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Charging a Down payment a good idea?

Discussion in 'Commercial Snow Removal' started by SnowGeekJason, Oct 24, 2015.

  1. SnowGeekJason

    SnowGeekJason Junior Member
    from 48025
    Messages: 26

    Hello, I work in South East Michigan Metro Detroit area and i have an amazing opportunity to Clear 2 huge apartment towers parking lots and sidewalks. Only problem it I do not have the capitol to go a month or so without being paid and for the estimated 8 tons of salt needed per clearing. plus needing another truck to handle the other 5 commercial and 30 residential contracts i have. (Billing at end of month) If the price per clearing is about $8,000 and the trigger is 1in for salt and 2in for plowing is it a bad idea to ask for a down payment of $40,000 or so? Average events range from 10-15 throughout the year .
     
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    If you said that to me.I'd shake your hand and say,thank you ,but no thanks,next!
     
  3. dieselss

    dieselss PlowSite Fanatic
    Messages: 10,983

    IMO if you don't have the startup capital, your not ready yet.
     
  4. John_DeereGreen

    John_DeereGreen PlowSite.com Addict
    Messages: 1,902

    If you can't afford to front all that is required for commercial properties for a minimum of 90 days, you're too small to take on the work. Line of credit, etc is no different than not being able to front it yourself. If you and/or the business do not have the cash on hand to cover all expenses, the job is too big for you to handle.

    I'm sure some will disagree on the LOC/CC's but all that does is move the issue down the road if someone doesn't pay or pays too slow. And it screws credit up in the process.

    Also, I'd like to see an apartment complex that is 8K per plow/salt.
     
  5. Mr.Markus

    Mr.Markus PlowSite Fanatic
    Messages: 5,177

    I've met many landscape and construction contractors that require 25% on signing. There is nothing wrong with asking for it if you're hesitant that they will pay. I've never seen it in the snow industry, and that is where you are competing. If you really want the work you won't ask for it. If you are hesitant then go ahead, what can it hurt.
     
  6. SnowGeekJason

    SnowGeekJason Junior Member
    from 48025
    Messages: 26

    Opps ya sorry meant 8 thousand pounds. I do see your point regarding the credit This is our third year in the plow business. Never really taken a loan out besides on the Truck and plow. But yes the Property is fairly large and requires lots of sidewalk clearing more than anything along with 5 loading docks with 4-6 degree grades. With about 450,000 square feet to work with its appartments mixed with a shopping plaza.
     
  7. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Special orders maybe, might try it for salt, but this is where the lines of credit comes in.
     
  8. FredG

    FredG 2000 Club Member
    Messages: 2,239

    I think you need to do your numbers again on the salt and go from there. Sounds like your stressing over start up. Sounds like a lot of salt for one event. Is this something they want to give you or will there be other bidders?
     
  9. Defcon 5

    Defcon 5 PlowSite.com Addict
    Messages: 1,701




    Does not sound like your Business is ready for this size of account..

    What makes you so sure they are going to pay in 30 days after bill is submitted?


    If your bent on getting this account try selling them on a seasonal contract..A fixed amount every month for the winter..
     
  10. SnowGeekJason

    SnowGeekJason Junior Member
    from 48025
    Messages: 26


    Not sure if on if there other bidders. Yes I do agree it might be more than i can chew but you gotta start somewhere. To the measurement i took this is what i figured.
     
  11. Defcon 5

    Defcon 5 PlowSite.com Addict
    Messages: 1,701

    Is it 450k of pavement??
     
  12. SnowGeekJason

    SnowGeekJason Junior Member
    from 48025
    Messages: 26

    I like the idea about a contract for the season but with a cap. I typically done it with my Residential accounts. They usually pay 100% up front or half. That way i can get revenue early to start off. Typically how i work if the client does not pay with a Month of the invoice date I do not continue to work for them. Of course i get them more than one warning. Agreed My company is somewhat new to snow plowing but not first year.
     
  13. FredG

    FredG 2000 Club Member
    Messages: 2,239

    Why can't you get credit from your salt supplier. Go to the bank and take a 90 day note. They know you need working capitol. I used to do that all the time when I started out. This was a long time ago. Hopefully the banks still do that.
     
  14. SnowGeekJason

    SnowGeekJason Junior Member
    from 48025
    Messages: 26


    Yes, lots of sidewalks more than anything. There are Two towers and about 18 stories on each tower. So figure there is a lot of parking spaces, sidewalks, and there's a small shopping area as well.
     
  15. SnowGeekJason

    SnowGeekJason Junior Member
    from 48025
    Messages: 26

    Trust Me i would love to do that. Only Problem is I'm 19. Only thing building credit right now is Truck and Plow. The company brings in a little less than about $125,000 a year as of now.
     
  16. FredG

    FredG 2000 Club Member
    Messages: 2,239

    Don't be scared take the opportunity. If your a hard worker it will work for you. Just do it and don't stop till finished. You will see you can do it. You know you need a back up plan. Meaning someone to cover you in case of a break down etc. I keep extra equipment around just for that reason. You may need someone with a loader for stacking. You can only stack so far with a truck.
     
  17. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,046

    Nothing wrong with borrowing money or using LOC on something that is going to make you money. We all had to start somewhere. Just make sure you know what your getting into.
     
  18. Superior L & L

    Superior L & L PlowSite Veteran
    from MI
    Messages: 3,039

    True salt supplier giving credit ? Lol
     
  19. 160SR

    160SR Junior Member
    from nh
    Messages: 27

    If you walk into a bank with a signed contract for 120K they may front you some money but they're gonna want a slice of the pie.
     
  20. FredG

    FredG 2000 Club Member
    Messages: 2,239

    If you paid that truck on time as agreed and been paying for a year or two that is enough. Don't you know any private lenders? I backed a son of one of my long time friends. The kid is banging!