Investing in Bigger Equipment

[climbingmonkey24]

Eventually I’m interested in maybe expanding to some bigger equipment. In particular I have been considering a spider lift. I’m trying to be smart about it and keep costs down while maximizing efficiency and increasing profit.

I was just interested in hearing some opinions about how some of you guy’s went about purchasing bigger equipment. In some cases we are talking $100k+ dollars here.

Did you buy it in full?

Finance it? If so, did you make a down payment?

Investors?

How far into when you started your business did you start buying big equipment (if you started out with little to no equipment at first)?

 

[climbingmonkey24]

I’ll share my experience just for the sake of anyone else on here who may be curious about this same topic.

When I started my business I worked out of my car. Had all the gear and saws in the car, and would subcontract others to do the cleanup if it was a cleanup job.

This can be a way to get started but you have to be careful that your subcontractors don’t try and take advantage of you. Be very clear about the terms / each parties responsibilities. I was young and new to the business world and if I could’ve done it different I would have either not got involved with subcontractors or I would’ve made sure I had some sort of written agreement. But, part of this game is learning!

The first piece of equipment I invested in was a hydraulic dump trailer. Best investment I could’ve made. I think I paid like around $4k-$5k or somewhere around there. Allowed me to handle cleanups for both big and small jobs (dump trailers can tend to hold a lot more than they look).

The next piece of equipment that I didn’t actually invest in and buy but added to my arsenal is a small chipper. My buddy who does tree work has two chippers, and he let’s me use one of them, and I just pay him as I use it. Pretty affordable and has allowed me to take on bigger jobs. And if the job is small enough that it isn’t worth it then I just don’t use it.

 

[MA Arborist]

I financed my last 3 pieces of equipment
I did put about 30% down on the dump truck and about 50% down on the pickup
When I was ready to pay off the loans early my CPA informed me that there is no tax benefit (by paying off the loans). I ended up financing my nifty SD 50 in full and paying off the two trucks.
With an uncertain economy I didn’t want to have too many “notes” out so that is why I paid some off early.

IMHO If the work is steady the equipment will pay for itself (so long as it is reliable equipment).

 

[Mitch Hoy]

1. You have to have the volume of work to justify the purchase. Businesses that go big right away have issues.
2. People that are afraid of borrowing money tend to spin their wheels.
3. It takes time to build a financial track record. Start small with borrowing to build credit. Report a profit and pay taxes.
4. Address bottlenecks in your production with your purchases. Don’t fix it if it aint broke.
5. When it comes time to purchase or replace, don’t take half measures. Someone once said on treebuzz, “If you don’t feel sick signing the purchase, you didn’t go big enough.”