Lawn Care Business Forum Lawn Care Business Book Lawn Care Business Blog Lawn Care Software
Home Forum Contract & Flyer Templates Blog Software Videos Podcast Calculators / Estimators Store Mower Review Design It Yourself Lawn Business School

Go Back   GopherHaul Landscaping & Lawn Care Business Marketing Forum > Business > General Business Discussions

General Business Discussions A place to talk about general business discussions.

Over extending your business


General Business Discussions

A place to talk about general business discussions.
Reply
 
Thread Tools Search this Thread
  #1  
Old 06-11-2009, 04:21 PM
Steve's Avatar
Steve Steve is offline
Administrator
 
Join Date: May 2003
Posts: 36,415
Rep Power: 10
Steve has disabled reputation
Default Over extending your business

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?
__________________
- Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
Download your Free trial of Gopher Lawn Care Software.
Reply With Quote

Stop guess-timating. Learn how to estimate and make money! $$$
Mow Time Estimator Lawn Care Price Estimator Mulch and Topsoil Calculator Snow Plow Estimate Calculator


  #2  
Old 06-11-2009, 04:37 PM
doug1980
Guest
 
Posts: n/a
Default

Lawn care business tipsLawn Care Business Book
Well me having only taken a few business classes and being just a "good ol' country boy" from southern Indiana, this is great advice. Then again it sounds like just plain old common sense. I have a lot to learn about owning and operating a business, I admit, but I get a sense of enchoragement when something like this appears and that was exactly what I had planned to do any way. I can't imagine putting myself out there with no safety net.
Reply With Quote
  #3  
Old 06-11-2009, 05:43 PM
turfmaster's Avatar
turfmaster turfmaster is offline
Senior Member
 
Join Date: Apr 2009
Location: Midwest
Posts: 366
Rep Power: 6
turfmaster is on a distinguished road
Thumbs up

Quote:
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?
I agree with this philosophy totally. In fact that is the business plan that I have followed.
Reply With Quote
  #4  
Old 06-11-2009, 08:59 PM
picframer's Avatar
picframer picframer is offline
Andy
 
Join Date: Jan 2009
Location: Halifax, Nova Scotia
Posts: 2,885
Rep Power: 9
picframer will become famous soon enough
Default

It's a bit of a balancing act, wish I had a crystal ball some times. We could still add a pile of equipment and staff to catch up but it's time to put the brakes on unless an opportunity comes along.

When I hit three weeks of work ahead of us I start looking at possibly adding equipment/staff or if I get a really big contract and the profit would cover 40% of the equipment cost then I buy it.

I have taken a couple of zero percent loans from John Deere, what I do however is write them a cheque for twelve months payments in advance, they hadn't had this happen before but figured out how to put it through their software. Any purchase under $5,000 is paid by cheque.

I keep six months of cash in the company account to cover everything, it has very little debt anyhow.
__________________
Andy
Halifax, Nova Scotia
Reply With Quote
  #5  
Old 06-11-2009, 09:08 PM
Steve's Avatar
Steve Steve is offline
Administrator
 
Join Date: May 2003
Posts: 36,415
Rep Power: 10
Steve has disabled reputation
Default

Quote:
I have taken a couple of zero percent loans from John Deere, what I do however is write them a cheque for twelve months payments in advance, they hadn't had this happen before but figured out how to put it through their software. Any purchase under $5,000 is paid by cheque.
What is the benefit of doing that?

Quote:
I keep six months of cash in the company account to cover everything, it has very little debt anyhow.
Would you advise others to do this too? Does the 6 months of cash cover all expenses the business would have during that time, so it could operate for that length with even no income?
__________________
- Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
Download your Free trial of Gopher Lawn Care Software.
Reply With Quote
  #6  
Old 06-11-2009, 09:26 PM
picframer's Avatar
picframer picframer is offline
Andy
 
Join Date: Jan 2009
Location: Halifax, Nova Scotia
Posts: 2,885
Rep Power: 9
picframer will become famous soon enough
Default

Quote:
Originally Posted by Steve View Post
What is the benefit of doing that?


Would you advise others to do this too? Does the 6 months of cash cover all expenses the business would have during that time, so it could operate for that length with even no income?
Steve, the benefit is no worries, it also reduces the taxable income for the given year. Stuff happens as does accidents, if I were to get hurt the company would keep going but I do not want to have to put any more of my own cash in so this takes care of any loan payments.

As for the 6 months, I realize that most companies can not do this but ye3 if you can you should, at least three months. You should also put a portion of every piece of work away, say 10% to start, perhaps have your better half control this seperate fund if you find yourself spending it, rainy days happen, growth is required, this fund will ensure you do not have to borrow. Personally I put 50% of net profits away for future growth.
__________________
Andy
Halifax, Nova Scotia
Reply With Quote
Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Forum Jump

» Recent Threads
  RatingTitle, Username, & Date Last Post Replies Views
Look out Bob Villa -...
Mr Dave
Today 10:06 AM
Today 10:06 AM
by Mr Dave
0 1
Whe does Mowing season...
jack2048
Today 07:05 AM
Today 09:05 AM
by ExtremeLawncareServices
1 38
Falling into business
stellarmowing
09-28-2014 04:35 PM
Today 07:52 AM
by stellarmowing
3 216
Sprinkler head guards...
Sprinkler Buddy
09-27-2014 04:55 AM
Yesterday 09:05 PM
by Sprinkler Buddy
2 297
John Deere z235 Deck
WesleySnips
Yesterday 06:02 PM
Yesterday 06:02 PM
by WesleySnips
0 73
Question?what should I...
dalvan0
09-24-2014 11:10 PM
Yesterday 04:59 PM
by jrs.landscaping
13 669
Help a brother...
tbtigers03
09-28-2014 11:41 AM
Yesterday 04:20 PM
by tbtigers03
4 242
hey
sizemorelawncare
09-28-2014 08:12 PM
Yesterday 03:10 PM
by Steve
2 169
Update on LawnsAway and...
Ian Lovejoy
09-28-2014 10:24 AM
Yesterday 03:09 PM
by Steve
2 224
Need to figure out how...
tjslawnde
09-28-2014 10:31 AM
Yesterday 03:05 PM
by Steve
4 243
Aerocore Deck?
wdrdoctor
09-26-2014 06:21 PM
Yesterday 02:36 PM
by Steve
3 373
Hello from CNY
arazucontracting
09-22-2014 06:07 PM
Yesterday 02:33 PM
by Steve
3 642
How to price lawn mowing.
jack2048
09-24-2014 04:18 PM
Yesterday 02:27 PM
by Steve
4 493
Pricing ????
6295danny
01-14-2013 07:54 PM
Yesterday 02:22 PM
by Steve
35 6,508
30 Inch Push Mowers Pros...
Billy Goat
06-27-2013 08:07 PM
09-27-2014 04:11 PM
by SGL1
30 7,010
Kohler command carb...
ExtremeLawncareServices
09-21-2014 03:09 PM
09-26-2014 06:08 PM
by jrs.landscaping
23 1,030
Replacing a Shindi T-27
Dan Tanner
09-13-2014 12:59 PM
09-26-2014 04:16 PM
by stevef1201
5 1,036
Looking for feed back on...
ExtremeLawncareServices
09-17-2014 08:38 AM
09-25-2014 09:18 AM
by ExtremeLawncareServices
10 1,062
These are the days on...
ExtremeLawncareServices
03-22-2014 09:12 AM
09-25-2014 08:01 AM
by ExtremeLawncareServices
124 9,243
Trying something new,...
ExtremeLawncareServices
09-21-2014 09:07 PM
09-23-2014 11:13 AM
by Steve
4 737
This sucks...
Matther777
09-18-2014 04:56 PM
09-22-2014 08:02 PM
by ExtremeLawncareServices
11 1,125
Not sure, but anyone do...
SnowRemoval2k14
09-22-2014 12:10 AM
09-22-2014 04:49 PM
by Steve
1 686
Tribulations of working...
stevef1201
09-13-2014 08:37 AM
09-22-2014 04:45 PM
by Steve
9 1,018
Mulching beds
Bradcook21
09-21-2014 07:43 AM
09-22-2014 04:43 PM
by Steve
3 757
Scag turf tiger hydrolic...
ExtremeLawncareServices
09-04-2014 10:55 PM
09-22-2014 04:35 PM
by Steve
12 1,385
2014 Gie-expo
ExtremeLawncareServices
08-19-2014 11:22 PM
09-21-2014 09:23 PM
by ExtremeLawncareServices
3 1,400
Mowing 7 acres
avetslawncare
08-31-2014 04:24 PM
09-19-2014 03:29 PM
by acrajchel
6 1,626
snowplowing
jshak40
09-01-2014 07:20 AM
09-19-2014 11:49 AM
by Steve
23 2,051
Lowballers scrubs &...
Darksteel
01-13-2014 07:35 AM
09-18-2014 06:32 PM
by Northwoods Outdoors
58 7,456
Hello from upstate NY!
A&MLawn&Snow
09-18-2014 11:19 AM
09-18-2014 04:10 PM
by Sprinkler Buddy
2 859
Price to apply fertilizer
SS.Lawncare
09-15-2014 11:10 AM
09-18-2014 01:16 PM
by Steve
9 1,043
Trailer tires
J.A.S.LawnService
09-01-2014 10:17 AM
09-17-2014 09:57 PM
by curts lawn care
4 1,474
new to the forum
SGlawncare
09-16-2014 11:20 PM
09-17-2014 08:29 PM
by curts lawn care
3 874
Help With Snow Blowing...
Robertf31
09-13-2014 10:55 PM
09-17-2014 12:34 PM
by Steve
11 1,231
Non-Stop Summer?
SouthallMowing
09-14-2014 10:51 PM
09-17-2014 10:48 AM
by stevef1201
6 986
Poll - net income
Dan5082
11-15-2010 08:08 PM
09-16-2014 04:44 PM
by jrs.landscaping
12 3,732
Getting lowballed!
PineHillLawn
06-27-2012 07:23 AM
09-16-2014 01:25 PM
by jrs.landscaping
24 5,475
Compare this summer to...
Steve
09-03-2014 12:52 PM
09-16-2014 11:20 AM
by Hanks Lawn Care Services
15 1,659
thinking about throwing...
veteranslawncaresystems
09-09-2014 10:31 PM
09-15-2014 03:41 PM
by Steve
12 1,381
Hello
Robertf31
09-12-2014 10:34 PM
09-15-2014 03:17 PM
by Steve
2 885
Newbie......Again
Jibber
09-13-2014 12:17 PM
09-15-2014 02:54 PM
by Sprinkler Buddy
2 1,008
need help with starter...
GoGreenerKS
09-12-2014 04:23 PM
09-15-2014 02:25 PM
by Steve
3 933
Brake job!
kslawn
08-30-2014 07:49 AM
09-15-2014 02:16 PM
by Steve
12 1,725
Hello
jawnebgoode
08-28-2014 08:37 PM
09-15-2014 02:15 PM
by Steve
3 1,455
Employee uniforms
Gerardo_Landscape
01-21-2014 11:11 PM
09-15-2014 02:12 PM
by Steve
5 1,522
Greetings from the north
Northwoods Outdoors
09-13-2014 08:55 AM
09-15-2014 02:07 PM
by Steve
1 876
darleneh
darleneh
09-15-2014 12:33 PM
09-15-2014 02:07 PM
by Sprinkler Buddy
1 912
My 1st bid
WesleySnips
06-11-2014 03:13 PM
09-15-2014 02:05 PM
by Steve
29 2,368
New Aerator
Chaz
09-09-2014 11:43 PM
09-15-2014 01:50 PM
by Steve
9 1,152
Yearly contract Pricing
jrob0691
08-21-2014 08:57 AM
09-15-2014 01:23 PM
by stevef1201
8 1,901
» Popular Tags
2wd 4x4 aerocore apartment bid article marketing auger bid billy goat brushcutter care charge collections subcontractor decorating deliquentaccounts equipment rental exmark ferris foreman four wheel drive gopherhaul grass gravely health hills holiday lighting honda how much to charge husqvarna installation john deere quik trac landscape services lawn lawn care lawn care business podcast lawn care business seo lawn care business show lawn care business website lawn care business website seo lawn care seo lawn care website lighting brass outdoor lights managing a lawn care business marketing mechanic monthly mulch mulch price new buisness podcast promotion pto push versus ride savannah scag schedule scripts seo snow snow plowing starting a business starting a lawn care business stihl sulky theft theft of services toro toro grand stand trailer turfgrass consulting walk behind walker
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 10:40 AM.


(C) 2011 Riggs Publications - Terms of use & Privacy Policy

All times are GMT -5. The time now is 10:40 AM.

(C) 2011 Riggs Publications - Terms of use & Privacy Policy