With all due respect. I think I explained the line of credit to death.
On paper, the business was doing great.
Great balance sheet
Showed a very nice profit
Little debt
The line of credit is very simple.
To make it simpler.
You have a job for 10,000
Your expenses are 7,000
The deal is offered is.
You pay 7,000 now. And in 45 days Ill give you 10,000
When you get that 10,000 you pay off the line and now have 3,000 free and clear
Next job 15,000 your expenses are 10,000
You have 3,000 toward that.
You take that 3,000, the banks 7,000 and pay the expenses.
Then you get paid 15,000 and now you have 8,000 in the bank.
Next week you have 2 jobs one 20,000 and one 15,000
First one expenses 13,000 second one 10,000
Take your 8,000 plus 15,000 and pay your expenses
Get paid for the jobs, pay back the 15,000 to the bank. You now have 20,000 in the bank.
Now week one your doing the first one. Then it will be 6 weeks after until you get paid.
Week two the second one. 6 weeks to get paid
You see, to do it slow. Without the line of credit to start. Even with a good amount of money in the bank.....You would have to do a job......Shut down for six weeks.....Do another job......Shut down for six weeks.....
Yes....It can be done that way. But it takes A LOT of money to finance multiple jobs at once.
At the end. You end up with a lot of money. But you need that little bridge in between the time you have to pay, and you get paid.
Eventually, you may have enough money to finance multiple jobs. But you can see how long that would take.
So it wasnt a case of "overextending" and there was no "going into debt"
I wasnt buying trucks i couldnt afford, or buying equipment hoping to get work.
I was using a tool for exactly what it was designed for.
Where Im at fault.....Was not knowing that line could be taken away at any moment.
In that case, I would have done some things different.