growing with debt vs. no debt

Discussion in 'Business Operations' started by georgialawn88, Jul 3, 2013.

  1. SRT8

    SRT8 LawnSite Bronze Member
    from CA
    Messages: 1,318

    We always have debt, no biggie. Just don't over extend yourself and you will be ok. We don't finance little things, just trucks. If you are trying to grow your business fast sometimes you have no choice. I try to buy used trucks cash as much as possible but sometimes I cant find good deals. We work in a very competitive area and appearance matters in my neck of the woods. I love my business, and I love pulling up to the yard and seeing all the nice trucks parked in a row with their nice trailers and nice equipment. Could I have all old ugly trucks and ugly trailers and old equipment and still function? Yes I could, or at least I think I could? that's a good question. Over the years I have created this brand, a very neat company that provides excellent service and a clean appearance with clean cut guys all with uniforms. Some people think it doesn't matter but it matters to me.

    I don't fear debt now because I know I can pay off every loan I have tomorrow if I felt like it. Don't start your business and use loans as an easy way out . When I started off it was top ramen and work work work , no sleep. Debt can get you in trouble real fast but when used properly can be golden!
  2. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    its cheaper to just get new every other year to prevent problems,

    That's pretty much the case with us, people always ask why do you always have new equipt, well first off our equipt isn't really new just well maintained and kept clean so it looks new most of the time, but yea we're now in a one or two year rotation on our two cycle stuff, the mowers as of now should go for four years might try to stretch five out of them we'll know next year if that's realistic, we've been really strict on the maint so we'll see if it pays off.
  3. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    SRT, I know what you mean I've built my business the same way!
  4. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    I am avoiding debt. Saving and buying with cash.

    There can be times when it makes sense to get a 0% loan when other criteria's are met.

    Problem is income in this business is seasonal. Hard to project that you will make enough money then set it aside so you can make the payments on time through the slow half of the year.

    Also no guarantee that you will keep all your customers over the winter and that you will add a lot more the next season as well.

    Hoping and wishful thinking has left many people come up short when it is time to pay bills.

    I just read a post where a guy has ten customers and wants to buy a $10,000 mower for next year based on that he thinks he will be able to add a lot more customers next year.
  5. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    You have to find out what is going to work as far as your marketing plan goes, get the phone ringing off the hook before making an investment in new equipt, that's what we did. When your getting 10, 20 or more calls a day for work your marketing is beginning to work, get the work first!
  6. alexschultz1

    alexschultz1 LawnSite Bronze Member
    Messages: 1,588

    a wise old man once told me that a business man owns his business, the business doesn't own him. Only take on a loan for guaranteed income. if the investment does not triple your profit from the cost of the machine you should not buy it
  7. SRT8

    SRT8 LawnSite Bronze Member
    from CA
    Messages: 1,318

    Everyones business is going to be completely different and call for different things. I don't worry about the fall/winter because i live in California and we work year round. We never stop working so our cash-flow is always ok. Thats one of the reasons we don't fear debt. But if you only work 8 months or so of the year and tend to get dropped by customers, thats when debt can be a scary thing.

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