I was reading an article on cnn about a family owned business who rents portable toilets. With the current economic downturn there isn't much construction going on. With less construction sites, there is less of a need for portable toilets.
Family fights to keep business out of the toilet - "We didn't take on a large amount of debt. We paid cash for our assets," he said. The company owns its property outright, including all its portable toilets, vehicles and equipment.
That's part of the business model Sharp said his parents taught him, and it's helped this family business survive and ward off bottom feeders who see the toilets sitting unused and think he's desperate to be bought out at a fraction of the cost.
"Had we spent outside our means, had we grown and leveraged everything, financed everything, we'd be in a really tough situation," he said. "Good business model: Storing money, saving money when you make money ... keeping things simple."
This is a great small business example on how saving money is so helpful. The economic cycle will go up and down over time. At times the economy will speed up with more spending and then there are times when it will slow down.
Some can argue that when the economy is really rip roaring, that it is a good time to go into debt so you can take advantage of all the free flowing money and profit more. What does this mean for the green industry? Well it's possible you might find yourself, during times of a good economy, swamped with customers. There is a lot less competition because more people are employed than looking to start their own business. They have money to spend on lawn care and you think this is great. You go out and finance a new truck or trailer or larger mower. Maybe you even take on a bunch of crews. You start leveraging your assets and may find you use your home as collateral on a loan to pay for all this stuff.
Then you find everything is going great and you are making all this money. Next thing you know it, the economy slows down and you don't have as many customers. So you lay off a crew. You start to have equipment sit idle. Next thing you know it you don't have the cash flow now to pay the loans on all this added equipment. You didn't save any money. If the economy slows for too long, you just might lose everything because you used everything you had as collateral to grow. You over extended yourself and this is how things collapse.
On the other hand, if you are able to save cash and pay for things as you go, you may not grow as fast as those who leverage their assets, but you will have a stronger foundation to grow from.
When the economy slows down, you will have minimal bills, you will own your business assets and you be more likely able weather the storm. Another great part about that is when the economy starts to rev up, you will be in a great position to take advantage of all the new customers and you will be able to scale up faster than others who would just be starting up.
What's your thoughts on this?
Family fights to keep business out of the toilet - "We didn't take on a large amount of debt. We paid cash for our assets," he said. The company owns its property outright, including all its portable toilets, vehicles and equipment.
That's part of the business model Sharp said his parents taught him, and it's helped this family business survive and ward off bottom feeders who see the toilets sitting unused and think he's desperate to be bought out at a fraction of the cost.
"Had we spent outside our means, had we grown and leveraged everything, financed everything, we'd be in a really tough situation," he said. "Good business model: Storing money, saving money when you make money ... keeping things simple."
This is a great small business example on how saving money is so helpful. The economic cycle will go up and down over time. At times the economy will speed up with more spending and then there are times when it will slow down.
Some can argue that when the economy is really rip roaring, that it is a good time to go into debt so you can take advantage of all the free flowing money and profit more. What does this mean for the green industry? Well it's possible you might find yourself, during times of a good economy, swamped with customers. There is a lot less competition because more people are employed than looking to start their own business. They have money to spend on lawn care and you think this is great. You go out and finance a new truck or trailer or larger mower. Maybe you even take on a bunch of crews. You start leveraging your assets and may find you use your home as collateral on a loan to pay for all this stuff.
Then you find everything is going great and you are making all this money. Next thing you know it, the economy slows down and you don't have as many customers. So you lay off a crew. You start to have equipment sit idle. Next thing you know it you don't have the cash flow now to pay the loans on all this added equipment. You didn't save any money. If the economy slows for too long, you just might lose everything because you used everything you had as collateral to grow. You over extended yourself and this is how things collapse.
On the other hand, if you are able to save cash and pay for things as you go, you may not grow as fast as those who leverage their assets, but you will have a stronger foundation to grow from.
When the economy slows down, you will have minimal bills, you will own your business assets and you be more likely able weather the storm. Another great part about that is when the economy starts to rev up, you will be in a great position to take advantage of all the new customers and you will be able to scale up faster than others who would just be starting up.
What's your thoughts on this?
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