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Questions On Starting a Backhoe business

Discussion in 'Tractor/Loader/Backhoes' started by jkc, Nov 23, 2010.

  1. jkc

    jkc Member

    Joined:
    Nov 22, 2010
    Messages:
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    Location:
    NC
    Hello to all. I am a newbie on this site and I have a few questions for all of you experienced diiggers. I am looking to get into the backhoe business with my own dump truck, trailer and backhoe. I have been in the retail business for a while and it stinks now that the economy has taken a dump. I have enough funds to pay for all of my equipment so I will not have any payments. I plan on getting insurance to cover myself. The big question is, is it worth getting into this type of business. I know that you have to work at anything that you do but I want to know about the money and the profit margins. I would like to hear all thoughts.
     
  2. Bob Horrell

    Bob Horrell Charter Member

    Joined:
    Nov 18, 2003
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    Occupation:
    Owner/Operator grading business
    Location:
    Acton, CA
    My advice would be to not limit yourself to just backhoe work. I don't know what is going on in your area, but adding an additional piece of equipment might just open up your job market. In my area, the guys that just do backhoe work are pretty slow, if not out of the business because of the economy. A skidsteer, for instance, with all the attachments that can be rented might open up your opportunities considerably.
     
  3. El Hombre

    El Hombre Senior Member

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    May 6, 2010
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    Location:
    SF Bay Area
    Guy I knew told me the insurance ran $400 a month if he never dug deeper than 4 feet. $1600 a month if he went deeper; all the utility lines are under at least 4 feet of dirt. We were down for 3 days of no phones because of someone with a hoe.

    Other thing I saw was a guy with a backhoe on a D-4 sized track machine. He could get into hillside sites and other places no one would/could go. He was getting the same kind of money for his little machine that people with big tracked excavators were getting. In other words, try to find a profitable spot, not what everybody else is doing.
     
  4. Deeretime

    Deeretime Senior Member

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    Occupation:
    superintendent
    Location:
    High River Alberta
    Maybe concider a Mini dig and a skidsteer, i have run alot of backhoes and i have found that mini dig's and skidsteers work better for some aplications and i belive that they are more versitle than a backhoe in most places. with two smaller machines your not limmeted to a small scope of work, I E utility contracting. Landscapeing with a skidsteer is easier because you can see what you are doing and can get more attachments to make you more productive, another employee can be useful to clean up with one machine while the other is proforming another task aswell you are not relying on one machine incase one goes down.

    What sise of backhoe and what make were you looking at?
     
  5. AKRentalMan

    AKRentalMan Member

    Joined:
    Nov 23, 2010
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    Location:
    Alaska
    I would also suggest looking at a mini-ex and a skidsteer, Backhoes are good at a lot of things but not great at anything.
    Something else to consider is when your business grows you'll be able to utilize the different assets on seperate jobs.
    The readily available attachments for skidsteers make them super versatile and most can be rented for very little money until you can justify purchasing your own.
     
  6. jkc

    jkc Member

    Joined:
    Nov 22, 2010
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    Location:
    NC
    I was looking at a 80-100 Hp backhoe. I would like to stay with John deere or Cat but I have found some JCB backhoes at pretty decent prices. Anything to these machines?
     
  7. digginchaz

    digginchaz New Member

    Joined:
    Sep 12, 2009
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    Location:
    Indiana
    Do you have any experience? Who is going to do your estimating? What type of work do you plan on doing? Do you have a place to put materials? If you don't have experience in the field it can end up costing you and not just money. Would like to know if you have all your bases covered. Don't want this to be you:Banghead
     
  8. Phil

    Phil Senior Member

    Joined:
    May 2, 2005
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    Occupation:
    retired operator and mechanic
    Location:
    Southeastern Ontario
    Welcome to the forum digginchaz :drinkup.
    Lots of good advice I think. Glad I'm not in the business. Getting paid, is something else to worry about. Lots of backhoes out there, seems everyone has one, so there's lots of competition. Takes a long time to build up a customer base, can you put food on the table until your business is established? Are you good with a wrench..if you can't do at least some of your repairs it might get interesting. Consider the cost of parts when you decide on a make of machine, aftermarket parts available? Nothing like throwing a pail of cold water on an idea. Phil:)
     
  9. AKRentalMan

    AKRentalMan Member

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    Location:
    Alaska
    Cost of downtime also comes into play with parts availability and dealer network/support. An expensive part in stock is cheaper than a less expensive backordered part a week out in a busy season.
     
  10. Ando

    Ando Well-Known Member

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    Nov 15, 2009
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    Location:
    Australia
    I know that we are on oppostie sides of the world but....many of the local contractors in my area run mini excavators as well as their backhoes. It seems the ideal setup is- backhoe + truck & trailer + mini ex + bobcat. (covers alot of bases)

    I'm also thinking of a business and am interested to hear peoples thoughts on profit margins.

    A couple of blokes I know that run backhoes reckon it's just a way of buying a job (ie: similar net earnings to a wage slave)

    A business plan (including back-up/get out, plan) is a must.
     
  11. Deeretime

    Deeretime Senior Member

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    Occupation:
    superintendent
    Location:
    High River Alberta
    Yup more responcibility's and more headaches the only thing you will gain is hopefuly a sense of acomplishment rather than utter failure, all the money you will earn will have to be dumped back into your business for a few years until your business is stable
     
  12. Ando

    Ando Well-Known Member

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    Location:
    Australia
    I guess you could also add in tax deductable items....

    Vehicle and service trailer (+ a percentage of your personal vehicle)
    fuel/oils etc
    phones
    home office
    clothing

    Of course, you've got to pay for all that first but it is something you can't claim on wages. (in Australia anyway)
     
  13. Deeretime

    Deeretime Senior Member

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    Occupation:
    superintendent
    Location:
    High River Alberta
    But it can be done !!!
    just make sure you are in it because you want to do great work and satisfy customers, if you go in it half assed you make the rest of us look bad
     
  14. KSSS

    KSSS Senior Member

    Joined:
    Feb 27, 2005
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    2,315
    Occupation:
    excavation
    Location:
    Idaho
    I would really look close at what is available in your area. Talk to some excavators, General Contractors, look through the Yellowpages and google your area. Get a good idea of how saturated your area is. Also pay attention to what types of services are offered and what is not. Based on what you find out, structure your business to fill the niche thats open (assuming there is some room for another). Buying a backhoe without investigating whats going on in your area, is silly. A couple three years ago you could start an excavating business anywhere in America and make money. Thats not true any more.

    Here it is about diversity. A one trick back hoe pony wont get you far. However what really matters is what is happening in your area.

    Remember the old story of an excavator that won the Powerball one year. They asked what he was going to do with his millions. He said he would probably just keep excavating until it all gone. A lot truth to that especially lately.
     
  15. frogfarmer

    frogfarmer Well-Known Member

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    Aug 26, 2010
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    Location:
    South East Missouri
    If you have done your homework and have worked out all the unforseen disasters by all means jump in with both feet and hope you dont drown. My suggestions would be contact the contractors in your area and see what work they might have to throw your way. You will get the work nobody wants but if there is enough you can get your name out and more business to follow. If you have a truck you might try the hauling business and see what else your customers need. Alot of guys make enough hauling they dont have time to dig. Another point to mention is I put twice as many hours on my skids as my hoe. I even rent a mini X on ocassion even though I have a full size hoe. When its all said and done I still have a full time job working for the MAN to ensure a retirement and health care benefits. I can make enough to support the business easily but there are always slow times and seldom is there enough excess to invest in my retirement.
     
  16. Hokiesmokes

    Hokiesmokes Well-Known Member

    Joined:
    Aug 18, 2010
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    Location:
    Ohio
    Insurance is a high cost for sure, it's more if you want to truck for hire. I'm going through the same things right now, the transportation side is much higher than the contractor liability. Right now the majority of work is maintenance - like sewer lines, downspout drains, concrete and other associated residential stuff. Around me, landscapers are dime a dozen and thats the industry I have the most experience in, but even the ones without skids can rent them. You have to try to find guys who sub the machine work out, they are out there. I've even considered picking up a crane and subbing to the tree services, although as more and more get their own cranes, this will get harder to do.
     
  17. Willis Bushogin

    Willis Bushogin Senior Member

    Joined:
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    Occupation:
    owner
    Location:
    NC
    backhoe

    Im from eastern NC and I was in the septic business, but when the economy went bad, so did that work. I would suggest you get in that business, unless you have some customers. Its hard out there now, unless you have good contacts, even in my area, a backhoe is usually used for septic, footers, small excavations, etc. My best piece of equipment ever purchased was a skidsteer, but again you have to have work for it. I use it to final grade, spread dirt, load debris, etc.
    its about ten times faster than a backhoe.
    About the only thing that we have going, is contract hauling (dump trucks) we have lucked out and gotten on 2 state highway jobs and its kept us busy
    what area are you in?
    Good Luck
     
  18. DGODGR

    DGODGR Senior Member

    Joined:
    Dec 19, 2009
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    718
    Location:
    S/W CO
    In most areas construction has been much slower than it has in the past. That will make it very hard for you to get a business started. Especially if you are new to the business. I started my business in CA about 15 years ago. I started with (1) backhoe and I didn't even have a way to move it myself. I almost failed several times despite the good economy. As others have said, finding a niche will be key. In my experience most work for a single backhoe is hourly, operated rental. Do you have any previous experience or any potential customers/contacts? With so much competition in the hourly, operated rental business you have to have something that really sets you apart. Being the best , most productive, reliable guy around is a good start. I doubt that will be the case if you don't have any/much experience. Even if you are it may take a while for you to get the exposure so that the customer base will realize what you have to offer, especially in a depressed market.
     
  19. Gmc7210

    Gmc7210 Member

    Joined:
    Nov 13, 2009
    Messages:
    20
    Occupation:
    Owner of small excavating/landscaping company
    Location:
    plattsburgh new york
    I started a backhoe business like you are thinking of about a year and a half ago, and i've been happier at work than i've ever been. A man can make a decent living at it, as long as he realizes that you won't be sitting in the cab pulling levers all day. During this season ive been a mechanic,plumber,welder,trucker,estimator,carpenter,concrete man,landscaper,demo man,paver,landscaper,land clearer,engineer,bookkeeper,equipment recoverer,painter,and an operator. Those are just the things i can think of right now, but the point is don't limit yourself, do all you can yourself,don't get discouraged, and work your butt off. Trucking is also a big part of what I do in order to keep busy as well as get a bidding advantage on some of my competition who don't own trucks.
     
  20. Hokiesmokes

    Hokiesmokes Well-Known Member

    Joined:
    Aug 18, 2010
    Messages:
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    Location:
    Ohio
    Hey GMC, what kind of hauling work are you finding for that single axle?