Debt Free business

Discussion in 'Starting a Lawn Care Business' started by Hoss4x4, Sep 18, 2011.

  1. JimMarshall

    JimMarshall LawnSite Senior Member
    from NW PA
    Messages: 316

    WE are debt free to a point, we have a couple of our trucks financed... but only because they offered 0% financing. Unless there is a 0% financing deal running, we don't finance. Other than that, the only debt we have is revolving debt.
  2. bolc5150

    bolc5150 LawnSite Member
    Messages: 176

    I was almost debt free until my wife had a back fusion and lost her job..But, God has a way..Last year my income grew 100+% and we just landed another nice contract of 6 commercial properties. And yes, I am looking to expand so I am buying a used box truck that I think I can pay off in 18 month's along with hiring an employee. Raising 3 kids was I had to finance some stuff. I used to think new is the way to go, but now except for my main mowers i buy used. I try to keep any finance down to 36 month's or less. I try and use cash when I can, but I have to watch what I pay with it due to if you claim it on taxes. I started with 0 and now I have a legitament company that has really good exposure and a good client base.
  3. 32vld

    32vld LawnSite Gold Member
    Messages: 3,984

    Your wife's illness put you in a bind. I do know your story. Though it appears you have enough cash flow that if things slow down you will still make your payments.

    When a business has enough income that to finance a truck, mower, whatever is ok if the economy took an extra big dump and a business lost 25% of their business and still make the payments then it would be safe to feel that a loan on a new truck would be a low risk to take.

    Thing is many people specially when starting out do not have the volume of income that if they lost 25% cash flow they would go belly up.

    The problem is most people are to easily willing to take risks that are not wise.

    My view is avoiding interest payments is always a huge savings.
    The first car I bought cost $7,000. I paid the bank $9,000.

    Compound interest is a wonderful thing when you are the one earning it instead of paying it.

    I have knew of printing business that had millions of dollars in sales that grew and bought all their equipment with cash that they had said aside. Their last press cost a million dollars.

    This business owned everything including their building. Not having to pay off any loans will can make the difference when the economy goes bad.
  4. 205mx

    205mx LawnSite Silver Member
    Messages: 2,377

    ^^^^ and THAT much better when the economy is in the 1990's!
  5. weeze

    weeze LawnSite Fanatic
    Messages: 10,986

    i think everyone is in debt. if you pay insurance each month you are in debt to the insurance company. if you have a power bill you are in debt to them. same goes for water, gas, cable, cell phone, etc. :laugh:

    it used to be easier to live debt free. my grandparents did it. they bought their house for 20k in cash. that house now is close to $150k. noone can really save that much money to pay for a house in cash these days.

    it's the same way with trucks or cars. you used to could buy a decent truck for $5k and you could save up and buy it in cash. these days if you want a decent used truck they cost about $12-$15k. i don't even bother with used anymore because they cost so much. a brand new one is $20k. only 5 thousand more.

    as for me i'm debt free except for my truck. i owe $9k on it.

    or are we talking business debt here or personal debt? my truck is my personal truck. so my business has no debt at all. i'm sure most everyone on here has a mortgage debt personally.
  6. Hope Landscaping

    Hope Landscaping LawnSite Senior Member
    Messages: 282

    My business is debt free! I'm growing slow but I'm in it for the long run. No debt = no risk.
  7. 205mx

    205mx LawnSite Silver Member
    Messages: 2,377


    No. Owing the gas company $60 is not debt. You used their service and so you owe them for the services and or product. That's not debt.

    Also, I just bought my wife a 2004 f150. 101,000 miles. Runs perfect. Beautiful Bright red, 4 door. Sun roof. XLT. Fiberglass bed topper. KBB is 12,700 I paid 10,000 cash. That's HALF of what a new "20k" truck is. Which would HAVE to be pre owned or complete standard cab base model.

    I buy all my vehicles like this. Drive them a few years, then sell and get something else. It's fun and exciting to have a new car often. And no, 100,000 miles on a 5.4 ford doesn't scare me. I have a 6.0 chevy with 136,000. Minimal issues.
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    Last edited: Mar 3, 2013
  8. 32vld

    32vld LawnSite Gold Member
    Messages: 3,984

    Utility, phone, insurance, expenses. They are not optional loans to make purchases.

    With O% finanace better to leave one's money in the bank then pay cash for a new truck.
  9. 205mx

    205mx LawnSite Silver Member
    Messages: 2,377

    Right. The problem with 0% is that it tricks you in to spending MORE than you otherwise should if you understand what I'm saying.

    FI. If your business makes 40k NET PROFIT, a 10,000 mower next year is outrageous. But because it's 0% people "might as well use someone else's money" when really all it does is cause you to over spend.
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  10. weeze

    weeze LawnSite Fanatic
    Messages: 10,986

    technically it's not debt you are right. it's not a loan but it's something you have to pay each month though so it's the same difference. you are still making payments.

    basically you are in debt month to month to the people that send you bills. they are your boss. you work for them. it's all a matter of perspective.

    the only total debt/money freedom is to not owe or have to pay anyone any money of any kind for anything ever. doesn't exist unless you live in the woods and kill your own food and build your own house and such like they do on tv. :laugh:

    you have to live off the grid to acheive this and there are actually people that do this in our world.

    as for paying 10k cash for a truck and then doing it again so often that is alot of wasted money. you'll spend 40k in cash on 4 different trucks while i'll still be driving the 20k truck with no payments. if you buy a truck new it will last you 15-20 years if you take care of it. i would suggest a toyota though not a ford. a ford may not make it that long.
    Last edited: Mar 3, 2013

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