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 online now
Administrator
 
Join Date: May 2003
Posts: 36,181
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 online now
Administrator
 
Join Date: May 2003
Posts: 36,181
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
Left handed edging with...
SGL1
Yesterday 08:59 PM
Yesterday 08:59 PM
by SGL1
0 23
Need help determining...
Jbss861
07-20-2014 02:33 PM
Yesterday 08:51 PM
by SGL1
11 241
Got my first lawn job...
SGL1
06-11-2014 09:19 PM
Yesterday 08:47 PM
by SGL1
27 1,117
Customer letters
kslawn
Yesterday 06:17 AM
Yesterday 06:17 PM
by kslawn
2 63
Crop Rotation Techniques...
eastsidelandcare
07-17-2014 03:47 PM
Yesterday 05:53 PM
by eastsidelandcare
2 130
Selling lawns like...
eastsidelandcare
07-17-2014 03:51 PM
Yesterday 05:49 PM
by eastsidelandcare
2 171
Scag new "Eliminator"......
ExtremeLawncareServices
07-20-2014 10:45 AM
Yesterday 05:37 PM
by Just for Cuts
9 208
These are the days on...
ExtremeLawncareServices
03-22-2014 09:12 AM
Yesterday 03:55 PM
by stevef1201
75 4,278
Should I ?
googus
07-22-2014 04:06 PM
Yesterday 03:48 PM
by googus
3 111
need professional advice...
Fiddlers_green
07-20-2014 07:21 PM
Yesterday 12:42 PM
by Steve
3 140
new to me box truck
jrayb39667
03-06-2014 10:20 PM
Yesterday 12:40 PM
by Steve
15 1,315
My First Apartment...
SSLCtn
05-26-2014 10:17 PM
Yesterday 12:14 PM
by Steve
14 822
Lawn Service back in...
LawnCareMan280
07-18-2014 09:00 PM
Yesterday 11:48 AM
by Steve
4 176
Overspray?
stevef1201
07-21-2014 04:20 PM
Yesterday 11:39 AM
by Steve
3 86
Hello Everyone! Newbie...
SLKlawn
07-17-2014 06:22 PM
07-22-2014 01:53 PM
by Steve
6 209
Proper height for lawn
rob lederhilger
05-26-2014 08:01 AM
07-21-2014 02:53 PM
by LawnDoctor
9 608
Blade sharpener
Just for Cuts
07-04-2014 12:31 PM
07-21-2014 01:48 PM
by Steve
9 448
What's my business worth?
Chaz
07-16-2014 01:35 PM
07-21-2014 01:45 PM
by Steve
4 225
Single tree, mow customer
WesleySnips
06-27-2014 10:12 AM
07-21-2014 01:04 PM
by Steve
12 499
1.5 Acre Jungle
WesleySnips
07-15-2014 05:57 PM
07-20-2014 11:31 AM
by ExtremeLawncareServices
21 524
Gopher schedule software
Ray
07-18-2014 04:13 PM
07-18-2014 04:13 PM
by Ray
0 114
2006 Chevy fuel pump...
KevinsLawns
07-17-2014 08:39 PM
07-18-2014 11:51 AM
by Steve
1 116
Halfway point of year!
Steve
07-01-2014 12:08 PM
07-18-2014 11:38 AM
by Steve
14 660
I got told to leave and...
gwilson98
06-16-2014 02:07 PM
07-17-2014 11:43 AM
by Steve
16 976
Hey guys this is the...
prmenter@gmail.com
07-07-2014 08:23 PM
07-16-2014 08:10 PM
by ExtremeLawncareServices
28 711
Mowing the hills
prmenter@gmail.com
07-08-2014 12:22 PM
07-16-2014 05:00 PM
by Just for Cuts
18 646
Say Hello !!!
Steve
03-19-2007 11:18 AM
07-15-2014 05:38 PM
by icon2000
1,184 318,588
need some help geting...
dalvan0
07-13-2014 09:28 PM
07-15-2014 11:56 AM
by Steve
5 219
new trailer help
mattthelawnguy
07-11-2014 08:21 PM
07-15-2014 11:42 AM
by Steve
9 321
Classified Ad Template...
bcfb
06-05-2013 02:40 AM
07-15-2014 11:16 AM
by Steve
15 3,658
Husqvarna pz 60
CDLAWNCARE
07-06-2014 06:50 PM
07-15-2014 08:53 AM
by kslawn
10 394
Lowballers
Chaz
07-11-2014 03:55 PM
07-14-2014 12:27 PM
by Steve
5 326
My new side job
Sprinkler Buddy
05-10-2014 05:23 AM
07-14-2014 12:15 PM
by Steve
10 787
Illegal spraying
GoGreenerKS
07-04-2014 09:11 AM
07-13-2014 10:36 PM
by GoGreenerKS
10 504
New Mower and Trailer
Chaz
06-25-2014 12:04 PM
07-13-2014 06:25 PM
by SGL1
7 513
What Fertilizer to Use?
acrajchel
04-07-2014 01:56 PM
07-12-2014 07:36 PM
by SGL1
21 1,833
Fuel and fuel additives
SGL1
07-06-2014 10:23 AM
07-11-2014 07:53 PM
by SGL1
15 505
Questions for a patchy...
jumcgee
07-09-2014 08:42 AM
07-11-2014 12:34 PM
by Steve
1 178
toro proline blades wont...
boog
06-25-2014 06:26 PM
07-11-2014 05:28 AM
by kslawn
18 610
Contents of Marketing to...
prmenter@gmail.com
07-09-2014 05:25 PM
07-10-2014 03:23 PM
by Steve
3 265
Shindaiwa
CLB454
05-13-2014 09:04 PM
07-10-2014 03:04 PM
by Steve
14 744
Starting New in FL
mmcuttrim
08-06-2010 09:22 AM
07-10-2014 02:44 PM
by Steve
48 11,206
Bid help 45 on acre...
Priggan
06-26-2014 12:56 PM
07-09-2014 08:38 AM
by kslawn
7 489
need help bidding fence...
veteranslawncaresystems
07-03-2014 10:33 AM
07-08-2014 12:00 PM
by Steve
5 349
Trimmer or Knife?
gwilson98
07-04-2014 09:56 PM
07-07-2014 02:41 PM
by Steve
6 313
Started a New Solar Lawn...
Solar Lawn Care
06-08-2013 01:40 AM
07-07-2014 01:55 PM
by Steve
37 7,380
New Canadian Member
coppervalley
07-04-2014 02:15 PM
07-07-2014 01:12 PM
by Steve
1 215
Happy Independance...
stevef1201
07-04-2014 07:05 AM
07-07-2014 01:01 PM
by Steve
2 214
Echo PE 266 edger
stevef1201
07-01-2014 01:28 PM
07-07-2014 12:47 PM
by Steve
4 293
30 Inch Push Mowers Pros...
Billy Goat
06-27-2013 08:07 PM
07-06-2014 01:50 PM
by SGL1
21 5,197
» Popular Tags
34'' ads blades butterfly gardens charge christmas christmas light hanging credit card customers ditches employee problems exmark fall ferris financing first truck franchise georgia gopherhaul grass gravely growing a lawn care business health holiday how much to charge installation invoice kansas city lawn 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 lawn care website seo lighting brass outdoor lights marketing mechanic monthly mow mowing mulch price new and restored landscapes new buisness new business organize podcast promotion pto riding mower running a business savannah scag schedule seo social media starting a business start up lawn care business steep lawns stihl sulky top dresser toro toro grand stand tree care trimmer rack walker winter services
Powered by vBadvanced CMPS v3.1.0

All times are GMT -5. The time now is 05:28 AM.


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

All times are GMT -5. The time now is 05:28 AM.

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