Brian Kaskavalciyan argues most home-improvement businesses don't need debt. His friend Chris Hermes built a company to $9 million revenue in two years on $10-20k capital with zero debt, maintaining a 15% net margin that generated $900k in annual cash flow for reinvestment.
Today, I do not want any debt. In fact, in a home improvement business, unless you buy assets like a building, I mean, you can almost make the argument, you know, trucks are okay, a building is okay, but unless you're buying real assets, to go into debt is silly. You don't need to go into debt. I mean, I've got a friend in the business right now, Chris Hermes, that started a business 3 years ago with, I don't know, $10 grand, $20 grand. He did $6.5 million his first year. He doesn't have a penny of debt. And the second year they did, I believe, $9 million. Super profitable. And, you know, I mean, think about it, you do $6 million at a 15% net, that's $900,000 of cash flow. How much do you need, you know, to reinvest in the business when you've got that kind of cash flow and when you understand your gross margins.
