When do you draw the line?

Discussion in 'Business Operations' started by Ijustwantausername, Nov 15, 2011.

  1. Ijustwantausername

    Ijustwantausername LawnSite Bronze Member
    Messages: 1,728

    What I mean by that is, when do you say okay I need this piece of equipment to justify this particular amount of work I am getting? I am a little discouraged because I spent $400 on a Lesco spreader this fall because I suddenly had an influx of business (aerating/seeding) and after being in this business I know to not cheap out on things like that. Well, the influx was short lived, and now no calls at all and now I have this flawless spreader not being used.

    Also, spent $500 on a 48" Bluebird plug aerator because I had an influx of aerations, now no calls at all. I know the season is just about out for the year and I know things slow down, including mowing, but at the same time I ask myself "should I have bought something a little cheaper for the amount of work I had?"

    I just hate when money sits in things that could be sold and something cheaper could replace it. What do you all think?
  2. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Messages: 2,131

    obviously it comes down to how often you will use a piece of equipment. For example this spring I bought both a Dingo and Skid Steer. I was renting both of them and had the skid steer lined up for a month long rental and was about to reserve it for a second month. I realize with the contracts I had signed for through out the year rental would be more than what a years worth of payments would be. With the Dingo, my rental place does not give weekly or monthly discounts because thay are in such high demand. My rental was nearly as much as what a payment would be. Now I go out taking on skid steer work for other contractors and the machines pay for themselves and the operator with no problem.
  3. dKoester

    dKoester LawnSite Gold Member
    Messages: 3,390

    Start planning for spring! What are you waiting for? Develope a marketing strategy to get your equipment under man power. Idle equipment is lost money.
  4. Gilmore.Landscaping

    Gilmore.Landscaping LawnSite Senior Member
    from Ontario
    Messages: 645

    You can't usually expect to pay off equipment that quickly, like you said the spreader was expensive but it will also last you many years to come, so really you should figure your are using it spring summer and fall for years to come so it will easily pay for itself. Same with the aerator.
  5. seabee24

    seabee24 LawnSite Senior Member
    Messages: 619


    compare the following items:

    TOTAL RENTAL COST FOR THE YEAR - total rental cost is the amount that the rental company will charge you, plus the amount of "wasted time", fuel, delivery expenses to get all your jobs done for the year with that equipment.

    TOTAL OWNERSHIP COST -- add the price of the machine, costs of all the labor and material to fix, repair, maintain and store the equipment, then subtract what it should be worth when you go to sell it......then divide by the number of years you think it will run.

    which ever is less is the one i would choose. You would be surprised that in most cases if you are not using a peace 6 out of 10 days for the entire season, it may not be worth owning.

    too many peoples surprise alot of large construction companies rent ALOT of equipment. things like dozers, cranes, excavators. most are on a lease
  6. Dr.NewEarth

    Dr.NewEarth LawnSite Bronze Member
    Messages: 1,476

    Your vision is only for one year. How many years service will you get out of the equipment before you replace it? Over five years, you shall reap a decent return on your wise investments.
  7. MAD whacker

    MAD whacker LawnSite Member
    Messages: 63

    dont beat your self up to bad. I've bought thing before and NEVER used them again . it happens , but lucky for you a aerator and spreader will be used again. some times its not bad to have equipment you dont use much as long as you have what you need when you need it. and as long as you can afford it , it does not hurt to have options for when opportunity DOES present its self.

    my dad is a pack rat and keeps everything , its helped me more than once...
  8. thunderthud

    thunderthud LawnSite Member
    Messages: 127

    I bought a CAS Stone Slinger in 2008. At the time, we thought it would save us doing foundations and slabs. $145,000 for the chassis and $300,000 for the slinger itself. This was a major investment.

    Total usage in 2009: 19 days.
    Total usage in 2010: 23 days.
    Total usage in 2011: 11 days.

    Do the math. It successfully cut down the amount of stone wasted, and it sped up the backfill process. The problem is both of those things were really expensive, but not $445,000 expensive. It gets used, I'm glad I have it, probably could have easily not purchased it either.

    Don't feel so bad. There are many things like the Slinger or spreader we buy that perhaps didn't pay for themselves right off the bat. But they are yours until you either sell it, or use it until it dies.
  9. arninglawns

    arninglawns LawnSite Member
    Messages: 68

    You might also consider subcontrating out work instead of buying or renting equipment. Around here, it seems like there's always someone with a stump grinder or a bigger mower than I have that can do a job for less than what it would cost me to have my crew do it. Heck, I even subbed out a regular lawn mowing the other day because my crew had already left the area.

    That being said, I have an electric pump sprayer (for staining fences) and a pressure washer sitting in my Pearland shop collecting dust, lol.
  10. Ijustwantausername

    Ijustwantausername LawnSite Bronze Member
    Messages: 1,728

    Thanks guys, lots of good advice.

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