Editorial Advisory Board: May 2017

What’s your advice for landscape and lawn care companies when it comes to taking on debt?

Landscape Professionals

Richard Bare
Arbor-Nomics Turf
Norcross, Ga.

“Some debt in necessary in business, but keeping it under constant management is imperative. Don’t forget, cash is king!”

Jerry McKay
McKay Landscape Lighting
Omaha, Neb.

“In the early days you have to do it just to get up and running. As soon as possible, get out of debt and pay as you go. You make wiser financial decisions when you’re not using somebody else’s money.”

Greg Winchel
Winchel Irrigation
Grandville, Mich.

“We don’t take business loans or debt; we pay ourselves a payment every month to a separate savings account for equipment purchases, etc. We then make the purchase when we have enough money to pay for it. The upside is that if business slows, we are not at the mercy of the bank calling in a loan or struggling to make the bank payments. It’s easier to sleep at night. The downside is we have possibly missed some growth opportunities because we didn’t have enough equipment to add more staff and do more work when business is good.”

Industry Consultants

Dan Gordon
TurfBooks
Newton, N.J.

“Work with bankers to establish credit before you need it. Getting credit in the heat of battle is many times difficult!”

Kevin Kehoe
3PG Consulting
Laguna, Calif.

“Debt is not necessarily the enemy. There are times you need short-term debt for spring payroll, for example. A line of credit is a very wise move. Factoring receivables is very bad and there are far better ways to manage receivables today. Long-term debt can be important when you have a long-term growth opportunity for several reasons. Equity is expensive, and you don’t want to get illiquid because of long-term investments necessary for growth needs. So it makes sense to match the term of the need with the term of the loan.

Overall, debt is OK, but know what the bank requires before they tie your hands with covenants, etc. My simple rule: The best time to establish debt and credit rating is when you do not need it. Then you control it not the bank.”

Phil Harwood
Pro-Motion Consulting
Grand Rapids, Mich.

“Be cautious when borrowing. Low interest rate loans still need to be paid back.”

Frank Ross
3PG Consulting
Alpharetta, Ga.

“Balanced debt can be good, but be careful, irresponsible debt can be a narcotic!”