Will a lot of small domestic tree firms go bust?

[doobin]

On 04/11/2022 at 18:32, Clutchy said:

Disagree, finance gets a lot of hate and more so now but if you can't meet you finance payments which lets be honest are a small portion of total running costs then your business is doomed anyway, for example wages are 12k a month, finance on 135k of mixed kit is 2.6k a month. In 5 years it will be all mine outright at probably 50% of this value, recently much higher. So the next lot of finance I can either drop a bigger deposit or finance the lot and keep the capital in the company to buy more money producing assets/things 

 

Finance also gives you nice consistent monthly out goings and therefore easier to keep an eye on your monthly/daily running costs. Can even chop it in every 3 years for warranty on the kit. 

 

However now that interest rates have increased so much it makes it less attractive of a full solution, glory days over 

As far as I’m concerned, finance was an absolute no brainer at the rates I bought at. I’ve always worked on needing one day a month with a machine to pay its finance for that month. Small kit obviously, but lots of it. 

[JaySmith]

27 minutes ago, doobin said:

As far as I’m concerned, finance was an absolute no brainer at the rates I bought at. I’ve always worked on needing one day a month with a machine to pay its finance for that month. Small kit obviously, but lots of it. 

Part of the problem with where we are at is that finance rates have been artificially low for such a long period of time and this has allowed people to over extend themselves with effectively free money thrown at them. Years ago if you saw a neighbour or somebody down the street driving a new BMW you’d think he was doing well for himself or was middle management etc. Now every man and his dog is driving round in a BMW, Audi, Mercedes because of the introduction of cheap rates and the case that car leasing is more people than using pound notes. Many years ago you had credit cards but you couldn’t walk into a shop and finance a coat through a third party (maybe a store card), I brought a rab coat from a high street retailer then other day and was offered the ability to finance it through a broker. Peoples consumer habits have changed and this has lead to over extension. 
 

However that being said it has allowed firms to invest in new kit and allowed many to start up which is all good when the times are rosey and consumers are having work down, like during the lockdowns. But when the rates rise, Mrs Miggins doesn’t have the conifer hedge trimmed and firms are fighting for a smaller piece of the market it is a spiral to the bottom. I think it will affect the one man bands who have recently set up more, they may have a truck and chipper on finance, rely on residential works as they cannot access larger contracts yet and that is a precarious position to be in, as we know diversification is key. Maybe this will be the start of a larger correction. So many things at play here without even looking at the over inflated property market and ratio of earnings to property value. 

[doobin]

8 minutes ago, JaySmith said:

Part of the problem with where we are at is that finance rates have been artificially low for such a long period of time and this has allowed people to over extend themselves with effectively free money thrown at them. Years ago if you saw a neighbour or somebody down the street driving a new BMW you’d think he was doing well for himself or was middle management etc. Now every man and his dog is driving round in a BMW, Audi, Mercedes because of the introduction of cheap rates and the case that car leasing is more people than using pound notes. Many years ago you had credit cards but you couldn’t walk into a shop and finance a coat through a third party (maybe a store card), I brought a rab coat from a high street retailer then other day and was offered the ability to finance it through a broker. Peoples consumer habits have changed and this has lead to over extension. 
 

However that being said it has allowed firms to invest in new kit and allowed many to start up which is all good when the times are rosey and consumers are having work down, like during the lockdowns. But when the rates rise, Mrs Miggins doesn’t have the conifer hedge trimmed and firms are fighting for a smaller piece of the market it is a spiral to the bottom. I think it will affect the one man bands who have recently set up more, they may have a truck and chipper on finance, rely on residential works as they cannot access larger contracts yet and that is a precarious position to be in, as we know diversification is key. Maybe this will be the start of a larger correction. So many things at play here without even looking at the over inflated property market and ratio of earnings to property value. 

I agree with you. Stupidly low interest rates and quantative easing have trashed the economy. 

[Gardenscape]

I've seen big arb firms, most run their business with clapped out gear and bad mannered staff with attitude issues who just come for the pay cheque. I'm with Mark Bolam and share the same views as him.

 

I own all my own gear, it's all well looked after and my customers get top service because it's me they like dealing with, and that is the main reason they keep coming back. If I was to send someone else, I'd likely lose the customer for good. I control what jobs I take on, when I do them and I take a holiday when I like. On bigger jobs I have a few trustworthy lads who are similar to me. I can bring them in and I pay them more than other bigger Arb firms can and they will work less at the same time and finish early.

The main thing though is us small business owners have time to truly enjoy our lives without stress.

 

Anyone who wants to go big they you do that, but people like Clutchy trying knock us small businesses for staying small really need to concentrate on their own business and stop preaching to us.

 

 

[Clutchy]

3 hours ago, Gardenscape said:

I've seen big arb firms, most run their business with clapped out gear and bad mannered staff with attitude issues who just come for the pay cheque. I'm with Mark Bolam and share the same views as him.

 

I own all my own gear, it's all well looked after and my customers get top service because it's me they like dealing with, and that is the main reason they keep coming back. If I was to send someone else, I'd likely lose the customer for good. I control what jobs I take on, when I do them and I take a holiday when I like. On bigger jobs I have a few trustworthy lads who are similar to me. I can bring them in and I pay them more than other bigger Arb firms can and they will work less at the same time and finish early.

The main thing though is us small business owners have time to truly enjoy our lives without stress.

 

Anyone who wants to go big they you do that, but people like Clutchy trying knock us small businesses for staying small really need to concentrate on their own business and stop preaching to us.

 

 

Interesting. 

 

I am a small business? I have full control over everything you've outlined above, I'm not knocking small businesses. 

 

In fact, I've probably spent 9 hours on the phone this month already, for FREE helping other tree firms where I can. 

Being small doesn't mean you need to only do domestic or only charge small amounts. Charging more reduces stress so I really don't get what you mean.

I wouldn't advise anyone to go big in this industry, competing against too many people who run their tree business as a hobby/charity. I do recommend however, getting as much as you can per day with 1 or 2 gangs and using the profits to buy commercial property or other slow money producing assets so you don't need to climb trees at 70! 

Edited November 9, 2022 by Clutchy

[Mick Dempsey]

I am noticing a lot of very good nearly new chippers being put up for sale in the last few weeks.

Or is it my imagination?

 

 

[woody paul]

4 minutes ago, Mick Dempsey said:

I am noticing a lot of very good nearly new chippers being put up for sale in the last few weeks.

Or is it my imagination?

 

 

Lots of kit for sale is what I have seen. 

Or is some just getting rid of stuff they haven't used in a while. 

[eggsarascal]

14 minutes ago, Mick Dempsey said:

I am noticing a lot of very good nearly new chippers being put up for sale in the last few weeks.

Or is it my imagination?

 

 

Different industry but I’ve seen a few nearly new jetters on the market recently, when I’ve had a closer look the same seller is selling a fairly new van. It’s biting for some, it seems.

[Mick Dempsey]

That’s the thing, there’s rarely a reason for the sale of nearly new stuff, less than 100 hours for example.

 

[eggsarascal]

15 minutes ago, Mick Dempsey said:

That’s the thing, there’s rarely a reason for the sale of nearly new stuff, less than 100 hours for example.

 

£14k new with 76 hours on it, £9k.