credit card or personal loan

[disco_mitch]

some of you may have read my thread regards what to do with my life
well ive made a decision and that is
im a plasterer by trade atm 23 and i want to get into excavation so im going to try get 25k and buy a bobcat or excavator and a little tipper and start out on weekends than leave my current boss and plaster and excavate what eva has work and slowy work my way out of plasterin so my question is
which way to go about finance
few people have said its cheaper to get a credit card and handy because if cash is short one month repayments are less but it will be payed of over about 2 years so which would be the better way to go it will most likely be through cba

[hoadie72]

I think you should talk to an accountant and have him show you how you can maximise on the tax deductibility of buying stuff on a credit card versus a loan.

BTW, I'm not sure who's given you advice about credit cards - in most cases the interest on CCs is higher than personal loan, so unless you pay the credit card out before interest is due, you'll pay more this way than on a personal loan.

[BigJon]

Credit card interest rates are typically around 18 - 20%.

Surely you can get a loan with a much lower rate.

If the loan is secured you you should be able to get a better rate than an unsecured loan.

Talk to an accountant and possibly a loan broker.

[THE BOOGER]

Credit cards can be a killer if cash flow is slow you need to pay them off each month to get any interest advantage they can be up to 3 x the interest of a personal loan. As said talk to an accountant get some advice on the tax side of things too.

[MacMan]

Credit cards are the spawn of the devil.

Definitely DO talk to an accountant, and a couple of banks.

I don't know anyone who paid less on a credit card than a personal or secured business loan.

[disco_mitch]

loan will be unsecured and percentige on a unsecured personal loan is 14 credit card is 12
and i was talking to a mate who had a personal loan but than payed it out with a credit card as it worked out cheaper
and a mate with an excavation buisness uses his credit card to buy gear because if money is low the montly repayment is lower
ill have it on my finance for about 6 months and if things are going well than ill look at financing it under the buisness name

[THE BOOGER]

To pay 25 grand of in two years on a credit card the min monthly payment will be at least $650 per month (prob more) that means you need 2 full days per month just to break even 3 days to cover fuel and any repairs. I run a small bussiness and any loan is a last resort remember if your interest is 10% then you have to add 10% to your quotes to cover it many dont then find they cant cover costs when you are planing to work for yourself its better to over estemate your costs than under and one big thing is nobody ever pays on time:o

[disco_mitch]

To pay 25 grand of in two years on a credit card the min monthly payment will be at least $650 per month (prob more) that means you need 2 full days per month just to break even 3 days to cover fuel and any repairs. I run a small bussiness and any loan is a last resort remember if your interest is 10% then you have to add 10% to your quotes to cover it many dont then find they cant cover costs when you are planing to work for yourself its better to over estemate your costs than under and one big thing is nobody ever pays on time:o

i understand exactly where your coming from about being a last means but in my case its a only means and its either keep gyprocking all my life or dive in head first take the risk, it will either make or break me but at the end of the day not doing it certanly wont make me and may also break me ive been guaranteed altleast one day a week on $68 per hour and thats just to make a start but ill also have plastering work on aswell ill keep plastering mainly which will be my wage and the excavation work will all go straight back into the buisness

[ramblingboy42]

Have you considered asking your bank for a line of credit? It is one of the best ways to help you in starting a business. Rather than go into the ins and outs of it here, I really suggest you talk to your bank.....tell them everything you want to do, the possible income you can generate....(they already know this anyway)......you may be very surprised how much they allow you to use.

[disco_mitch]

that to me looks like i would first need a home loan with equity which is something i dont got

[3toes]

You need to talk to an accountant. It is not just the borrowing of the funds that you need to consider it is the tax implications this will have. Also the corporate structure you are going to adopt which will also impact on your tax position.

An accountant can advise you on the best way to borrow so that you can take full advantage of the system If you have previously been working for wages you will not be fully aware (not just the stories you have heard at the pub) of the possibilities for reducing your income that are out there. Get it wrong and you will have a tax bill bigger than what you actually earned.

Most accountants will have a relationship with a bank and finance broker. As they will better understand who is more likely to want your business it saves the hassle of approaching lenders who are not interested in what you are offering them.

This is important even if you intend to work under the radar on a cash basis as if successful you will eventually need to put in a tax return.

[disco_mitch]

i will most certanly be seeing a accountant as well as many other things, but the reason i feel that getting personal finance to start is that i can comfortably pay it off with my current day job which i will be staying in for atleast 6months than if i dont have much work i dont need to worry about the buisness not paying it back

[bblaze]

i understand exactly where your coming from about being a last means but in my case its a only means and its either keep gyprocking all my life or dive in head first take the risk, it will either make or break me but at the end of the day not doing it certanly wont make me and may also break me ive been guaranteed altleast one day a week on $68 per hour and thats just to make a start but ill also have plastering work on aswell ill keep plastering mainly which will be my wage and the excavation work will all go straight back into the buisness

Dont for one minute there is a garantee of any sort in small business, when things get tight its dog eat dog. In business for about 15 odd years as a full time income source.
cheers
blaze
ps
stay away from credit cards and see a broker with a business PLAN, if you havnt yet done a business plan its the first thing to do

[disco_mitch]

Dont for one minute there is a garantee of any sort in small business, when things get tight its dog eat dog. In business for about 15 odd years as a full time income source.
cheers
blaze
ps
stay away from credit cards and see a broker with a business PLAN, if you havnt yet done a business plan its the first thing to do

ive already looked into this and was told no matter how good of a buisness plan i put together i would not be able to get the finance and that the only way to get started will be finance it on wages

[bblaze]

you still need a busniess plan for your own benifet, if you dont know what you want to acheive in business, you will have no idea if you are reaching your expectations. You also need to plan an exit if all goes pear shaped. Some thing like 90% of small business fail in the first 5 years. Sit down on put in point form
How many hrs a week you intend to work ?(say you start with 5hrs and only get 3, what are the ramifacations, how do I increase hrs etc)

What is the projected maintance costs per anum? (if you havnt got these figures how will you know if you are spending more than you are making

And the list goes on and on, tie it all together and you have a business plan
Believe me you need it, without it marrages fail, money disapears etc
Not trying to talk you out of it but please go in with your eyes wide open, its not all rosy. Getting money is the least and smallest battle you will have.
cheers
blaze

[V8Ian]

Good advice from bblaze, also consider even though you have been offered X number of hours a week there is garrantee that

A ) Your equiptment won't let you down at the last minute.
B )The weather will permit the job to go ahead.
C ) The prime contractor will be able to supply you with the work.
Without trying to sound too cynical, you can think of a million things that can go wrong, but it will be something that wasn't considered that will let you down. Trying to pay the loan too quickly will leave you with no cash flow, for unexpected maintanance etc. You may be better off borrowing the money over a longer term, that you can repay from your regular job. As many before have said, " Consult an accountant."

[disco_mitch]

ok im getting a white board today and its all going to begin there
ill do a rough idea of what i want in a buisness plan and how i would like and estimate things will go and plan b than i will get it properly drawn up
from there i will go and see a accountant i have a abn already but need to know more about how to use it

thanks heaps for everyones advice you may have saved me from breaking..you may not
if anyone has any other advice on any of t i will take anytyhing on board even if its just about how to approach people or do invoices or chase money or anything ill have it all

[stevo68]

Back when I used to look through business plans to see which ones would fly and which ones wouldn't/ conversely those with an idea......if this thread had hit my desk I would have given it about a 5% chance of success if that.

Don't underestimate the usefulness of putting together a business plan. I have run own businesses and dealt with SME's over a 20 yr period. The one resounding factor is that most businesses are good at what they do...ie a baker baking....a painter...painting.........and accountant...accounting...you get the picture.

Where they fell down was that they had no clue about the other and in many cases major aspect of running a business. Like marketing, human resources, accounting/ tax, legal aspects, sales and so forth. Now if you have the $$$$ you can employ people with that experience...but it still helps to have some of the nounce yourself. Even better is to go an do a Small Business course through TAFE.

Perfect example...a mate of mine bought a bakery from 2 bakers. They were great bakers......crap at running a business........the 2 are seperate. He on the other hand....knew nothing about baking....but everything about running a business. He employed those with bakery experience and he marketed and managed the business side. Ended up with 4 bakeries and a cafe running off from one of them, was a huge success.

For the business plan...get an outline of what information you will need. I will start you off with the following:

SWOT Analysis

Strengths/ Weaknesses/ Opportunties/ Threats.....set up seperate sections for each topic and think about each segment from a personal and business perspective....and be honest. Many people have taken these simple steps and looked for another opportunity as they realised the dream and reality didn't meet.

Passion, attitude and determination....sounds like you have them ticked off...can't succeed in business or most things without them. However for longevity you also need the other factors. HTH,

Regards

Stevo

[Tombie]

And that Stevo, is a great piece of advice

[V8Ian]

Good one Stevo.:BigThumb:
Ya ain't whistling Dixie re the best artisans not being the best business people; they tend to float to the top and get taken advantage of in business.

[disco_mitch]

stevo thats the sort of advice i need

i wont be employing anyone i will be a sole trader and will have a truck and a bobcat or excavator still looking into which one i will chase work but i have contacts that can get me plenty and ive been watching it over the last 6 months and have never spoken to an operator that has been near being slow on work also i have the backup of plastering plus i can get other bits and pieces so getting the work is not the problem my only challenge will be learning the ropes of the paper work end of it which is why im only going to start out by doing 1 sometimes 2 days on a weekend but yes i have looked into the small buisness managment course tafe offers and i will most likely end up doing that to help me also

[El Duderino]

Credit is the anti-christ...and the same logic goes for a lot of my mates. If you cannot afford to pay cash upfront, then you cannot afford, simple as! Otherwise you're facing an uphill battle and going to whoop yourself...unless you're onto a certainty.

Owing money in any shape or form is not the way to go, unless it's unavoidable mate and you can justify it. Interest rates are going to rape your business for a long time no matter what. A mate n I have deliberately held off our business plans for a year or so, so that we can save the money and avoid loaning money at all...we have the idea of 'all that we have we own', n that's the best way to starting up business. Start small and don't overreach yourself. ;)

For what it's worth, neither of us have credit cards, and we both own our own properties outright, plus have savings for our venture...credit's for chumps without planning and hopeful ambitions. :wasntme:

[Jojo]

A bit late to post here but, nevertheless: have you considered hiring your equipment (i.e. bobcat) for the particular job? By doing this you will slip committing yourself to your debts. Any loan would make your life more troublesome, unless you will have a guaranteed amount of work (and thus, income).
I understand exactly where you are coming from, having a job at present you are fed up with. But if you wish to pursue an alternative you should make sure that everything is sound as you will be back at square one in no time at all otherwise. I don't want to talk you off your venture, but you definitely will have to make sure you know about the implications. A business plan is a must, likewise balanced and informed advice of a trustworthy accountant or similar professional.

Good luck!

[frantic]

My mate left being a small bus. tradie as like the previous post said got sick of waiting around weeks/ months for people to pay their bills while he was short of stock, fuel ,cash for his other 2 employees pay, maint. on his vehicles etc. So talk to a profesional accountant as you will need at least 3 months running $$$ with no other incomings as a reserve.

[disco_mitch]

i understand everything im being told and taking every bit on board but remember that for atleast the first 6months i will still have a day job(40hrs/week) and be paying off 20k just like i would if i had a nice car, on saturdays i will operate the income from that will go straight into the buisness legit and on paper taxes paid fuel grease and oil for the machines will come from my wallet but will be recorded what they are as a referance so for the first 6months from the money incoming the only outgoing will be repairs and taxes, insurance will be payed for the first 12 months from my money i do have svings just for starting but there not for equipment purchase

[Jojo]

That's exactly the point, mate! You are keeping your present job and will be doing this five days a week. You will be able to use your bobcat to make money on two days during the week at most. Which means, it will cost you money the remainig five days. So, why not making a contract with a machine hire? You might even getting a better deal when booking well in advance or regularly. I don't know your place but where I live there are quite a few outlets of a business which rents out everything from a simple spade to a 60 ton mobile crane. You will save $$$ as you don't have to pay interest on a loan, don't have to pay insurance (maybe even tax on your equipment) and don't have to worry if something breaks. Rent it when you need it, that's it.
IMHO it is not wise to start off your business with too much of a financial commitment if it can be avoided. Buy your bobcat when you quit your present job and go self-employed full-time.

Cheers

[big guy]

Can I suggest you do more research.

Lock in some possible contracts with builder mates.
Do a income projection with possible work.
Some weekends you may not be working but see what work is out there.
If the machine is just sitting there during the week perhaps look at hiring it out to locals for x amount.
If you are working 40hrs/w already, 10-15 more hrs on a machine can really take it out on you.

Look at the machine as just another tool as very shortly you be sick of driving an excavator, just ask some operators who been using them for years.

definately do a Business plan and get your partner or parents to read it back to you and see if you would lend this bloke some money.
Make it sound professional and make sense and quote real figures as financial institutions are not silly and will look straight through a half baked idea.

As for not employing anyone, why?
By what you are doing, you are buying youself a job and thats it.
You are probably thinking its fun sitting on a machine and digging but trust me, in the heat or rain, its no fun.
When something brakes and you have a dead line and the contractor has put liquidated damages in the contract so when you run late and can't finish on time you will pay penalties and they can be huge.
$70/hr seems a lot but with insurance, tax and tax and maintenace, whitecards, and periodic inspections now the norm on construction sites it quickly twindles away to just another basic wage.

Do not let the interest you pay bother you too much as that is just another tax deduction, most business loans are actually interest only anyway.

A good accountant is a must as said many times on here.

Put an add in local paper and see if anyone rings, just for feedback and tell them you will be onli working soon and be honest that this add was just to test the water.

If you really want to make some cash, working a single machine is not going to do it.
Get one and get a person to work it, get your margin and make money all week on that machine. work it and you work on the business rather than in the business and look for more work and supervise.
Get to a point where you have 2-3 machine so a breakdown will not impact a company to a point they feel let down and not use u again.

The word gets around quickly.

Good luck and if you really want something, you can make it happen but do it right, a slip up can kill a person on site and you may never work again.

Keep focused and I am sure with planning this can be your big ticket.

Now go do it.

[RRV80]

one thing i have learnt from people in small business is "that mates are to expensive to have" it sounds like a bad thing to say about your mates, but if all your mates ring you up and want you to do work for them on the "pay ya back later" policy, you put yourself behind, you've got fuel costs, maintenance and time consumed you could be charging someone else at full rate, and the last thing you want to be doing is chasing money of people beleive me it is very time consuming, i have been chasing a client oweing thousands to the business i work for for 5 months, their vehicle will be sold at auction if not picked up in january, which means alot of paper work and stuffing around, not to mention getting money out of insurance companies.

my point is dont undercut yourself and put yourself behind, mates jobs for example come well after your clientell aswell as your paperwork. I have found if you get yourself firmly planted, and you put in the hard yards and do jobs properly and don't cut corners are punctual and deliver results by deadlines "word of mouth" can make your business grow wihtout you doing a thing, especially in the industry you want to get into.

I also think you should steer well clear of credit cards, it is too easy to to spend that little bit more and if you start to get behind i found the hard way they are alot harder to get back into control.

[disco_mitch]

well the idea of renting a machine seemed like a good idea so i have been looking into it and its around 300 for half a day or 350-400 for 24hours so i would need to be doing atleast 2days work for me to actually make a bit of money instead of pay to do work but than i still need a truck to get the machine around which is 165 for 4 hours or 195 for 24hours so lets say i hire a machine and truck for 24 hours thats around 600 so i need to earn 600 before i start earning anything im sure that i would be better of buying my own equipment and paying interest for those sort if rates and it would only be worth it if i had a full weekends work so if i had a job for 4hours i would have to knock it back unless i could line up 3 or 4jobs one after anather

as far as getting contract drawn up for work i have done a bit of scouting and its not that easy not without doing quite a bit of work for them first i have spoken to a few people who will be able to get me work though and thats just a start, when i first buy the gear i will be taking it out to a mates property for about 4 weekends to get used to it i can operate but would want to get the knack of my own machine so if i was to hire one than it would cost me 2400 just to practice in 4 weeks repayments would be around 600-900 thats a gap or about 1500-1800 for overheads so unless i have a job lined up and my machine breaks down i cant validate hire i can validate the cost if it saves my name,

i would look at hiring my gear out to other blokes whose machines break down at a rate of say 200 a day which i think would be great as that could go straight into the buisness remembering i wont be putting any of the income into my wallet until i leave my day job

i still have a lot of reasearching to do and would love it if people keep feedback coming good or bad im taking it all in

[big guy]

One thing I forgot, make sure you can read plans and work with levels.

read them twice and cut once, it can become very costly otherwise.

[THE BOOGER]

Dial before you dig or get someone to it underground phone lines are exe but underground power can put you underground good professional liability insurance is a must have will cover most mistakes:p

[disco_mitch]

One thing I forgot, make sure you can read plans and work with levels.

my qualifacation in construction has alrady given me good knowledge on reading plans and working with levels thats what i do

read them twice and cut once, it can become very costly otherwise
learnt this lesson more than once good example was doing a bathroom reno and was rushing it didnt check where water pipes were and screwed the sheet on straight into a water pipe than had to pay a plumber to come fix it cost me time and money but was paid a leeson that rushing only makes the job take longer
.


Dial before you dig or get someone to it underground phone lines are exe but underground power can put you underground good professional liability insurance is a must have will cover most mistakes:p

yea been looking at this also and found that hire kenards also hires out one of the CAT cable avoidance tools which is something that i would hire when i needed it i wont be going in without all the appropriate insurances either