Need to grow - with debt, or stay and pay things off

Discussion in 'Business Operations' started by meets1, Oct 29, 2006.

  1. meets1

    meets1 LawnSite Gold Member
    Messages: 3,850

    I read so much about becoming wealthy - that only 5% of all contractors are wealthy - the other 95% will still ne SS, will have a minor amount of "money" saved up but really work day to day like an employee and not an owner therefore never looking ahead to the future.

    Here is my deal - yes I run many hours, 6 days a week. I have a crew of 6 that all work 5 days and two guys that work with me on Saturdays. I think I delegate well but my wife says differently - never home.

    I run/own and lawn care/landscape maintance company. Everything in b/t we do. I also have a painting company - where we overlap a little due to sweeping and striping parking lots. I keep 1 - 2 guys business with that but I also help when needed. I do all the striping. I also branched to light constructions projects - decks, fencing, even shingling.

    I have the equipment - I just figure why not make it earn its money instead of sitting in shop.

    My peoblem is I keep things up. All equipment is fairly new - looking at a new skid - the other has 2500 hours and things are starting to add up for repairs. But to shell out 25K for a new one - I don;t know. But yet it looks good, it'll run awesome and get work done.

    Just built a new shop 66x88x16. That is on a payment plan cuz I have no money laying around just to throw at that project but I was of paying $1000 / month rent and my payment is now $1100 month to my own building which is mine.

    All our trucks are 2002 or newer but miles are adding and I think I will keep each truck until 100,000 miles. Right now 3 trucks are in the 75 - 85k range. But that means more money to keep up the image, keep newer trucks going, less downtime, more dependable and still be able to get a fair price for the trucks. But yet that doesn't help my "wealthy" prespective any?

    All our mowers - I run for a 1000 hours. I have been lucky that I sell each mower privately each year. Seems someone is always looking for a quality mower with a few hours on it. I still money then to update, but I keep the most up-to-date mowers, everything is under warrenty and guys keep them up cuz there new again. But........wealth idea comes into play.

    We take in alot of money - at least to me. But in the end - sure things are getting paid for and I make a decent wage (Incorpated) but my cash doesn't seem to grow by leaps.

    I know this is long - but just on my mind lately of what to do differently if anything??
  2. Green-Pro

    Green-Pro LawnSite Bronze Member
    Messages: 1,420

    Its a fine line but IMHO you will eventually need to incur some debt in order to promote growth of your business. The key is to do your homework, i.e. know your numbers and the level of debt you can support responsibly. When I began in '05 I started debt free, we grew fairly rapidly and I found it necessary to obtain a line of business credit at our bank. I don't have much financed, used it wisely to obtain what we needed most urgently to gain more business and maximize efficiency. I also looked at the numbers pretty hard to make the determination that we could A: Afford the repayment and B: Pay off early (with no penalty). I typically do not like to carry debt, but I have found that in relation to growth of your business it will become a necessary evil to some extent.
    Again the key is know your numbers, do your homework/research, and incur debt responsibly.

    On a side note another advantage to a bank line of credit is to keep your liquid cash liquid, where it will do you the most good as opposed to tying the whole wad up in an expensive piece of equipment that you could pay off early anyway.
  3. Tim Wright

    Tim Wright LawnSite Bronze Member
    Messages: 1,034

    You are thinking correctly. I am also thinking along these lines and below is what I am doing.

    I would do a lot of reading.

    Dave Ramsey - The Total Money Make Over

    Robert Kyiosoki - Rich Dad Poor Dad, Money Quadrant, Retire Young Retire Rich,

    I think once you have done some reading, and soul searching, you will know what you have to do.

    Use your current business as leaverage into other areas of assets that actually make you positive cashflow, with passave and residual income, especially when you are not the one sweating the work.

    You are on the right track, don't give up, and surround yourself with people who are ahead of you, and honest.

    Don't give up on this quest.


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