How would you spend $100k?

You can get pretty decent deals on bucket trucks, but... they have some drawbacks. Cant do many jobs, need Air brakes, need commercial inspection on truck and annual on boom, dielectric testing too! And they are hose monsters that need fairly constant maintenance. That said , I have one and we do quite well with it, however, past 75 feet and you are climbing any hoo! So you'd best get a like on for leg irons cuz you aint getting away with out em!
 
WVTrees said:
Howdy folks,

I'm interested in hearing your opinions...My small-time/part time tree service has been up and operational for a little while, and has been very profitable so far. I do all of the climbing, and my son handles the ropes and the ground work until the tree's down, then we both tackle it. I have a small chipper, and 2 trucks. We both have other full time jobs, so most of our tree work is done on either a vacation day, or a weekend. Eventually (2-3 years), my goal is to move into this work full time.

Question: I have $100k to spend on equipment, and am trying to figure out the biggest bang for my buck. I need a bigger chipper, a forestry truck, a dump trailer, a big saw, and some way to handle wood. What would you do?
Click to expand...



How much of "very profitable so far" are you paying yourselves? Any of that go into retirement?

It's this history and plan based on full costs of business?

Are you insured through your other jobs?


Is this HELOC your only cushion?


No need to answer... Just asking if you've asked all these questions if yourself.



Dump trailers are usually more than 5k, taxes and tabs.

Where is your repair budget for the iron?

A mini for $10k needs a grapple. BMGs are upwards of $3k with shipping, iirc, and well worth it.
 
you can blow a hydraulic line on anything.... I guess using your method of thought just buy a new chainsaw and get back to Fing work
 
z133 said:
you can blow a hydraulic line on anything.... I guess using your method of thought just buy a new chainsaw and get back to Fing work
Click to expand...
Yes there is some truth to keeping it simple and just getting to work. Part of the whole learning curve to tree work is balancing your actual expenses and profits with your estimating. When you have less overhead, bidding jobs is more simple because you don’t have to pay your machines and extra manpower and other expenses.
Sure, in the beginning your income is somewhat capped but at least it’s manageable and very difficult to get in over your head.
 
Some of the best money we’ve made is large tree dismantles with no clean up. No equipment but chainsaws and climbing gear. I charge dearly for trees over 36” dbh in tight spots. Almost all profit if I didn’t have all that iron sitting around doing nothing! See even if the machines are parked they still cost me money in insurance and depreciation. I own my machines outright but if you had a loan on them... you don’t want idle machines.
 
Any kind of one ton dumber or trailer and a dingo for sure...so many things u can do with that man. Take ur time
 
I don’t see wisdom in sinking $100k of equity from a house into a part time tree business that clears $3k a month. Double that for being a senior family member’s house.

Like someone else said, grow organically. Start keeping books, make it a legitimate business than can borrow its own money. Debt/credit is never an asset, it’s a liability. An artificial injection of money into a company not ready to use it is a recipe for failure.

If you’re already doing tree work, you should be able to see the current bottle neck and look for ways to streamline it.
 
Lumberjack said:
I don’t see wisdom in sinking $100k of equity from a house into a part time tree business that clears $3k a month. Double that for being a senior family member’s house.

Like someone else said, grow organically. Start keeping books, make it a legitimate business than can borrow its own money. Debt/credit is never an asset, it’s a liability. An artificial injection of money into a company not ready to use it is a recipe for failure.

If you’re already doing tree work, you should be able to see the current bottle neck and look for ways to streamline it.
Click to expand...
Not always true man, sometimes borrowing money to streamline an operation can make it more profitable. In this case I think it would be good money spent unwisely. Of course, there can also be a situation where spending cash can leave a business cash poor and asset rich! Also not a desirable position. But I agree, 3 grand a month to risk a house is foolish when you are entering into a business that allows for continuous growth with very little investment up front. Plus you gain the experience as you grow.
 
  • Like
Reactions: ATH
Whoa! I was not familiar with the HELOC as being a home equity loan. The way I read in the OP was it was a “family member” that was providing the funding! There are only three buckets of money I would never touch for the business; kids college education fund, my retirement and my homes equity! I love my kid, I need an end game and no way in hell would I gamble my house on a slow winter! FIND OTHER FUNDING or work harder/more.
Separate yourself from the business (LLC or S-Corp) and start building credit for the business. That way when you need the money it will be attainable. That’s one thing I wish I had done 10 years ago instead of 3. We now have a Business LOC with no term and a great APR. if I get slow or cash flow is poor all I’m required to pay is the interest to keep the account in good standing.
Please don’t risk your house/family for tree equipment ! Not that it’s not a good investment, but it’s just the wrong kind of investment. Keep pumping the profits back into it, and it will grow. There is nothing wrong with borrowing money, just think about if you can live without the collateral you put up!!!
 
Lumberjack said:
The debt is a liability; what the debt buys is an asset (depreciating asset in this case). The streamlined production is extrinsic value.
Click to expand...
But if the debt servicing is less than the revenue generated then it will be profitable, in addition interest on a loan is an expense that can offset income. The reality is most people today have a via card, Amex or whatever and most of debt is convenience that is not revenue generating. Plus a depreciated asset can be sold at then end of its depreciation. I agree that borrowing is not as good in most cases as paying outright, but it may be a viable short term solution to increase productivity without making the borrower cash poor, which can leave one exposed in the event of a breakdown or health issue.
 
If you're looking to invest, I'd suggest investing in some sort of mutual fund, or perhaps the S&P500. Leaving it sit idle is a waste, if you can get an annual 5-15% return.

As far as your respective business plan, there are two basic trains of thought...

1. Based on your cash flow and working capital, borrow as much as you can afford to pay on leased or purchased equipment that you may want to upgrade every several years, as needed to keep up with an evolving industry. Leveraging your cash holdings can be risky, depending on interest rate fluctuations, etc., but this can grow/expand your net worth the quickest if done wisely.

2. Preserve your working capital and buy used equipment that'll get the job done, or the type of job/s you are willing/able to handle. Buy the (non-ppe) gear used and negotiate an all cash price, so you own it outright and are not obligated to anyone. This is a more conservative approach and minimizes your risk and exposure, especially during uncertain times.

Perhaps a combination of both, depending on your short or long term goals and objectives.
 
Stephen Moore said:
But if the debt servicing is less than the revenue generated then it will be profitable, in addition interest on a loan is an expense that can offset income. The reality is most people today have a via card, Amex or whatever and most of debt is convenience that is not revenue generating. Plus a depreciated asset can be sold at then end of its depreciation. I agree that borrowing is not as good in most cases as paying outright, but it may be a viable short term solution to increase productivity without making the borrower cash poor, which can leave one exposed in the event of a breakdown or health issue.
Click to expand...

I have no problem with loans for equipment, and have and continue to use my credit to further my endeavors. Debt is still a liability when it comes to the books.

If he has $100k in available credit, spends it on this used equipment, then the bucket truck’s engine craps out for a $10-15k repair... what then?

I
 
Lumberjack said:
I have no problem with loans for equipment, and have and continue to use my credit to further my endeavors. Debt is still a liability when it comes to the books.

If he has $100k in available credit, spends it on this used equipment, then the bucket truck’s engine craps out for a $10-15k repair... what then?

I
Click to expand...
Exactly my point, access to credit is a safety valve. Having cash in the safe is flexibility.
 
Couple of things:

1. My current non-tree salary allows me to easily absorb the HELOC payment if need be.
2. As an sole-member LLC, my business expenses are write offs against my personal income, which is a HUGE plus.
3. Said family member's home is completely paid off, and they are in a very sound financial position.

EDIT: I am seeking advice as far as what equipment makes sense for me at this stage, just to see what opinions and advice are/is out there. I have a great accountant, business lawyer, insurance broker, and elders that I bounce the financial questions off of, although I do appreciate the words of caution.
 
The home won’t be mortgage free if you get an equity loan on it. If they are that well off, why don’t they set up a simple term loan as a private lender? That way, they don’t have a lien against the title.
 
You must log in or register to reply here.

New threads New posts

Back
Top Bottom