Charging a Down payment a good idea?

SnowGeekJason

Member
Location
48025
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 .
 

John_DeereGreen

PlowSite Fanatic
Location
Wooster, OH
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.
 

Mr.Markus

PlowSite Fanatic
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.
 
OP
SnowGeekJason

SnowGeekJason

Member
Location
48025
John_DeereGreen;2042155 said:
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.

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.
 

grandview

PlowSite Fanatic
Location
lancaster ny
Mr.Markus;2042164 said:
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.

Special orders maybe, might try it for salt, but this is where the lines of credit comes in.
 
SnowGeekJason;2042146 said:
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 .

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?
 

Defcon 5

PlowSite Fanatic
Location
Woodhaven,Mi
SnowGeekJason;2042146 said:
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 .




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..
 
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SnowGeekJason

SnowGeekJason

Member
Location
48025
FredG;2042175 said:
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?


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.
 
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SnowGeekJason

SnowGeekJason

Member
Location
48025
Defcon 5;2042177 said:
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..

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.
 
SnowGeekJason;2042146 said:
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 .

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.
 
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SnowGeekJason

SnowGeekJason

Member
Location
48025
Defcon 5;2042183 said:
Is it 450k of pavement??


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.
 
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SnowGeekJason

SnowGeekJason

Member
Location
48025
FredG;2042185 said:
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.

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.
 
SnowGeekJason;2042182 said:
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.

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.
 

Superior L & L

PlowSite Veteran
Location
MI
FredG;2042185 said:
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.

True salt supplier giving credit ? Lol
 

160SR

Member
Location
nh
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.
 
SnowGeekJason;2042189 said:
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.

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!
 

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