JITSUBRAD 14 Report post Posted February 16, 2011 Right now my company is small, but debt free. I am thinking of taking the plunge and buying a good trailer set up that will cost between 8-10k. I am very hesitant about doing this, mainly because I like for my cash outflows to go toward marketing and not toward debt service. Just wanted to get the expert's opinion on debt in your business. Share this post Link to post Share on other sites
0 Celeste 341 Report post Posted February 16, 2011 How long will it take to generate the ADDITIONAL income that your new investment produces? You would want to justify that this new equipment will cause you to make XX thousands of dollars that you would NOT have made without it. Once you can be assured that the new debt is going to pay, you won't worry so much about it :) Share this post Link to post Share on other sites
0 Beth n Rod 1,279 Report post Posted February 16, 2011 You should be able to get an affordable lease with a $1.00 buyout. Talk to your accountant, but this is what we have done before and it was not a problem to pay off, and could be depreciated over time. Also the $1.00 buyout is more favorable than some other lease options. Beth Share this post Link to post Share on other sites
0 JITSUBRAD 14 Report post Posted February 16, 2011 Very interested to know more, Beth. I have a background in accounting so I understand capital leases. I had no idea there were companies that would do this with our industry. Can someone point me in the right direction? This would be perfect! Brad. Share this post Link to post Share on other sites
0 Dieseldad97 14 Report post Posted February 16, 2011 Most of the time you have to spend money to make money. If you need the equipment, buy it and make the money. Share this post Link to post Share on other sites
0 Ace Painting 14 Report post Posted February 17, 2011 I personally don't like debt. But if you business needs a trailor and is being held back I would definately find a way to get it. Share this post Link to post Share on other sites
0 Celeste 341 Report post Posted February 17, 2011 Very interested to know more, Beth. I have a background in accounting so I understand capital leases. I had no idea there were companies that would do this with our industry. Can someone point me in the right direction? This would be perfect!Brad. Okay now - if you have an accounting background, you should know better than most about investment and return! Share this post Link to post Share on other sites
0 JITSUBRAD 14 Report post Posted February 17, 2011 I understand investment and return very well. My issue is with debt and leverage. Being that my client base is not yet established and that work is hit or miss, it is a big step to go out with an 8k loan. I am a believer that 8k in marketing for residential clients will produce a better bottom line than 8k in equipment for commercial work, with no advertising budget. Brad. Share this post Link to post Share on other sites
0 Celeste 341 Report post Posted February 17, 2011 And there is your answer :) Share this post Link to post Share on other sites
0 Chris Tharpe 40 Report post Posted February 18, 2011 If I had it to do all over again, I would have operated from the begining on cash. Cash is king! Share this post Link to post Share on other sites
0 JITSUBRAD 14 Report post Posted February 18, 2011 If I had it to do all over again, I would have operated from the begining on cash. Cash is king! Very interesting. Thank you! Share this post Link to post Share on other sites
0 Chappy 138 Report post Posted February 18, 2011 First of all, an affordable lease is still debt. If you can't work next year due to injury you still owe the money. I went 7 years without any debt except the truck. I landed jobs then ordered equipment to do the job. I've gone through 2 skids, 3 trailers and finally leased my current skid and only because I wanted to go top of the line. But I have enough in the bank to pay it off if need be. Secondly, build your own trailer set up. You can do it a lot cheaper than a pre built rig will cost. I don't know if your just starting out or not, but if you are, buy what you need with an eye on growing, don't overspend or you will regret it. Imhbao Share this post Link to post Share on other sites
0 big mike 14 Report post Posted February 19, 2011 I went the cash route as well. It's a slower way to grow, but manageable IMO. Also, if you find the business isn't your cup of tea, you won't have a ton of debt to get out from under. My overhead is lower because of it, and I can afford to keep my pricing competitive. Share this post Link to post Share on other sites
0 bigchaz 157 Report post Posted February 19, 2011 Are you doing work already? If so and you have some equipment I would build the trailer from scratch. Granted i bought a cheap rig but you can start with a trailer, put what you have on there and continue to add as funds come in. I added something every couple months when I got around to to it and had the cash to buy it Share this post Link to post Share on other sites
0 Scott Stone 604 Report post Posted February 19, 2011 At this point, I am debt free. I am bidding on a contract that is going to require that I iincur debt to a significant level. I will admit. It is scary, but in the end I think it will be well worth the effort and risk. Share this post Link to post Share on other sites
Right now my company is small, but debt free. I am thinking of taking the plunge and buying a good trailer set up that will cost between 8-10k.
I am very hesitant about doing this, mainly because I like for my cash outflows to go toward marketing and not toward debt service.
Just wanted to get the expert's opinion on debt in your business.
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