Old vs. New equip.....

Bodean

Cali dreamer
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For a person starting out.....

As business owners....What says ye fer Buying outright a twenty year old truck and chipper and deal with the breakdowns......

or finance new equipment that will be trouble free ish....and owe the bank...?

Deva
 
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Wow, Butch! thanks for the Avatar change....though that's not me, It's my friend Steve.
I took the picture...Still hella cool, Thanks.
 
Sheeeit. I ask myself this every day.

I have a diverse mixture of old and new stuff. My tractors are all used, some of them from the early 70's. The new ones start at 225 and go up to 450 thousand. Way outta my price range.

The new and newish stuff still breaks down, just in sort of a different way. Might be covered under warranty, but you still lose time.

We bought our 4 wheelers new, horse trailers new, bale processer, baler, disc mower, post driver, v rake, and probably some other stuff I cant think of.

All three farming tractors were used, mowing tractor, four loader tractors, both combines, disk, both toolbars, air seeder, rock picker, couple of chore tractors, silly little Ford tractor, (impulse buy) augers, all three grain trucks, all four semi trucks, both dump trucks, both service trucks, grain trailers, all three hay trailers, D8, 950 loader, backhoe, compactor, road patrol, scrapers, excavator, both lowboys.

We dont do much dirt work any more, so that repair bill is quite low, but the parts bill on the rest of the lot is still lower than one years payment on a new combine.

We had to decide what we could get away with for new stuff. We cant be working on a baler when its time to bale, miss a day and the hay is almost ruined. We did pay cash for a used baler once, and worked on it all the time.

We had to borrow money for most of this stuff, but we could not have expanded like we did with out it. We dont necessarily see debt for capital purchases as a bad thing, as long as you keep it with in reason. Hardly anyone starts out with cash, just have to weigh the pros and cons.

Can we afford it? Can we afford to be with out it? How much labor will we save? Will it replace a hired man or make ours and his life better? Will the added productivity allow us to get our work done with room to expand? Will this let us spend more time with our family? Do we NEED it or want it?

Thats how we look at all our purchases, new or used.

I have the benefit of being able to fix all our stuff, as well as a hired man who was a mechanic for the National Guard for 25 plus years. That kind of ability lets us get by with older machinery. Not having that ability would cost us another 30 to 40 thousand a year. Plus being able to fix the old shit means I can buy two old tractors for the price of a newer one. We can at least have ONE running, or run both if we are lucky. So we take some chances on used stuff that would be silly for someone else.

You are lucky that you have been in the business for so long, you know what it takes to make it work. If you have the ability to work on your equipment, taking a chance on older stuff is okay. If not, the down time you might have could be devastating. You could VERY quickly have more into the machine in parts and labor than it is worth, or could make you in a long time.

I know it sucks to be in debt, but if you have a plan and a bank that will work for you, it is not the end of the world. We see it as a partnership. Kinda lopsided though!

If you can make the figures work, buy the best stuff you can afford. Dont hamstring yourself when you start out by buying junk, but if the numbers wont work, dont overbuy either. Also, it doesn't hurt to realistically anticipate expansion when making a purchase either.

Shit, that was a long winded post that was pretty short on actual information. Sorry. Good luck!
 
Excellent post Jim

I've done both ways, I think it depends on your mechanical abilities, and whether you have a steady income stream.

If you have no mechanical skills then breakdowns are going to cost you time and money,if you don't have a reliable income stream then finance repayments are always going to be a struggle.
 
Excellent post Jim

I've done both ways, I think it depends on your mechanical abilities, and whether you have a steady income stream.

If you have no mechanical skills then breakdowns are going to cost you time and money,if you don't have a reliable income stream then finance repayments are always going to be a struggle.

I think this is spot-on. How much can you push pruning year round, less equipment intensive, more people looking for a CA? Do you need to compete in the removal market? What is Plan B for a break-down, either way (can you brush trailer to the dump in the mean time, rent a dump truck/ chipper).

I love sending $450 a month for my Boxer with much less worry about breakdowns than a used loader, where everything is in some state of wear. As Jim said, new stuff breaks, too. I developed the weld crack. A solid truck/ back-up truck (do you have a 1ton pickup or something, currently?) is harder to replace than a chipper out of service.

Do you have a trustworthy, available mechanic/ machine shop for repairs?
 
It depends. I think just starting out new or very low hour will used is a smart bet. They will get you past the break downs until you have a name and calls rolling in. With new you can write off the depreciation and the purchase cost, used you can do the same but not as much. When new and financed you know what your bills are going to be without the worry of being shut down due to break down and having to come out of pocket to cover repairs. Used knowing how to wrench is a major plus or at least knowing a good wrench. Big Jim hit on all of those points.
 
Decent used is how I went. Then again I can fix most things and have friends who are mechanics. I usually have to do some tree work for them instead of paying a bill.
 
Newer used.....
Trucks break period, new or used.

I would buy new loader......since they get rode hard and put away wet. New chipper....same reason

Newer used trucks are better then buying new. Seen plenty of brand new truck nightmares.

Have ping two trucks will move things faster and keep you rolling when one is down for the count.

Pam Al when something breaks".......
 
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Wow. Great responses. Fantastic insight. After I posted this I thought it was a stupid question....but on the contrary.
 
Newer used.....
Trucks break period, new or used.

I would buy new loader......since they get rode hard and put away wet. New chipper....same reason

Newer used trucks are better then buying new. Seen plenty of brand new truck nightmares.

Have ping two trucks will move things faster and keep you rolling when one is down for the count.

Pam Al when something breaks".......

This is exactly how I did it.
 
Most important piece of equipment in my outfit is my 3/4 ton pickup truck. Besides my wife's mini van it's the family main vehicle plus work Truck.
My old pickup gave me 7 years of loyal service but was starting to cost money to keep on the road. I took a test drive of the new 2015's and couldn't believe how well the 2500 Rams are improved. This time around I got it loaded right up with every available option, cooled seats are amazing to cool off after a long day in the heat climbing.
I bought my stump grinder new 12 years ago and still has lots of life in it. Chipper the same story, reverse back then bought them new but drove an old pickup.
If I was to upgrade my outfit in the near future I would add a used low hour mini skid steer and a used fifth wheel dump trailer to back up my all in one trailer unit.
 
My truck seats are covered with perforated leather covers and with a tap on the controls the air conditioning routes cold air through the seats.
Another tap on the control screen the front and rear seats turn on the heat, the steering wheel is also heated , very nice on those cold mornings or after getting into a cold truck at the end of the day.

I would have scuffed at all this technology when I was younger but there comes a time in your life when it's greatly appreciated :)
 
New/used, it's a conundrum. I've got stories supporting both causes.
All I will say is if you buy used (bearing in mind huge sums of money can be saved) you better be "sympatico" with machinery.
 
I've only been able to ever purchase used, and spend time and money to get things running, but I'm broke so not sure if my advice would be of any use. ;)
 
I've gone through this same discussion countless times with my wife over equip purchases. We were advised by a good friend and very successful entrepreneur to buy a new truck, till I showed her prices, and we bought an 04 F250 a few months ago (8k for a 250 vs. over 20k for new 150). It was just down for a week on a stalled brake project due to a specialized tool I had to order. I always buy used just to avoid the cost of financing and having a monthly payment. I work part time and like to avoid the monthly payment stress when business is light or something breaks and needs parts.
You really have to weigh out what is most important to YOU and buy the best equipment you can afford. The stuff I got by without or made something half assed when I was getting started I just order in a heartbeat now, but the business now has the money to support that and I know how useful that particular bit of gear is. The equipment purchasing fund snowballs as the business begins to grow, that aspect amazed me. When dealing with big equip and vehicles, I fix most things myself and have my recently retired father on call who has been a mechanic all his life (he also owns the chipper that we use). If I didn't have my mechanical abilities and Dad to call in, I would not buy stuff as old as I do.

The 2 truck setup is a very good point, some equipment is much easier to rent than others. I just bought my second today (put a deposit on it anyway, buying it Januray 2nd). Its a 1989 F450 stake body dump with a lift gate, which we are hoping like hell will make the 3 hour drive home with no breakdowns. (It hasn't been on the road in a number of years)
Even Sean's monthly boxxer payment scares the hell out of my wife, so its a very personal issue. It all depends on your business history, mech ability, and how you feel about financing stuff.

Jim's post was spot on, i hope this one at least helped a little also.
 
NO WC on machinery, its never late, easy to fix compared to a broken person.

Finance what you need while you have a salary.

A lot of people seem to be much better set up by going in well-funded. I understand the law suit took a huge financial toll that would have had you sitting pretty for iron, and that SUCKS. Is the timing right to jump ship? How is the seasonality of work there. Probably year round, no?

I ditched out of State Parks because it was ridiculously and dangerously run by design (under-staffed, rely on unreliable people for safety issues, blah blah). I could have set up better to go back to full time private business with more salary time, and financing with that salary plus business income.
 
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Exactly Sean....trying to see what I need to do while I still have a job.

Poop or get off the pot...I got 10 long years in and I'm only getting older....now's the time.

Financing scares me....for now though once the business starts rolling then reassess.

I'm looking forward to this. Scary or not, change is needed.

Looking toward seasoned equip....
 
I agree that financing is scary Deva. For us at least, it was a necessity. A good banker will want to work with you, to give you some breathing room, a strategy, and allow you to expand your business in a fashion that would not be possible with out them. Debt is not necessarily a bad thing, if you manage it right and dont go backwards. Be conservative in your budgeting, conservative in your income and liberal in your expenses column. Try to build some margin in your operation when you start out. We are worst case budgeters, max expense and minimum income. On a year like this it kept our losses low, where as others around us are much further in the shit than us.

A great CPA and a good bank are invaluable when you start out. Its still a risk, but manage that risk. You are in a great position seeing that you have been in the business so long, so you know what it takes.

Just shop around to find a bank that loans to businesses, a CPA that knows business, and ask other tree operations that you know about the management side.

For us at least, if we had not incorporated we would have to borrow money to pay the tax each year. Look into incorporating, or LLC's.
 
I agree that financing is scary Deva. For us at least, it was a necessity. A good banker will want to work with you, to give you some breathing room, a strategy, and allow you to expand your business in a fashion that would not be possible with out them. Debt is not necessarily a bad thing, if you manage it right and dont go backwards. Be conservative in your budgeting, conservative in your income and liberal in your expenses column. Try to build some margin in your operation when you start out. We are worst case budgeters, max expense and minimum income. On a year like this it kept our losses low, where as others around us are much further in the shit than us.

A great CPA and a good bank are invaluable when you start out. Its still a risk, but manage that risk. You are in a great position seeing that you have been in the business so long, so you know what it takes.

Just shop around to find a bank that loans to businesses, a CPA that knows business, and ask other tree operations that you know about the management side.

For us at least, if we had not incorporated we would have to borrow money to pay the tax each year. Look into incorporating, or LLC's.
Don't know what the acronyms are, but a lot of sound advice.
 
I don't know how it is over there, but in the UK since the credit crisis banks have been useless for lending to small businesses. My equipment is all on asset finance with specialist brokers, bank won't even give me an overdraft without big fees and lots of fuss.

When I started out I didnt have any finance, and very little kit, just a truck that doubled up as my car, and hired in a chipper as and when I needed it. Now I have a better established business the finance repayments don't bother me, even with a couple of lean months there is enough in the pot to see me through.
 
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