Caught in the cashflow trap
By Andrew Faulkner
WORK is there for a new machine but you have no capital to finance it. So how do you persuade the bank to lend you the cash?
That is a dilemma faced by most contractors when they set up in business, particularly when there is no collateral with which to secure a loan. And it is a problem currently perplexing our northern contractor, Michael Scott.
"The problem for small, one-man businesses like mine is that finance companies almost want written guarantees of work for a machine before they will part with the money – not something most farmers are prepared to give," he says.
Mr Scotts contracting business, which is based about 10 miles from Penrith, currently relies almost solely on low ground pressure spraying/fertiliser spreading work carried out with a 12-year-old Frazier Agribuggy. To boost income he hires himself out as self-employed labour for slurry tanking, round baling and relief stock work. For this, Mr Scott either uses the customers own equipment or hires it in. But he recognises this is not the best way forward to expand his own contracting business.
"I know there is year-round demand in this area for a low ground pressure multi-purpose vehicle, capable of either slurry tanking or spraying/fertiliser spreading, if only I could get hold of one. My biggest problem is getting the finance companies to believe it, too."
Mr Scott has already earmarked the machine he reckons is best-suited to the potential workload – the Chavtrac SupaTanka. The £40,000 SupaTanka is powered by a 110hp Perkins engine through a mechanical gearbox, and is fitted with a 7300-litre (1600gal) slurry tanker. Mr Scott would also specify a sprayer, equipped with just 12m (40ft) wide booms to cope with the difficult Cumbrian terrain.
Meanwhile, it is business as usual as he plans how to get the capital together for the Chavtrac. Main work at the moment is finishing off herbicide spraying on winter cereals and slurry tanking with the Renault tractor/Molex tanker combination he hires from Langwathby-based farmer/contractor, David Kersey. *
• Farming area: Mixed enterprises but predominantly dairy.
• Work undertaken: Low-ground-pressure fertiliser spreading and spraying.
• Machinery fleet: Frazier Agribuggy, Hardi sprayer fitted with 12m (40ft) wide boom and Teagle fertiliser spreader.
• Labour: Michael Scott.
• Approx annual turnover: £20,000.
Much of Michael Scotts (inset) winter is spent at the wheel of Cumbrian farmer David Kerseys Renault 106-54 TL/ Molex slurry tanking outfit.