Despite the government’s efforts to shore up banks, the credit crunch is on, and lawn and landscape companies are feeling it.
In 2002, Paul Fraynd started his landscaping business, Omaha Friendly Services of Omaha, Neb., with a $50 used mower and a line of credit worth significantly more.
“I was nineteen years old, and I went to the bank and got a $20,000 line of credit,” says Fraynd. “I enjoyed mowing lawns in high school and I didn’t want to work for anyone else. It was the freedom of the whole thing.”
What a difference a decade makes. In the past nine years, Omaha Friendly Services has grown into a full-service company with $750,000 in annual revenue. Fraynd doesn’t mow lawns anymore. Instead, he spends most of his time in the office, preparing bids for new jobs, collecting past due bills from customers, and purchasing supplies and equipment.
Despite the recession, business is decent and Fraynd remains upbeat about 2011. Yet his life has become considerably more complicated since he started the business, in part because of banks’ reluctance to lend money.
“Our previous growth was carefree, but keeping up with volume has definitely become an issue for us,” says Fraynd. “When I started the business, anyone could get a line of credit. Yet despite the growth in our business, I’ve been turned down for an expansion of our credit line. It’s hurt our cash flow.
“We’re to the point of living almost paycheck to paycheck,” he adds.
Lack of credit has had a widespread impact on U.S. small businesses. A recent study by the National Small Business Association found that 41% of small business owners can’t obtain adequate financing, the highest level in 17 years. Landscape businesses are no exception.
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Published in Lawn and Landscape Magazine – 2010 State of the Industry Report.