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Starting debt free

Discussion in 'Starting a Lawn Care Business' started by jak2703, Aug 8, 2007.

  1. jak2703

    jak2703 LawnSite Member
    Messages: 14

    In everyones opinion how big of a deal is it to start out not oweing anything? Do you think this would help out a lot?
  2. KTO Enterprises

    KTO Enterprises LawnSite Bronze Member
    Messages: 1,286

    I think it helps out a lot because you dont have to sweat equipment payments when things are slow.
  3. JB1

    JB1 LawnSite Fanatic
    Messages: 5,903

    but then again its a good motivation factor, just depends on what going in debt means, dollar wise for what.
  4. DiyDave

    DiyDave LawnSite Bronze Member
    Messages: 1,695

    Means that you can tell a lot of poeple to kiss your asphalt driveway! Having machinery paid for gives you pride in ownership, and keeps you alert to things that maybe you wouldn't notice, if you are leasing. Also makes you constantly question if you are doing the right thing for your business, keeping your eye where it should be-on the bottom line! My $.02:usflag:
  5. GreenT

    GreenT LawnSite Fanatic
    Messages: 42,962

    From a stricktly financial point of view, if you can qualify for the 0% available from some manufacturers, it is more advantageous to finance.

    It also depends on your specific situation. If, for example, in order to get your equipment by using cash depletes all your available capital, then again it is better to finance with some cash down to keep your payments as low as possible.

    Being equipment "rich" and cash "poor" is not a good situation.

    Even 1.9% is a good deal right now.

  6. jak2703

    jak2703 LawnSite Member
    Messages: 14

    I am with you on everything you said. Cash should not be a problem because i have another income that will help me grow the business. My plan is for a very close friend to mow, while I go to work. I undersand the risk involved in this, however I weighed the "risk", and i think it will work out. Thanks for the advice.
  7. PTP

    PTP LawnSite Bronze Member
    from Tulsa
    Messages: 1,397

    I started out with $10,000 cash and cleared about 20K my first year. I never had any business debt and I am very thankful for that. The business is still debt free and we service over 200 accounts and that makes for a good profit all around. I would not be in this position if I had accumulated debt at first.
  8. TSG

    TSG LawnSite Senior Member
    Messages: 444

    why couldn't you be in the same position you are in now.
    Did you start FT or PT
    Where did the startup cost come from?
    I ask because everyones situation is different and carrying some debt
    can be a good tax move.
    Just an observation
  9. Albery's Lawn & Tractor

    Albery's Lawn & Tractor LawnSite Bronze Member
    Messages: 1,674

    I think it's better to keep MY money in MY bank account when you have good credit and qualify for 0-1.9% on equip. I can save my money seince I don'y have to pay interest on equip, while earning interest from a savings account. Then you have money in case of an unexpected emergency, advertising, whatever. Don't buy more then what you need. Just be smart. Little handhelds and things like that I always pay write a bus check, but my mower, it was a no brainer on financing with 1.9%, I could pay it off but why?
  10. TSG

    TSG LawnSite Senior Member
    Messages: 444

    There is always the issue of personal debt vs corporate debt
    and who do you want to own your assets (you or Corp)
    Why use your $$$$ when you can use someone elses for less.
    Then take a 196 deduction and use returned tax money to help make the payments.

    Then again you can personally own the equipment and lease it to the corp or employees making them subcontractors, save on workmans comp.

    Theres a bunch of fun stuff you can do that puts more money in your pocket.
    It isn't how much you make, it is how much you keep.

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