Take Out a Loan for a Business

[Music] brought to you by the every dooll app start budgeting for free today let's go to DJ and Pittsburgh Pennsylvania DJ how can we help ay so I'm kind of having some trouble wrapping my head around an issue where i' I'd like to start my own small equipment rental company but I I have a natural kind of aversion to debt but I think that the amount that I'm going to need to start this company at the lowest level is going to be enough to where it might be worth getting into some level of of lowlevel debt I I found a 0% loan for the particular piece of equipment I want to buy so I'm not sure which is to go from here and how much tell us about the equipment and how much all right so to give you need the backstory because it's a good backstory the company that I work for is extremely motivated to help their employees out they like to have their employees be able to have the equipment they sell so they sell their equipment at Cost Plus I think a small transaction fee and on on the new equipment the amount is $33,000 for the piece of equipment that I want plus the attachments that I would need in order to make it marketable oh you get the attachments with the 30,000 uh you get the attachments you get the equipment you get the warranty oh and I'm also then allowed to be my own repair man all right so what kind of a machine are we talking about what does it do uh about a 3500 PB mini excavator with zero TL swing a mini excavator and what what are you are you going to rent that to people did I understand that right yes sir so how much are you g to rent it for uh I'm G to try to rent it at 350 that's kind of what I've found has been a comparable rate 350 an Hour 3 350 a day 350 a day oh seems like a pretty good deal of course I don't know much about mini excavators uh and they usually rent somewhere in that 350 to 400 range who are the people that are renting manyi Excavators so my goal is to go for kind of the homeowner demographic who says I don't want to pay someone $4,000 to do this I'm going to rent this machine for $400 and do it myself that's kind of my my demographic is I don't have enough money to be wasting it but I have enough money to rent something okay and couple more questions here um you started off the call sounding like you were going to have multiple machines and now we're just talking about this one so is this what you're going to start with so this is what I'm starting with over time I'm going to buy in cash but just to get that beginning going I'm thinking a loan would be how much cash do you have saved up so right now me and my wife are trying to buy a home and we're also having a child so it's kind of this sounds like the wor time to do this but but answer the question really quick how much money do you have saved up so sorry I'm adding I I'd say about $7500 okay or not yeah 775 how many tons you said this thing is for the mini excavator how many tons or how much did it way well I'm looking on Facebook Marketplace and I'm seeing a whole bunch of mini excavators running anywhere used from $5,000 to $133,000 to $155,000 uhoh so why don't we just go do buy a used one in cash to see if this business even has any Merit to it exactly so I've called a couple local business owners over in the area that I used to work and they said that they tried to buy the used excavators but when that ended up happening was they would go through and have to put new bushings in and put new pins in and then the amount of work that it would take to make it marketable actually got them up above the cost of if I'm the homeowner I don't care if it's the shiniest newest one I want someone that's getting the job done yeah oh I I get that but the cost of making it that would make it run well enough that people would be able to rent it cost we' hit a wall DJ you called us you want to buy a home you're having a kid you're about to go 30 grand into debt in the middle of all of this to hope that you Roi it's going to take 86 rentals at 350 just to break even on this this is crazy easy risk DJ that's kind of why I'm I really wanted to push towards buying the used I just have a lot of fear about that because I've seen what those repair bills get to no no you're missing the point DJ you're missing the point you called us and you asked you wanted to know our opinion I would not do this loan I would not do this business this is risky you should wait have the child do you have any other debt uh I've actually paid off the remainder of my Deb great do you have an emergency fund I do is that the 7500 or you have stuff outside of that I have a cash emergency fund set aside as well but I tend to forget that that exists because I won't touch it unless I need to I would not start a business at this stage even if you had the cash I'd put the cash towards buying a home wouldn't you George well and right now we got this baby on the way we got to make sure there mom and baby get home safe and there's no medical bills to pay and this is a lot of responsibility and so I'm waiting until we got the baby we're in the new house then we can start this business with cash with cash start slow I would not even though you're getting a discount and it's this great opportunity this is how most stupid decisions start I don't think it's a great opportunity I'm not even trying to dash Your Dreams DJ but this is really why the reason I walk through who's the customer all the This is highly speculative and George ran the numbers you got to rent it how many times 86 86 days you've got to rent it just to break even man that is going to become a weight on your shoulders yeah the only reason that I'm more pushed towards it is because the I've talked to four people so far that do this and they average about 10 rentals a month in the slow season so it's not you know but I I understand what you're saying I would much prefer buy it with the cash well then do that you are you are relying on four people who are giving you a story that's worked for them there's no guarantees it's going to work for you and they may be okay with debt you're not why would you be okay now but not later that's what's weird to me you're like well in the future I want a cash flow but right now let's go borrow money and I just don't understand where future DJ is getting tripped up by present DJ I just have such a fear of standing still that I I'll never do it if I don't what if fear I mean that fear of still yeah but let me give you what you should be afraid of you're you should be afraid of going backwards this plan this plan has a healthy dose of going backwards involved I'd rather stand still and go backwards what about you DJ I'd say you're probably correct about that not probably I'm rarely right I've been married 25 years I have three teenagers I'm wrong all the time at least that's what everybody says George but in this one rare situation standing still or staying still or holding serve you pick the metaphor George is a lot better why well there's a lot of risk here and my brain just went to insurance and liability and starting the small business what happens when this person destroys your equipment gets hurt on your equipment because you didn't maintain it properly and that part worries me alone on top of the fact you're trying to buy a house and have a baby we're trying to do too much at once and so for those Reasons I'm out if this was Shark Tank I would opt out you really handle that well I mean when you started running through all that I have a tad bit of anxiety for our friend you need some Tums just thinking about it yeah where you know what usually I have a little he's got some in the desk no there used to be a thing I was going to pop a Tums right there there's something about when there's big changes happening in life it makes us want to go do something a little crazy buying a house having a kid you go now I got to start the business if I don't do it now I'm never going to start it George I want to bring back what I think is a really interesting wrestling match with millions of Americans I want you to weigh in on it I get what he's saying he's young he wants to get ahead he wants to own something he wants to be his own man work for himself I get that urge and he's going I'm I'm afraid of standing still and he's forgetting about the risk of going backwards what do you think about that wrestling match that's a real wrestling match yeah sometimes you're standing still because there's a cliff right in front of you it's a there's a precipice there and it's your body saying listen man you're not safe right now and so I'm going to pause on this whole deal and we love small business there's a right way to do it and a right time to do it and both of those boxes are not checked for me create your free every dooll budget today the simplest way to budget for your life