Lawn care business debt stories.

Most new lawn care businesses start up with very little money and with no money in reserve. This opens the door to financial troubles when you begin to run into the standard problems of equipment breaking down, or not being able to find enough customers, or not having enough money set aside to get you through the slow months. So what does a new entrepreneur tend to do when they have these problems? They go into debt. To get you thinking more about debt or using credit cards, here are some talks, from the Gopher Lawn Care Business Forum, on the downside of taking that path.

One lawn care business owner wrote “what are some of the worst debt situations you have gotten yourself into? I don’t buy a lot of big items often, but I do buy a lot of small things daily. Without realizing it and also because I’m too ignorant to check and/or limit my spending… I find myself in these fun situations where I have to pay off some debt before it gets too big.

So far I’ve always managed to pay it off, I’ve only been in debt for about a month maximum. The thrill isn’t fun. This time, I just wiped my business account clean to pay off some personal debt. I did this after I gave the government their tax money, I should have all the money back May 1st.

When it comes to using a debit card, money is withdrawn from an account. Unfortunately, there is always a high service fee each time you make a purchase. Every time I would use my debit card, I could expect to pay $2.50 additionally.

As for a credit card, every time you use it, you are borrowing money from the bank. When you apply for a credit card, the bank will allow you to borrow/use approximately $500, over time the bank may offer to raise your limit if you have a good track record at paying them back.

If you spend money you borrow from the bank (credit card), and you don’t pay them back on time - instead of breaking your legs they will charge interest on the amount you owe to them, making it even more difficult to pay your debt off.

Example, if you spend $1,000 with your credit card and you don’t pay the bank back on time, the bank probably charges somewhere around 19% on the amount you didn’t pay off, and you would then have to pay $1,190.00! Let’s say you are lucky, and you manage to pay off $500 of that debt by next year, you’d still end up paying $821.10 ($690 + 19%).

$1000 - $821.10 = $178.90

BASICALLY, you just WASTED $178.90.

Credit cards are AMAZING, but people (even myself) need to be cautious. Sometimes I get a little carried away or ‘feel lucky’.  I say, only use your credit card for major purchases, and use cash for other crap (drinks, food, movies, etc). Before you even ask, no, I do not take my own advice but I wish I would.”

A second lawn care business owner added “I have always been a cash man. Now this has helped me and hurt me. First off, you can’t spend more then you have. It’s harder to hand over money than swipe a card. With cash, you’re more likely not to spend on impulse because you see it leaving your pocket.

Credit cards have been good to me. I spend less than 20% of my limit and pay it in full 10 days later. I have never paid interest on a credit card. This also raised my credit.

Now the only reason I started to use credit cards was because I had no credit. I never borrowed anything. I knew one day I would want a mortgage and I already had cars/trucks. So I wasn’t going to borrow for the sake of paying it back to build credit. So I started to pay for things that I would’ve bought with cash with credit.

Debit depends, my business account charges a fee for every deposit, withdrawal, check, etc. With my personal account, I only use my atms so I never pay a fee. I often ring up business expenses with my personal card because of the fees for the business account. Again I never had an overdraft fee or bounced check. To establish my credit more I used debit less.”

A third added “I could go on and on about my debt stories but I won’t. What I can say is you need to  pace your spending on big price items as you need them with the key word here being NEED them. Put the want factor out of the picture when looking at big ticket equipment. That is how I got myself into all sorts of debt trouble.”

Read more about Lawn Care Business Bidding Tips, Upsells, And Disasters To Avoid. Learn how to improve your bidding process with this book and be prepared before hand by knowing what you should be looking out for before a problem occurs.”

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Lawn Care Business Books And Software.
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The landscaping and lawn care business plan startup guide
A rebellious teenagers guide to starting a landscaping & lawn care business
The GopherHaul Lawn Care Business Show Episode Guide.
Stop Lowballing! A Lawn Care Business Owner\'s Guide To Success