[Paul]

Along the same lines that Matt is saying how many here have insurance? Not many here I think are self insured both business wise and personally. So we finace our "insurance"! How many here pay their insurance bill all at one time I know some here are talking $30K to $50K plus a year! I'll bet we would all like to be self-insured! It sure would save us a bunch of money real fast!

[johnkeegan]

To me it seems financially irresponsible to NOT buy (finance) a piece of equipment if it dramatically increases your efficency. Especially in this industry, which has a finite number of days each year to work and a finite number of potential good employees. If you see a need for a new piece of equipment but you're afraid to borrow and, therefore, decide to save and wait a few years to pay cash for that piece of equipment, you are also losing out on the increased efficency (profit) during that wait period... Also, add to that the increased physical wear and tear on you and your employees.

[cutntrim]

When I started in business in 1991 my ex-partner and I were in University and our first summer we used the following equipment;

1986 Ford Mustang (mine) which we put a trailer hitch on

Borrowed home-made box trailer from my partner's uncle

Borrowed Sears Craftsman "Big Wheel" mower (partner's parent's) nicknamed the "Silver Bullet"

A couple rakes, shovels and corn brooms from our parent's sheds

We bought; a 21" Mastercraft mower from Canadian Tire...nicknamed "Red Thunder", and one WeedEater single-line trimmer

...that's it...

The following summer we applied for a $7,500.00 government-sponsored Student Venture Loan and used that to upgrade to a 36" Ransome WB, a couple curved-shaft Homelite trimmers, a Homelite backpack blower and a Homelite hand-blower (nice not to use brooms anymore), and a 5'x10' landscape trailer. That same year I sold my Mustang and bought a 1992 Nissan 2wd pickup which was $11,500 on-the-road and I financed it through the dealer.

Point is, you don't have to start with ALL THE TOYS right off the bat, but unless you've got some coin saved up (we didn't as we were students), or a rich uncle...you're gonna need credit at some point. Paying back that original government loan allowed us to qualify for another government small business loan when the first expired, and we were able to purchase three more WB's, two used 3/4 ton 4x4's, and another landscape trailer.

If you were formerly in the corporate world and have some savings built up, or your relatives bankroll you, or you inherit your business...then you hopefully can live by "Cash is King" and God Bless you for it...but if you're like me and my partner and are a 21 year-old student with zero savings or family financing and you are starting literally from scratch...then prudent use of financing is not only advised, it's required.

Just my take on it anyway...so check into government-sponsored small business loans (especially if you are a student) if they have those in the States. Good luck.

[HardDaysKnight]

Gardenhaus blogged: How many small business owners do you know that say I have not had a vakay in years.......

None. I don't associate with anyone who says vakay.
Your entire answer is about you and he never asked
if he should aquire credit but how to.

[Gardenhaus]

Unfortunately some people take this personally....vakay was simply an attempt to shorten my typing of vacation no different the lol or lflmao.....

Comments made here reflect what is wrong with both the US government and personal and business finance.....everyone looks to take the easy way...the quick way.....give me a pill to lose weight instead of shutting your mouth and getting your fat a** in the gym each day.......manage my kid's behavior with drugs instead of spending time with them.......

My anecdotal references are based on people who have done it.....cash.....slowly but surely......one secret to success is to see how someone else did it and follow them.....not take advice from those that are struggling.....take it from those who have made it.....

And references to inheritance rich uncles and such are not aimed at me.....yes my in laws and other mentor are very successful $ wise.....but are from the school of I earned mine you earn yours.......not a penny in help .......but more importantly taught me how to make a lot of money and do it efficiently.....while be happy......nuf said.......

[johnkeegan]

Garden, Are you suggesting that financing something is "taking the easy way out?" As long as someone realizes that using credit also includes the responsibility of dedicating yourself to making the payments, it is definately not "taking the easy way out." It could be argued that forestalling the purchase of a piece of equipment that has an immediate need just because someone fears monthly payments, is actually "taking the easy way out."
Like many, you also appear to confuse personal credit with business credit. Using credit to buy a BMW or a $10K big screen TV is not the same as financing a $40K skidsteer. Hopefully, I don't need to explain the difference.
And you're really painting with a large brush when you compare businessman that use credit with the Fed. Gov't that runs a deficit so it can cut taxes without cutting spending. They're not doing it to increase efficency and productivity like a small businessman. They're just trying to please all.
And as far as comparing business debt to A.D.D. and obesity... well, I'll cut you some slack because I see it was early in the morning when you wrote that.
Also,selectively reading a few "secrets-to-success" books or looking at few "rags-to'riches" stories and trying to apply that to every business scenario is a real oversimplification. Some businesses require much investment in equipment, research and development etc., others are not investment intensive. In those businesses that require the investments you either take the risk (i.e. finance) to stay up-to-date or you become a dinosaur and get left behind. And taking that risk is definately not "taking the easy way out."
P.S.- Also be sure you're not applying the attributes of your unique situation (an isolated niche) to the rest of those that landscape. Hardscapers are deifinately more equipment intensive than softscapers. And if you're in an area with ample competition, if you don't invest in "automation" to increase efficencies, you'll get priced out of the market. I don't get nervous when I see an old pickup with a few wheelbarrows, shovels, hand tampers (or maybe a Dingo). But I would get nervous if I saw someone with a mid-sized dump, bigger skidsteer, ASV, mini-ex., bark blower etc. It doesn't guarantee he does quality work, but it shows he's in it for the long haul and he's concerned about efficency, as well as the health and happiness of his employess... And he's definately not looking for the safe, "easy way out."

[Dale Wiley]

I don't get nervous when I see an old pickup with a few wheelbarrows, shovels, hand tampers (or maybe a Dingo).

This would be my company.

3- 1970's era Ford pickups,
1 -1979 F 350 flatbed /service truck
1- 1989 Ford F 250 (mine),
1 -14K dump trailer (on 24 mo lease) Vermeer S600 with 9 attachments ( on lease - 3.5 more years),
Tilt trailer,
1 box trailer
Toro Multi Pro spray unit.
Toro top dresser
Toro greens aerator
Lazer mower
Exmark mid mower
Honda 4 Trax

4.5 field employees.
1 support / foreperson / mechanic
1 Sales- Project Manager - Business Operations. (me)
20 plus years in business.
Profitable, but not flush

But I would get nervous if I saw someone with a mid-sized dump, bigger skidsteer, ASV, mini-ex., bark blower etc. It doesn't guarantee he does quality work, but it shows he's in it for the long haul and he's concerned about efficency, as well as the health and happiness of his employess..

This is my newest competitor in town. Not even in business last year
(I checked). Somebody got a good loan, re financed a house something, but the fact is borrowed or not, THIS IS A PILE OF MONEY.

Rented store front / office on major highway.($$$$$)

All this equipment is brand new.
2 brand new F 250's
1 brand new F 350
1 tilt trailer
2 box trailers
Thousands in graphics.

They are assuming this housing boom is going to bring their ship in.

We do quality work. Pictures available.
In business 20 years - 7 under this LLC
Very concerned with efficiency - hence the Vermeer package $ 887 per month.
No WC claims ever, 40 hours per week, bonus's, presents for newborns, paid above average, health insurance. I could have another 5 workers in a week with the same attitudes and skills, IF I needed them.

Now, please explain to me what the difference is here ??

If the market does not meet expectations, if the real estate boom falters, if we have another terrorist attack and the ensuing economical collapse ....??????

Which company will survive ??

Which company has a historical track record of performance, existing client base ??

Who will be able to keep employees working as long as possible ??

Since I don't have all that flash, I do have a viable , legitimate and stable business...I have use an APPROPRIATE amount of debt to put what I need on the ground for last year and next year, and if things went well and justified it , I would not hesitate to put another Vermeer S 600 package on the ground, and I could get the deal done in a week or less.

The comparison you make John is accurate. There are thousands of different business models, yours mine, others, that produce both different and similar results. I have chosen my way after being filleted 10 different ways over the years.

I dislike bankers, finance people, equipment sales persons, materials sales persons, because they are concerned with one thing - parting me and my money in the fastest way possible.

I spent many years looking at different operations. I have seen and been on site at well over 300 different landscape companies and golf courses, from Southern CA, to the Deep South, Upper Midwest, East Coast , Pacific Northwest.

My employees drive maybe 15 miles most days to work. They don't care if they drive there in a 30 year old pickup. They do care they have the machinery and tools they need to do the quality job they are expected to do and want to do. When they call the support person, they know a piece of equipment will show up. They know the materials will be there waiting for them.

My main point is about sustainability.

The dude with all the iron and payments ...if cash becomes short , is he going to lay off employees, or make the payments on idle equipment ??

[site]

The bank will probably ask you as the principal of the corporation to act as a cosigner on your first few loans. Between that and setting up terms with suppliers you should be off and running. Everyone has strong opinions about credit. As long as yours has been well thought out and you stick carefully to the plan you will be fine.

[Gardenhaus]

Dearest John

I am not attempting to say financing is the easy way out....I am saying it is not an alternative I go for period.........

I do not have isolated stories of rags to riches through my mentors......most of our very wealthy clients and friends are also cash is king believers. They started their companies small and then expanded (most of them) or took on partners(a couple)....as investors(actual stockholders in the company) to pay cash for establishing their business, minimize the down side....not the same as a loan.

You obviously are not part of softscaping industry and do not understand the investment in.......... education ($30,000 back in 70's) paid in cash, vehicles, skid steers, dingos, enclosed trailers, blowers back packs and walk behind, power brooms, computers, plotters and computer software, extensive hand tools, pole pruner chain saws, demo light systems, demo irrigation systems, inventorying the trailer with enough spare light, water garden and irrigation parts that we can fix just about any problem on the spot.

I love to see others set up as we are...that raises the bar for everyone......however, used trucks don't need to mean dilapidated trucks......and renting min ex's until you have a plan to pay for one (cash preferred) or within one season. And why don't you pay your insurance at one time or qtrly....

We have 25% of our volume paid in advance during the winter. We have several clients who will pay for the full year in advance for a slight discount of say 5%. We have done their work forever and they know we take care of them first.....so as part of our annual budget this is taken care of, no need for a winter credit line........

We aren't exactly isolated here in my neck of the woods. Lots of contractors, just no competitors........(typed as humbly as possible to get point across)

In our other business, we are looking to expand regionally, we don't have the required $100,000's of thousands or million to do what we want and if we decide to go regionally or national we will sell stock to expand with cash....

It is easy to always say....If only I had more education, If only I had more money, if only I lived somewhere else......if only kills a lot of peoples dreams........ask Oprah, Sam Walton (only if you know a ghost whisperer , or the thousands of refugees willing to risk their lives to come to the US to have a shot at what we have........Americans are fat and happy and have lost the can do drive of what this country was founded on......work or starve to death is pretty much what happened to the early settlers......now we live in the land of entitlement........

I truly believe that "Those that are convinced against their will are of the same opinion still" you gotta find what works for you and if you are happy go with it......no arm turning going on here..

I have a simple benchmark and the timeframe continues to expand....start with say no work for three to six months..... and you can pay all of my personal and business bills without a credit line or home equity loan, I'd say you are in good shape.

In the end, thanks to living in America We can agree to disagree! and not have to subvert ourselves to name calling and personal attacks.

[Nebraska]

Drizzay it will happen over time as you set up credit accounts with banks, vendors, and suppliers.

I agree a lot with what everyone is saying here. It really comes down to each individuals vantage point and each individuals goals for their business at the particular time.

The bottom line is that quick and significant growth for a business will not happen without the capital. For most of us the capital came from other people's money. To assume that risk is how many have suceeded----and of course many have failed. For some the risk is the adrenaline rush we thrive upon. Without it, it feels just like another job. Sure you can grow without outside sources of capital but it will never match the growth rates that can be achieved with outside capital.

The position that everyone is going to have on this is very intertwinded within their own personal and professional goals at that particular time. There really is no right or wrong way.....just escalating or minimizing the levels of risk that one is willing and able to withstand; and of course manage.

[Dale Wiley]

The position that everyone is going to have on this is very intertwinded within their own personal and professional goals at that particular time. There really is no right or wrong way.....just escalating or minimizing the levels of risk that one is willing and able to withstand; and of course manage.

Hear..Hear... I think this sums it up.
Each to his own...

[johnkeegan]

Dale, Sorry if it sounded as if I was inferring that the "required" equipment must be shiny and new. The important thing is that you have the "right" tools for the job and your guys. I have an 86 F350 and a 91 Isuzu in my fleet (and a 1970 Troybilt tiller). As long as they continue to be dependable, they are welcome to stay. Unfortunately, I had little luck finding the right used skidsteers and larger diesel trucks required, specked out as needed. So, I broke down and bought new. And since the need was immediate, it made no sense to wait 5 years so I could pay in cash.

....Garden, Please help clarify. Earlier you said,"Comments made here reflect what is wrong with both the US government and personal and business finance.....everyone looks to take the easy way...the quick way....." and later you said, " I am not attempting to say financing is the easy way out....." Is it just me, or is that contradictory.
And sorry if I mislabeled your situation as an "isolated niche." It was based on your earlier statement, "If I went to Philly their would be 20 companies as good and better than us......" That suggests to me that you're protected from robust competition but, again, perhaps I misinterpreted.
Also, sorry to wreck your thesis, but for the last 20 years I have been "part of softscaping industry" and part of the hardscaping industry for the last 10. I know first hand the differing equipment demands of the two. If I chose to stick solely with softscaping I could probably make a comfortable living with just a one ton, a few wheelbarrows, good shovels, a pick axe, hand edger, my old Troybilt, a ballcart and an old Kubota...HEY WAIT!...That is what I did my first 10 years.
It was only when I decided to move into hardscaping, which requires continuously moving large quantities of soil and tons of pavers, stone and block etc., that large equipment and (at least) mid-sized dumps became a "need" not merely a convenience. And once you invest (finance) that heavily in that equipment it makes sense to get a heated garage to store and maintain them.
On most days, I can send my softscaping crew out with a load of mulch and a trailer full of plants and the necessary hand tools and they are good to go. Wereas, the hardscaping crew looks like the Beverly Hillbillies with the A300 with bucket and forks, block saws, paver saws and the other truck with the ASV and some more wet saws and block splitter...
Anyone who does both hard and softscaping understands the differing equipment demands. And I saw no need to wait 5 years to save up the money so I could pay in cash. I signed on the dotted line and at this point it's 90% paid for, with hardly any interest incurred. And the way I figure, I saved 5 years of wear and tear on me and my employees AND greatly increased productivity and efficency AND have twice as many jobs to take pride in, compared to if I had waited until I had cash in hand.

[Gardenhaus]

Hey John.....

You may continue your pissing contest by yourself.......and your prior landscraping attempt ........not worth the time when falling on deaf areas.....my pants are pulled back up

[johnkeegan]

Garden, I apologize for trying to understand what you were trying to say... I won't make that mistake again.

[Stonehenge]

Hey folks,

I think we might need to take a deep breath on this one.

Looks like the original poster's question was answered to his satisfaction, which is great. Clearly there's a difference of opinion in how to go about building your business (and whether using credit is the right answer for your business), but that's the beauty of it - there are many ways to skin a cat.

Let's just not leave the guts lying around.