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Discussion in 'Starting a Lawn Care Business' started by GravelyWalker, Oct 10, 2012.
YOU ARE FUNNY.
I would dare say that anyone of the "DEBT FREE companies listed above weren't always that way. Sorry, but Dave Ramsey isn't living in the real world, IMOP.
Dave Ramsey's overhead and expenses have to be practically zero compared to what he takes from the suckers who believe in him. You can't compare his "operation" to a service business. Maybe to a hedge fund perhaps.
Years ago I remember there was a large commercial printer, millions in sales. They bought every press cash. $250,000 and up.
They made the commitment when they started out to set aside enough money to avoid going into debt.
But that money HAD to come from someplace, it didn't just fall from the sky when they started the company. So they didn't finance the equipment but you can be sure the investors or partners or owner who kicked in the startup capital were looking for a return on their investment. Until they were paid off it's debt.
I don't remember the details of their beginnings.
Though I did know the printing industry. Many a Printer back in the 70's - 90's were able to buy small used printing presses and other needed equipment for $2,000 and start working out of their garage or basement. Being successful. Working at their business part time till they had enough volume to quit their jobs and go full time.
Picked up a contract this year 50000/year 3 years. I had enough $ to buy the mower, trailer and already had the truck but if I had I would have been pretty low on cash. I financed 100% for three years, and kept my money in the bank. Bought a used Z turn for about a grand leas than what it was worth. Didn't get my first check for two months after paying for gas/ ins/ payroll, etc. found a truck on the side of the road for 1500 bought it and sold it in about a month for three grand. The interest on the mower/ trailer is probably going to cost about 1000 over three years. If I had payed cash I would have ran out of money waiting for a check and lost my a$$. I made 1500 off the truck and another 1000 off the mower just by buying it, and everything will be paid off when the contract is up. Also found a truck for 11,000, blue booked at 17,000 and financed it. just buying that truck made me 5,000 if i was to sell it 2,000 under blue book. So tell me financing is dumb. Always keep cash in the bank, you never know what kind of deal or problem may arise tomorrow.
Also did the 1099 thing first year I hired employees. The employees mom claimed him as a dependent and didn't get her refund so the IRS sent me paperwork saying that they could audit me for this any time over the next seven years. Found out that there are strict requirements on who can be labeled a sub and that a lot of people have been doing it illegally including me. I did everything by the book after that but was fearful of anything that came from the IRS for years. It's not worth the stress for the little bit you save. Just take out the taxes and make your life easier.
Only you know what is best for your situation.
Ive done both. Financed the world and paid cash. Ive written extensive threads here about how things can change in an instant and about how that "only $100 a month" payment can be deceiving.
Credit isnt bad in itself and can be a useful tool. Human nature however can trick you.
Everything I bought "dramatically increased productivity" and was a drop in the bucket to make the payment. But one day that can seemingly change overnight.
Im back to running a large fast growing operation and I struggle with this decision everyday. There are so many things I want/need that could benefit my business.
Just personally though, Ive made a decision to run debt free. It just feels better at night. It feels better knowing if work stopped tomorrow, I park everything and nobody can take it and I dont have any checks to write for it.
I find im a much better shopper. Sure, the sting of a one time purchase hurts. But it feels good too. You write a big check one time. But then all the money that comes in after that is yours.
A few weeks ago i was badly in need of another line striper. (Im in the commercial sealcoating business) I needed one baaad. I almost went and bought a new one for $6000. Still would have paid cash but could have financed it at like $120 a month. Which is nothing.
Instead I did some hunting on the internet. And bought a package deal of 3 used but perfect running stripers, upgraded models from what i was going to buy new, plus a pusher machine and a bunch of other stuff.....$4,500
A freaking steal. Total of 4 pieces of equipment I could sell each for $3000 right now.
A month before that I needed another push blower. Almost bought a new one for $1300.
Looked on craigslist and found 3 for sale from the same guy. 3 little wonders running perfect maybe 4 years old and 1 almost new billygoat, all with hondas. All running perfect. Using my "pawn stars" teachings...lol I loaded all 3 of them up for $450.
I could sell them each for $450
This is not so much about credit in my mind. Its about smart business and patience.
Im very impatient. Ive been known in the past to have a machine break and buy a new one on the spot because the part was going to take a day.
But in my case. Look how much better off I am.
I wanted one striper and one blower. I could be making payments on $7,300 in equipment right now. Not a lot of money in payments but still.
Instead, I paid less than 5 grand and now have 3 stripers and 3 blowers.
Thats a hell of a lot more productivity
I remember the thred "how not to start a successful business". PROCUT has written some of the best threds in the history of lawnsite.
Five years ago me and one other feller were the only debt free fellers on here, now theres more debt free fellers then there is "in hawlk" people on here.
The thing I like about being debtfree is that if my truck doesnt leave the driveway it costs me next to nothing other than a little bit of insurance, thats it period.
Thats the kind of comments us debt free fellers got 5 years ago.
The Lawncare business is a service business in which customers want a real nice looking yard, they dont really care about new trucks and shiney mowers.