Is it normal to go into debt?

[turfman]

All of us are aware that it takes money to make money.

A few of the ways some may seek financial backing are: banks, family (rich uncle), outside investor(s), money saved in personal account, friend(s), credit cards, and so on.

Chances are that going into business you already have accumulated some personal debt. Turning to a banking institute is easy if you have collateral. Many people don't have much to offer (especially young men in their late twenties) so banks send you walking, but some have the opportunity to refinance their home, car, property,etc, and it all works out.

Not everyone has old money that can be passed from generation to generation and the rich uncle has moved west and forgot about everyone, so that's a done deal.

Not many people would want to invest in a lawn care business run by an anxious young man, they simply can't see the long term return in such an investment. Afterall, it is relatively easy to get into the business but extremely difficult to stay in it and do well. With the amount of layoffs in factories and the ever-growing demographic that is LAZY, why not throw a push mower in the back of your s-10 and make some $$? Anyway, the profession is not that professional looking!

The save all is you have good credit, really good credit. You spread out all of you debt into low APR accounts (maybe even 0% offers)and watch your debt slowly decline. What a great feeling right? So now you are making the payments on noting but principle, and look at lowering you debt as a form of actual savings (think about what I just said). Having said this, there isn't much $$ saved and new expenses come to surface--> no money but great credit! Charge it or pass? What if the expense was your advertising for this season? Tough one right! Spend the money on direct mailings and hope for a good return or spend less money for almost the same amount of doorhangers and hit the streets; take the money saved and use it somewhere else?

let's hear it.......

[MortNuke]

Hey Hamlet...you can mow with a pair of scissors, but it's not very profitable. But, Soft! Spend what you need to be efficient. For most of us that means putting yourself at risk and acquiring debt.

Mort

[Bulldog26]

Dan,
I saved money for the equipment I needed, then i got started. From thier I did eveything in cash. If I don't have the money I don't buy it. It is great motivation to save. Last year I knew I needed a second ztr but I didn't have the cash. Busted my ass from Aug. to Dec. on any work I could find. From that and some wheeling and dealing I know have equipment for a second trailer. I do this part time but now I can take on the extra work and have someone else making money for me while I'm at my fulltime job. Then I can turn this into my fulltime job. Hit the street and hand out the door hanger yourself. I think it's a better means of adver. anyway. Good Luck.
That's the way I have done it and I have no equipment payments effecting my cash flow. "borwer is slave to the lender"
bt

[CCLS]

One must take on debt to be successful unless they have money of their own. Most companies would not survive without taking on debt to expand and increase their sales. If you are not generating enough money you won't even be able to pay for your phone, insurance or fuel. You should also have a credit line set up where you can get cash in a bind if need be. You never know if a certain account will take a couple of months to pay you for your services. If your bills exceed your bank account balance because of late payers, then you have to have a credit line to carry you by till they pay.

I am strongly for taking on debt to increase net profit. You can write off most interest which is a plus. The only thing about taking on debt is to not go over board. Don't buy three mowers if you only need two. If you are generating more profit than your monthly payment on the piece of equipment, then you have a good debt investment.

[Team Gopher]

Hi turfman,

Great post and many great responses here as well. I think the responses you are going to get are based on personal philosophy.
If someone were to ask me if they should take on debt in order to grow, I would try to steer them away from doing it.
When I talk to a person who wants to start a restaurant, I ask them if they have the money to do it. If they say no, I suggest starting small, try a hot dog cart. Learn the basic principles on a small scale before you get bigger.
I suggest the same thing for this industry as well.
Why? Because I know people who lost their business years ago and are in debt and will be for years to come because of bad business decisions.

[pow]

Very few will be debt free. The first couple of years we ran basicly debt fee and I thought things were great until it was time to pay the tax man. In order for me to not have to pay taxes we decided to depercate everything the business owned that year. So for us we decided to keep a little debt.

[boazcat]

This is my third year of part-time work. I'll have everything paid off by the middle of the season. I will then begin saving for equipment replacement.
This year I am not purchasing anything with the credit card. It must be in the bank account, or it doesn't get purchased.

[ElShauno]

Well not all of us have that convience. I took out a loan for my trailer and will pay it off in a few months. then I will decide what I want to get next. I'm building my credit and only taking loans when I need something big. Hydro mower or newer bigger truck? One of those will be what I take out a loan on next.