackitdown

    hackitdown LawnSite Silver Member
    Messages: 2,782

    Wait till spring. Why let a mower sit all winter? Let the dealer deal with getting it started in the spring. If you are looking at a $700 mower there isn't much risk either way.

    Tax-wise it probably doesn't matter much. You can take the $700 as depreciation which will reduce your taxable income either year.
    That Guy Gary and sjessen like this.

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