When you visit a prospective customer, what type of sales approach do you use? If you're like most successful lawn maintenance professionals, you will talk about your experience in the industry, the quality of your work, your employees, response time and, just maybe, before the presentation ends, you might bring up price.
Yet when you walk into a dealer's showroom, what's the first thing on your mind? Price. The reason is that all successful business people work within a budget. Unfortunately, there oftentimes is a direct relationship between price and what a machine can or can't do for you. In other words, the lowest price may not be the best deal.
Of course, that's easy to say if you're not the one laying out the bread. But in any business, the initial price of a purchase counts less, much less, than the actual value of that purchase. In the lawn maintenance business, the value of a mower is measured in terms of productivity, operator comfort, quality of cut, durability, warranty and serviceability.
The catch? The buyer has to be able to afford the value. That's where financing can help.
Not For Everyone
Financing a piece of equipment isn't for everyone. Some operators don't want to pay the interest. Others feel if they can't afford the piece of equipment up front, it's not for them. But the reality of doing business today, of being able to grow and remain competitive, of having sufficient cash flow, has made prudent borrowing a viable option, if not an absolute necessity. The emphasis is on the word "prudent."
Before borrowing money or otherwise financing a purchase, take a few moments to crunch the numbers. Determine what your cash flow will be with the new purchase. Determine how much time you will save with the new mower and how much that labor savings translates into revenue.
Then determine what the mower will cost on a monthly basis, including interest and principle. If the revenue to be brought in by the new mower exceeds the monthly payment, plus operator labor and maintenance costs, then the mower will generate a positive cash flow.
In most cases, if a mower can generate a positive cash flow, that's a good reason to consider a financing option. There are other reasons, too, which are less tangible but equally important to your operation, e.g., serviceability, durability, reliability and quality of cut. But the primary reason to finance any piece of lawn maintenance equipment is to be able to get the unit in the field quickly so it can begin making money for the operator.
Borrower Profile
Retail finance companies, local banks and other lending institutions follow a set of guidelines to determine whether or not a customer is a good candidate for a loan. Credit history, income, profit and loss statements may all be part of these guidelines. So, too, are variables like stability (how long you've lived at your current residence and job history). All can come into play when applying for a loan. For big purchases over $20,000, some lending institutions might require a look at your contracts to make sure you can generate the income to pay back the loan. In other cases, simply taking 10 or 15 minutes to fill out an application form and waiting 10 minutes for the institution to reply may be all it takes to gain approval.
The truth is, financing is big business today and it is competitive. Getting money to make a purchase is a lot easier than you might think. And there are programs to satisfy nearly any contingency, from no money down and no interest for a predetermined period of time (to accommodate the mowing season), to more creative programs that allow customers to skip payments when the season slows or when emergencies occur.
The bottom line, of course, is the lending company wants to be paid according to the agreement, just like you want to be paid for your work.
Which brings up one last point. If financing is an option you're seriously considering, it makes sense to go one step beyond the monthly cash flow exercise. The reason? Payments extend for several months. Signing up customers to yearly contracts whenever possible will put your business on more solid footing and help provide a degree of financial stability to ensure loan payback is uninterrupted.
Remember the old saying, "Price becomes an issue only in the absence of value?" The next time you walk into a dealer's showroom, determine what the mower can do for you before focusing in on price - the same way you explain to customers how your service can be of value to them before talking about how much it will cost. If the mower can produce twice the amount of work your present mower is producing, or give you a better cut, or is more durable and reliable, then it may very well be worth the higher price and the financing costs.
Note: Your local bank will oftentimes offer the most favorable terms for borrowing money. However, there are national finance companies that specialize in lending money to lawn maintenance professionals. One of these companies, Dealer's Credit, Menomonee Falls, Wisconsin, has been especially helpful in getting Walker users from the showroom floor to the yard.
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