Banks? We don’t need no stinkin’ banks

I am convinced that one of the main reasons our business survived is that we never depended on banks to finance our needs.

If we needed equipment, we bought it with proceeds from our jobs. If we did not have the resources to buy the newest and best piece of equipment, we bought used. We never borrowed money to get through a job.

Instead, we worked out a payment schedule that forced our customers to finance their own projects. There were many times when the customers were kicking and screaming over our terms which required 50 percent up front, 25 percent when the job was nearly completed, and 25 percent before it was unloaded.

In many states, this is not allowed if you are a licensed contractor. For that reason, I never became a contractor, preferring instead to have my business classified as a manufacturer. We constantly had to make concessions like splitting the deposit into two payments or allowing a small retention at the end of the job. But we tried to keep to our terms as much as possible and as a result, we never ended up indebted to the bank.

Sometimes we had to resort to the usual techniques to get through the thin times. Things like low balling and front loading, which I’ll discuss later in the week. But the one thing we never had to worry about was the bank calling to demand money that we didn’t have.



  • Joe says:

    Great comments. We do the same and have the same attitude toward banks/credit. I personally feel that the credit industry as a whole is at least as responsible for the economic problems in our country as the people using the credit. We just began accepting credit/debit cards after a lot of internal debate.
    I think I am like a lot of folks in the woodworking business. I’m being pushed and shoved into the “modern” way of doing things.
    Enjoy your posts, keep at it.


  • T Alan Russell says:

    Bravo, It’s tuff but often better than the alternative.

  • I agree, but one small problem in Ca. I would be hung by my toenails if I did not have a contractor license. I too do my own manufacturing and I still need a license to install. So please be cautious.

  • Gene Kelly says:

    James is correct, installation does require a contractor’s license. That’s where it is nice to hire an installer/contractor for installation. You just need to keep an eye on them to be sure that it is being done your way. Because it all comes back to you not the installer.

  • Km says:

    I don’t know where I heard it, but a long time ago, I learned there are three critical elements to a successful business. Lack of any one of them can meal doom.

    1. A product or service people want to buy at your price.
    2. Management (that includes staff management, accounting, customer service, etc.)
    3. Cash to fund operations, in good times and bad.

  • russ says:

    I am a retired chef that has transitioned to a woodworking career. I do not believe in borrowing money so my shop has many craigslist tools that get upgraded when I have good jobs and good money. America would be in better shape if everyone conducted themselves in the same manner.

  • Gary L says:

    Jim, the same is true in CT.

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