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tonyslawn10@yahoo.com
01-10-2011, 05:53 PM
How do i get financing to get better equipment? My credit is shot, the buisness is doing good, when i have working equipment, and would really like to upgrade to get more buisness, but cant find the funding to get it going bigtime. Please help.

jymie
01-10-2011, 06:05 PM
The first few years will not justify you getting deep in debt. Avoid that at all costs. Make do with what you have if you can and just buy a little at a time as you can afford to. Check on Craigslist for items you wish to upgrade.

TNT Family Lawn Care
01-10-2011, 07:36 PM
Words of Wisdom right there


I agree with you do not go in debt make do with what you have or if you need something to do a job rent it much cheaper you can rent anything these days

Steve
01-11-2011, 02:36 AM
I ask this of Tony and others who have gone through this before him.

When you find/found yourself in this situation, did not having enough money to upgrade your machinery have anything to do with not charging enough for your work or were there other reasons why it wasn't possible at the time you wanted to do this?

What is the best way to resolve this issue?

johncrider
01-13-2011, 09:05 PM
You can also look at opening as an LLC or Corp. In many instances they are viewed as a separate entity therefore having their own credit histories. Generally, they have to be two years in business as such entity before they will be viewed separately. Speak to an attorney or accountant about this for your situation. It all depends on where you plan to be in ten years too.

Steve
01-14-2011, 03:05 AM
John,

Whats your view on the best way to raise money for equipment? Should you finance it or save for it or what?

picframer
01-14-2011, 06:36 AM
This is a fine line and I do not think there is a black and white answer based on my career in banking and financing hundreds of companies, it depends on the industry and the owners/directors marketing plans, industry measurement tools etc.

I am reminded that it takes money to make money, at the same time I have gone both routes and starting with nothing will get you there, it just takes longer, renting equipment for a special job is a very good option until you can afford the equipment.

My experience in financing and credit is Canadian, however credit granting is somewhat close.

The best way to establish credit in today's market, is to obtain a secure Master Card or Visa. Basically you deposit cash on a Credit card, use it and pay it off every month, this is reported to the credit agencies and after 6 to 12 months you will have established a credit history.

Steve
01-16-2011, 01:25 AM
I am reminded that it takes money to make money, at the same time I have gone both routes and starting with nothing will get you there, it just takes longer

Andy,

When you think of different routes to go, do you feel the new lawn care business owner who is still unsure of many things about his business should be spending more than he/she can spend on equipment?

Or should that apply more to a business veteran who understands the scope of what they are doing and taking out some debt to scale up, isn't such a big deal to them?

picframer
01-16-2011, 01:44 PM
Andy,

When you think of different routes to go, do you feel the new lawn care business owner who is still unsure of many things about his business should be spending more than he/she can spend on equipment?

Or should that apply more to a business veteran who understands the scope of what they are doing and taking out some debt to scale up, isn't such a big deal to them?

If the owner is unsure about anything then he/she should never go into debt to buy equipment.

As I noted it all depends on the person, experience and track record. Personally i had no issues taking on debt and my debt is now 7% of my Capital assets, granted I had a substantial amount of capital available to put into it.

It also depends on the percentage of debt you are taking on, for me to invest ten grand in a mower and borrow for it is nothing because of my circumstances, to others that may be a mammoth undertaking.

USA Lawn Care
01-16-2011, 05:01 PM
as hard as it is to have a big account staring you in the face and you have credit available (which you might not be able to afford), do yourself a favor and stay with cash AVAILABLE to buy equipment.
What gets people in trouble is they think this 'great deal' this 'one chance to get a big property to mow' is going to never come around again. Especially new lawn guys building their business. 99% of us who cut grass start out the same way. We do some advertising, get some accounts, referrals, business grows. If it grows too fast (which also means you are doing something right!), it suddenly turns into some bigger piece of equipment, new $6,000 mowers financed over 2-3 years, etc. Yes...it is hard to build slow and use ONLY available profit. I think it also takes sitting down with someone (an accountant friend) or very conservative business friend, talking over your business growth and having a perspective from someone who has seen businesses fail due to debt. Get someone in your corner to say, "grow slow.....don't go into debt....the work will always be there (and it will)".
New guys rolling along by themselves......yards to mow....credit racked up...oops I broke my leg over the weekend.....can't mow.....now what? The bills won't go away because of your broken leg. That's also what insurance is for but, like I said, 99% of us begin the same way and we all know it......just out there cutting grass making some extra $$.

Growing Green
01-16-2011, 07:01 PM
I will never borrow money. Even if that means I have to go slower. Not worth the stress or risk.

Matt

Steve
01-17-2011, 02:34 AM
my debt is now 7% of my Capital assets

Do you feel there is a % range that business owners should allow themselves to be within where after you exceed it, the debt % becomes dangerous?

picframer
01-17-2011, 04:57 AM
Do you feel there is a % range that business owners should allow themselves to be within where after you exceed it, the debt % becomes dangerous?

For any business your debt payments should not exceed more than 15 to 20% of your net income, that is just my opinion, finance companies, banks etc will go much higher.

Depending on what we are buying and what our marketing plan is, experience etc. it can be next to impossible to achieve objectives without debt, for example to save for an $80,000 excavator could take years, at the same time we could finance it and have it paid for in 1/3 of the amortization time of a loan.

There are many ways to raise capital also, issuing capital in your company, angel investors using promissory notes tied with a rate of return tied to year end profits etc.

For those starting out with no experience in owing their own business, it's best to stay out of debt until you have a couple of years under your belt, take on debt slow to grow, pay it off. Don't get wrapped up in low payment offerings, 0% interest etc.

Steve
01-18-2011, 12:59 AM
For those starting out with no experience in owing their own business, it's best to stay out of debt until you have a couple of years under your belt, take on debt slow to grow, pay it off. Don't get wrapped up in low payment offerings, 0% interest etc.

So ultimately it's better to just use some cheaper gear for the first year or two and even if it takes you longer, you will be learning a lot during that time and not slowly hanging yourself with a rope made of debt?

picframer
01-18-2011, 04:45 AM
So ultimately it's better to just use some cheaper gear for the first year or two and even if it takes you longer, you will be learning a lot during that time and not slowly hanging yourself with a rope made of debt?

Again it depends, if I were just starting out and say pressure washing or I have a lawn mowing business and I want to add this service, if I had enough customers interested that the profit from their jobs would pay for at least 25% of the washer, I would buy/finance it. Lawn spraying, chain saws etc. same thing. In my case if I had business or additional work lined up and needed more equipment, I bought or financed it.