Why You Should NOT Buy a NEW $70,000 Truck Like @TigranGertz (In-Depth Numbers)

Hey, everyone, it's Mike Andes and you're listening to the Landscape Business course. And today I'm responding to Tiger and Gertz talking about me in his video without mentioning me when it came to debt because he bought a brand new F250 2021 truck. I know he's doing it for taxes. And today we're going to dive into the comparison of a $70,000 truck bought brand new versus a truck that I would recommend buying at $15,000. Okay, so we're gonna do a comparative analysis. But before we get into that, before we get into that, I have to say, Tigran, I know you're watching this. You didn't mention my name. I gave you all this publicity and you didn't mention my name. I will forgive you. And for everyone out there that is thinking that I make these videos for spite or anything like that, it's not that way. This is banter between me and Tigran. And I hope that a lot of you learn from, from this discussion about debt, buying equipment, financing it, et cetera. Okay, so let me put that out there. The amount of comments that got banned by YouTube on the past couple videos because of all the swearing and calling me names is amazing. You gotta realize that if everyone thought exactly like you about everything, life would be very boring. And so the fact that maybe Tiger and I look at business a little bit differently is exactly why life is enjoyable. People disagree with you and you have different opinions. Okay? But today we are going to break down the numbers behind a truck. I'm using numbers for Tigrain. Yes. But I want to break down what I would recommend for most of you. All right, so if you have not watched my other videos on Tigran and you think I'm going after him, watch the other videos for context. This is not about him and his business. He is a very successful, hardscaping, high end construction type, design build. Okay? I'm not necessarily talking to someone that's doing multiple million in revenue. I'm talking to the 95% of you that are doing under 500,000 or under a million, I should say. And what for most of you is the right business decision, and I'm not talking about for someone who wants to do this. They've always wanted to have a brand new truck and that's always their goal. Yes, you should reward yourself. You should, et cetera, et cetera, et cetera. But from a business decision to go out and buy a $70,000 truck does not make sense as long as you Know that as long as you know that you're okay. Right now I don't want to make this video in terms of, from a tax standpoint because the numbers are a percentage basis. So If I spend $20,000 on a truck, for example, I'm going to get, let's say 35% off of my taxes. If I spend $80,000 on a truck, I'm still going to get 35% off. It's not about the numbers, it's about the fact that if I spent 20 on, on a truck, I therefore would have 60,000 from a number standpoint in comparison to 80 grand to go spin on some other place in the business like hiring, marketing, my website, et cetera, et cetera, et cetera. So let's jump right into it. Alright, I wrote down some numbers with a little bit of help from one of our franchisees out in Georgia. So thank you to Brian. He actually came up with the idea of me running these numbers. I changed them all up a little bit. Okay, so we are going to compare two different trucks. Truck number one. Truck number one is going to be a used truck and truck number two. Truck number two is gonna be brand new. Okay, Now I'm going to make a video. Hopefully in the next few days if I have some time, I'm gonna make a video proving to people, cause everyone's gonna say, cause this truck number one, the purchase price is going to be $15,000. Okay? Everyone is saying in the comments right now you can't buy a truck for $15,000. Okay, all right, my market, you're over in the Pacific Northwest. Whatever, whatever. Alright. I am going to prove that in 80% of America this will buy a decent work truck. And I'm going to do another video and I'm going to actually screen, record live and go to random places throughout the United States and prove that most places within a couple hours of you, you can get a truck for this price. Okay, but hold your britches before you start commenting about used trucks in your market are rust buckets after two years because of salt. Whatever. Alright, we'll get into that in just a second. We're gonna break down some numbers. Stay with me. This is gonna be a lot of fun. Alright, now the purchase price for truck number two is $70,000 just like Tigran's, alright? He bought 2021 F250 for his employee, okay. End of year to kind of save for in taxes. Now he also got a 10,000. He's gonna be putting a $10,000 bed a tool bed on the truck. Okay. Now he is going to have $0. We're going to make this analysis over the next five years. And I'm doing this because do I think a truck can last more than five years? Yes. Based upon someone's behavior of buying brand new vehicles, usually they renew them every five years. And Tigran has proved to do that. He renewed his 2016 truck once, you know, he got a new one in 2020. So like, usually someone who's buying brand new vehicles and financing them gets new ones every four or five years. Just saying. Okay. Also, this truck would last longer than five years too. But we're going to make the analysis just for the comparison. We're going to make this analysis over the course of five years. Okay. So truck number one used $15,000. Cool. Over here we got $70,000. Where's my red pen? I lost my red marker. Okay, we're gonna use pink. Alright, $15,000. But this is a used vehicle and we're going to assume that this used vehicle is a lemon. Okay. Lots of maintenance. So we're going to add plus 1,000 because, hey, Tigran does not have to pay any oil changes. All right. For five years. I don't think it's five years, but let's assume it is. He doesn't have to pay any oil changes for five years. So I'm just gonna put a thousand bucks in here for that. I'm gonna assume that this is like a lemon truck. I'm gonna do $5,000 for a new engine. Alright. Literally this is a lemon truck. Engine blows out and I'm gonna put oil changes up top here. Engine blows out and we have to literally put a new engine in this truck. Okay. Then the transmission goes out. We're gonna add another $5,000. You know, if you're a mechanic, you can probably put in cheaper than this. I understand that, but I'm just gonna use these numbers. Okay, Just bear with me for a second. All right. Transmission, $5,000. We're also going to assume that the suspension, we have to replace the suspension. Three grand, something blows out on the suspension. Alright? So suspension is replaced. So literally over the course of five years, this truck is a pain in the neck. Okay. And I could even, I'm not going to. I could even put like five grand or three grand in there for like lost time of like having to take it to a mechanic, for example. All right. In terms of having to rent a truck for a few days or, you know, worse yet, you. The truck Is there? And you have to use a different truck, whatever it is. Okay, let's just assume though these numbers, alright? Over here there is $0 in maintenance, no oil changes. If something did happen to the engine, something did happen, anything would be fixed by Ford because brand new it all is under warranty. All right? Extended warranty. Woohoo. Okay, now we're going to make a comparison after five years. So after five years go by, we have spent a grand total. Oh, sorry, I gotta make one more thing. The value, alright? The value of these trucks after five years. So value of these trucks after five years on the $15,000 truck, let's go ahead and assume that it only has a $10,000 value. All right? It's used up here, probably three, five years old, maybe even eight, 10 years old. And it goes from 15 to $10,000 over the course of five years. And that being said, it has a new engine, a new transmission, like it's basically been reb. So it's gonna last a lot longer than five years. However, let's just assume that the value of this vehicle is $10,000. Has a new transmission, new engine, has been maintained well, has new suspension at five years. All right, value of it is $10,000. The value of the $70,000 truck. Now let me be clear. A bed that costs 10,000, you will not get $10,000 more for it when you resell it. You will not. Okay, the $70,000, I do not know this for sure. I'm sure Tigran will fill us in on this. But I can almost guarantee that about 6 to 7 of that is in the warranty and about 10,000, 8,000 to 10,000 of that is in financing. I'm assuming when he said 70 grand, that includes the financing charges, but I guarantee you that that is about six and a half to $7,500 somewhere in that range. So really this $70,000 truck is probably only worth 50. The truck itself. And for some of you get onto his channel comment like oh, a truck's only worth 50,000. You're right, you're probably right. Okay. The fact is that he has financing charges, he gets an extended warranty and so he doesn't have any maintenance cost. Alright, so that's what he's buying right there. So he put 80 grand up front. But honestly, at the end of these five years, the value of that truck going from zero miles to let's say 80,000 or 75,000 miles is probably going to be. What number did I put down here? I put $25,000. Okay.

So this is going to assume again that the truck is probably worth 50 grand rolling off the lot immediately. It's probably only worth 40 just because it goes from new to used. And then over the course of five years, it goes from 40,000 down to 25. I'm being pretty generous, let's be honest. Okay, $25,000. Alright, so now let's draw some conclusions.

The total cost of these.

Trucks. Sorry, I messed this up, my apologies. Values are correct. But what we forgot to do is the fact that this truck over here did not really cost $15,000 over the course of five years. Now we're going to do the analysis over five years. Five years later, it's actually costed us 15, 16, 26, $29,000 is what's really cost us, all right? To operate this truck for five years. Over here, this truck has cost us our 80 grand. And then when we take away our value.

The value of the truck after five years, we take away 80, take away 25,000. The value.

Sorry, not the value, the cost over the course of those five years of this truck. The cost of this truck cost equals $55,000. Okay? Over here the cost is going to equal 29,000 minus the value of the truck, $19,000. Okay, so this is the total cost to have this truck for five years. Buying it, maintaining it, reselling it. And then this is the total cost minus the value of the truck for those five years. So we're assuming at the end of five years the truck is sold. Or even if you say we kept it, whatever the value though, off of what you've spent on it is 19,000. Over here we have $80,000. We put into it, we didn't have any warrant maintenance cost whatsoever. And the value of the truck is 25,000. Therefore the cost to us over the course of the five years is $55,000. Okay, so follow me so far. If you haven't followed me so far, re watch this part. I'm going to erase the top part and erase all of this stuff so I have more space to do my last of the analysis. All right, so we have these two trucks. One is new, one is used. And this is the total cost to operate this truck for five years. Total cost to you. All right, so now let's go ahead and run some more numbers. So we take this $19,000, we divide this by 60, so 60 months. So divide this by 60 months. And we're going to do the same thing over here. Divide this one by 60 months.

So if I take $19,000, I divide that by 60, that's going to equal $316.67 per month. What that means is that the total cost, everything all in for this truck is $316.67. Very cool. Now, there's one problem with this number over here, and that is the fact that when you're over here, you are insuring a brand new vehicle that's financed, and you, you are going to be spending considerable amount more than a $15,000 used vehicle that you can have higher deductibles for. So we really need to take into account the fact that this is going to cost at least $150 more per month in insurance because literally we're insuring over here a $15,000 asset when we first bought it. Over here, we're insuring a $50,000 asset that is financed and is going to require higher premiums due to the fact that we have lower deductibles. All right, so over here, really, what we really need to do here is add the cost of insurance and we're going to assume that we have $150 more per month.

By having this nice vehicle, the new vehicle, $150 more per month in comparison to this vehicle. So, for example, that would be, let's say, for example, the insurance would be $100 per month on this truck and 250 on this truck because it's $150 more. So if we take $150 per month and we multiply that by 60 months in a year, so we multiply that by 60 months over the course of the year, that equals nine. Yep, $9,000. So really, the cost to us over the course of these five years, again, I'm looking at the difference. $150 per month is the difference difference between these two vehicles. Otherwise I would add over here, but I'm looking at the difference. So just 150 times 60, that's $9,000 more tacked onto the cost for those five years of having this new vehicle. Therefore, the real cost is actually $64,000. So let's go ahead and just take this out. We've now added in the fact that there's going to be insurance extra cost of insurance of having the new vehicle. So we're going to put 64, $64,000 is the actual cost of the vehicle over the course of five years. Now, if we divide 64,000 by 60, what we come out to get is $1,000 66, 67 per month. All right? At the end of the day, the cost per month of truck number one versus truck number two, 316 versus 1,066, literally almost three. Three times, three times as much to operate this vehicle on the right hand side, all right? The new nice vehicle. Now, the difference of 316 versus 1,066 is exactly $750 per month. So you ask, well, I want a new truck, I want to drive a new truck because, you know, I just feel like I want to have that, et cetera. Great, that's fine. But realize it's costing you $750 per month, not in what your payment is. That is the cost differential from having a regular work truck that you have maintenance on. And you're gonna have to get a new engine, a new transmission, all the rest of it, okay? And if someone was saying like, oh, well, let's say for that transmission you missed two days of work and the engine you missed two days of work, you could put all those numbers in here and does not even come close. Like it's a dent in what we're talking about here. Okay? So $750 per month is the actual cost differential, the differential between having this truck versus this truck. Now this is the part that I get really passionate about. That $750, if it was spent on marketing for someone just starting their business. Again, we're not talking about Tigrid in this case. Tigran establishes business doing very well in hardscaping and high end construction in California. Okay? These customers are usually not working, worried about spending 50, 60, $100,000 on a landscaping project. But for most of you just starting out, most of you that are under a million in revenue, this is not where you want to be spending your money. Where you want to be spending your money is in marketing to grow your business. If that's what you want to do is grow your business, you want to spend this money on marketing. So we are going to assume, we're going to assume some numbers here. Number one, we're going to assume that your customer acquisition, acquisition cost is $300. What this basically means is that for every customer that you get, you have to spend $300 to acquire them. This is a very, very high number. Okay, let me very clear. This is a very high number. At Augusta Lawn Care, we shoot for 100 or below. Okay? So this is really, really high. But I'm doing this to be as conservative as possible and not make this look crazy. All right? If we, we assume Though a customer acquisition cost of $300, which means I got to spend $300 on Facebook ads. I got to spend $300 on every door, direct mail. I got to spend $300 on something to get one customer. That could be a landscaping job, that could be a mowing customer, that could be a fertilization customer. Whatever you do, $300 customer acquisition cost. If you run the numbers of $750 per month for five years and you assume a $300 customer acquisition cost, that would mean that you're going to have 2.5 customers per month.

Because again, you're saving $750 per month by having the cheaper truck that would, if you had a $300 customer acquisition cost, that's going to net out 2.5 customers per month. So in five years, five years later, you would have 150 customers. Okay? This is why people don't grow their business. They get flashy new things realizing, not realizing that it's affecting their business over the course of five years. Oh, well, you know, it's only a few dollars per month on payments like, and I'm doing it for taxes, whatever. No, no, no. It's costing you 150 customers over the course of five years. Maybe you lose a customer or two because when you were replacing the engine and the transmission, you had to lose a customer or two. Guess what? 150 customers is the differential in cost if you take the difference between used and this other truck. Alright, now again, I know some people are going to get in here and say you're talking about mowing and, and softscaping. Only when you're talking about hardscaping things. You need big trucks. Okay, I will buy that. But you do not need an $80,000 truck that is only worth 50, maybe 55 with that bed on the back with the tool bed. Okay? You are going to be looking at a vehicle that you can have a substantial three times cheaper to run. I could literally make these numbers a whole lot even incredibly larger simply by actually making my customer acquisition cost what it should be. I could also do the fact that, look, maybe instead of, I could actually take, I could get three trucks. I could get three trucks for the price of this other truck. When it comes to a monthly cost, well, that literally could 3x my business. If I have demand coming in, you say, well, I don't need a market. I have lots of customers coming in. Okay, we'll get three trucks instead of one. And this assumes that I've changed up the engine, the Transmission, the suspension. I have oil changes, a whole bunch of stuff. I'm gonna come up with another video. Cause I wanna show actually that you can get trucks for $15,000 that are half decent, maybe $20,000, but not, no, 80,000. All right, comment below. Thank you so much. This is all done for educational and try to help everyone just think about these things. Cause I see so many businesses get into debt under the guise of you need to go into debt to make money, you need to spend money to make money. And guess what? When you come to a debt collector, at the end of the day, something bad happens with health, family. Something happens. They don't really care about those things. They want their debt back, they want to collect. And so I have seen far too many businesses go out of business trying to follow this formula. And it is a recipe for disaster if you do not have an established business that is already doing substantial revenues. Very established. And speaking from someone who just recently has absolutely zero business debt. We paid off our last tiny little bit of an equipment loan that we had on a skid steer. And the equipment loan, it was like $1,500. We paid it off. Trust me. It feels great to have margins, profit margins that are very high that you can do profit sharing and you're not having these payments that are sucking the profit and sucking the life out of your business. I'd rather take this money and if I'm going to try to save it on taxes, pump it into real estate, pump it into, into some other asset that is going to be a better asset than spending this kind of money on something that depreciates from $80,000 to $25,000 in five years. Just my opinion. Comment below. Thanks so much everyone. You listen to the landscape business course. I'm Mike Andes. We'll see you next time.