“We have the work. Get the trucks on the road and we'll figure the rest out.”
Famous last words.
Say a new truck costs $700,000, financed. It starts costing you the day it lands in the yard. It starts earning whenever the work shows up. Those two dates never line up. The payment doesn't care if the locates are late, if the general contractor pushed the job, or if your best operator quit. It clears every month either way.
Add a second truck to chase the work and the fixed costs double. The revenue stays lumpy. The busier you get, the faster the treadmill spins.
The operators who get squeezed are not the slow ones. They are the busiest ones.
The work was never the problem. The work was real. The financing structure underneath it couldn't carry the growth.
We've been in diligence with a number of companies this year, and capital strategy comes up in the first hour of every serious conversation. It's half the reason we're building HydroCore as a platform. A bank treats a thirty-truck fleet differently from a three-truck fleet. Same iron, different cost of capital.
First published on LinkedIn.