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starting a new excavation business

Joined
Feb 24, 2018
Messages
19
Location
nova scotia
In your OP you said that you "have access to fill and gravel in place". Does that mean you already own the ground or that it is accessible in your area to purchase?
Yes to buy it by the yard or truck load , fill is 15 bucks a tandem truck load and gravel is 1.50 a yard .
 

bam1968

Senior Member
Joined
Nov 1, 2014
Messages
529
Location
IA
Occupation
Excavating Contractor
I wish gravel was that cheap in my neck of the woods. You mentioned a pit excavator a few times which I assumed you owned the ground.
 
Joined
Feb 24, 2018
Messages
19
Location
nova scotia
I wish gravel was that cheap in my neck of the woods. You mentioned a pit excavator a few times which I assumed you owned the ground.
I wish I did own some land with gravel on it , it’s quite a long haul at times but it’s only generally found in one area here and a lot of that is gone , bought up or not worth building a road to get it sadly
 

AzIron

Senior Member
Joined
Jun 14, 2016
Messages
1,541
Location
Az
i work with my competition all the time it does work and it keeps me from having to own dump trucks and deal with truck drivers. in my area i cant put a truck on the road at cost for what i can hire one for and its one less headache it may be different there. you have listed a lot of iron for one guy to run especially starting out. if people are slow to pay ( expect it ) it gets ugly quick. those payments on a loan start immediately not to mention overhead you may not get a check from your first job till 2 months after the day you completed it (sometimes more or never). most new outfits struggle with cash flow now add debt that is at or close to your annual gross revenue the cash flow struggle becomes a domino effect every time you need to replace or add equipment you have to borrow for it. you can never get ahead a lot of guys start like this in times like now you can trip over work and make money but get a slow month or 2 when your revenue is down 25 percent or more a lot of guys go out as fast as they started. think small start small and work into your dreams cause everybody thats been in business through more than one economy slow down will tell you they didnt start out big.
 

Vetech63

Senior Member
Joined
Aug 10, 2016
Messages
6,362
Location
Oklahoma
Man, I LOVE to see this type of ambition. I LOVE this type of ambition even more with little to no debt. Your first mistake is assuming that there will be 10 years of steady work.......wrong. I'm not trying to discourage you, but you better be smart about this. Borrow as little as you possibly can and start off small. You can build a good reputation doing so, and let the bigger stuff come to you later. You wont be sorry.
 
Joined
Feb 24, 2018
Messages
19
Location
nova scotia
Man, I LOVE to see this type of ambition. I LOVE this type of ambition even more with little to no debt. Your first mistake is assuming that there will be 10 years of steady work.......wrong. I'm not trying to discourage you, but you better be smart about this. Borrow as little as you possibly can and start off small. You can build a good reputation doing so, and let the bigger stuff come to you later. You wont be sorry.
As much as I hate to admit it probably starting small would be the best option , doing that comes with its own limitation and problems for me but be it those better than financial problems I get it . I’m still torn between the two options and with the cash flow issues ( borrowing 200 k) it’s easy to lay it out on paper and see how it could become a issue .
 

crane operator

Senior Member
Joined
Mar 27, 2009
Messages
8,275
Location
sw missouri
Some of the guys mentioned it, but I'm curious why you need a excavator for a pit that you don't own. If you need a excavator on each end, a truck in the middle, and its just you, I don't see that working. By me the quarries all load you.

If you're borrowing 200k, you better have 100k of your own money/ assets/ equity to operate on. If you don't have that kind of money on your own, you're probably borrowing too much. Yes, you have to spend money to make $, but you have to be realistic also. If you only have 20,000, you don't have any business borrowing that kind of money. Sure, there's all kinds of people that do, but they really shouldn't. They're the ones that when times get tough, end up having to take a bankruptcy and start all over. Not that a bankruptcy is the end of the world either, its just something I'd rather not go through.

You mentioned your "profits" at the end of the year, and how that depends on breakdowns. The equipment is going to breakdown, and when you least want it too. And they can all break down at the same time. Really. The site excavator can launch a rod through the side of the block, and you're going to have to spend 15k, right then, in order to keep working. And it could eat the hydraulic pumps the very next day. The same goes for the dump truck. And it probably won't happen at the end of the year when you have the profits from the year to work with, it could happen on day 2. Have you got 30k to fix it with? Want to go to the banker on day 2 and ask for the money?

They will break when you can least afford to fix them, and /or when you need them the most to finish up a job. Then not only are you not billing money, but you're spending $. That goes back to the having a pretty big nest egg.

Just another what if: You finish your first job, the second job you have all lined up, and now there's permit issues. Every week they tell you: "next monday, we're starting". They may be the big contractor that you really want to get in with and do their work, so you want to be there when they say, but that could go on for a month. Two months. That job may never happen. But even if you only miss the first month, that's a hole you have to climb back out of, and they aren't going to pay you for. I bring this up, because I've had it happen. Multiple times. I even bought a crane for a job that was supposed to be three years ago, and hasn't happened yet, but is "still in the works". That I had a "start date" for. Now I've gone and done a lot of other work with that equipment, but if it was the only job I had lined up, that could get ugly in a hurry.

I don't know how familiar you are with the insurance requirements, or plates, registration, taxes,business permits, etc. But just be aware that it all costs way more than you think it will.

Your dad has 30 years in running his own business, and isn't steering you wrong, listen to him. It doesn't matter a lot that it wasn't in the excavation game, its still a matter of managing expenses and assets and return on investment. Its a lot of $, no matter who you are, to step into another 200k of debt, a lot worse just starting out.

If you want to try it, buy the site excavator, pay to have it hauled, and buy the dirt/gravel, delivered. If it doesn't work out, sell the excavator and go back to work for someone. If you can't afford to buy the first excavator, of the list of equipment you want, you don't have enough $.

As far as the business owning and satisfaction thing. I think if you enjoy working, and what you do (whether that be dirt work, banking, plumbing, or greeting people at walmart) owning a business can be a good thing. If you're unhappy now, working for someone else, I generally think you won't be any happier working for yourself. You'll be just as unhappy, only with a lot more stress and pressures.

Double those pressures if you and your wife are both quitting jobs and doing this "together". If she works now, don't let her quit until a year later, you'll need the income.

If you think owning the business is the way to riches, you're probably doing it for the wrong reasons. I've actually never made as much money working for myself, as I have working for other people. That's the paycheck money, at the end of the year money, not counting what I've put back into the company. But you can't go out and spend money that you've invested in the business, on a trip to hawaii.

I can say that I enjoy what I do, but if I lost it all tomorrow, or sold it all, I would be just as happy to go hop in a seat of a crane for someone else.
 

Welder Dave

Senior Member
Joined
Oct 11, 2014
Messages
12,260
Location
Canada
Some of the guys mentioned it, but I'm curious why you need a excavator for a pit that you don't own. If you need a excavator on each end, a truck in the middle, and its just you, I don't see that working. By me the quarries all load you.

If you're borrowing 200k, you better have 100k of your own money/ assets/ equity to operate on. If you don't have that kind of money on your own, you're probably borrowing too much. Yes, you have to spend money to make $, but you have to be realistic also. If you only have 20,000, you don't have any business borrowing that kind of money. Sure, there's all kinds of people that do, but they really shouldn't. They're the ones that when times get tough, end up having to take a bankruptcy and start all over. Not that a bankruptcy is the end of the world either, its just something I'd rather not go through.

You mentioned your "profits" at the end of the year, and how that depends on breakdowns. The equipment is going to breakdown, and when you least want it too. And they can all break down at the same time. Really. The site excavator can launch a rod through the side of the block, and you're going to have to spend 15k, right then, in order to keep working. And it could eat the hydraulic pumps the very next day. The same goes for the dump truck. And it probably won't happen at the end of the year when you have the profits from the year to work with, it could happen on day 2. Have you got 30k to fix it with? Want to go to the banker on day 2 and ask for the money?

They will break when you can least afford to fix them, and /or when you need them the most to finish up a job. Then not only are you not billing money, but you're spending $. That goes back to the having a pretty big nest egg.

Just another what if: You finish your first job, the second job you have all lined up, and now there's permit issues. Every week they tell you: "next monday, we're starting". They may be the big contractor that you really want to get in with and do their work, so you want to be there when they say, but that could go on for a month. Two months. That job may never happen. But even if you only miss the first month, that's a hole you have to climb back out of, and they aren't going to pay you for. I bring this up, because I've had it happen. Multiple times. I even bought a crane for a job that was supposed to be three years ago, and hasn't happened yet, but is "still in the works". That I had a "start date" for. Now I've gone and done a lot of other work with that equipment, but if it was the only job I had lined up, that could get ugly in a hurry.

I don't know how familiar you are with the insurance requirements, or plates, registration, taxes,business permits, etc. But just be aware that it all costs way more than you think it will.

Your dad has 30 years in running his own business, and isn't steering you wrong, listen to him. It doesn't matter a lot that it wasn't in the excavation game, its still a matter of managing expenses and assets and return on investment. Its a lot of $, no matter who you are, to step into another 200k of debt, a lot worse just starting out.

If you want to try it, buy the site excavator, pay to have it hauled, and buy the dirt/gravel, delivered. If it doesn't work out, sell the excavator and go back to work for someone. If you can't afford to buy the first excavator, of the list of equipment you want, you don't have enough $.

As far as the business owning and satisfaction thing. I think if you enjoy working, and what you do (whether that be dirt work, banking, plumbing, or greeting people at walmart) owning a business can be a good thing. If you're unhappy now, working for someone else, I generally think you won't be any happier working for yourself. You'll be just as unhappy, only with a lot more stress and pressures.

Double those pressures if you and your wife are both quitting jobs and doing this "together". If she works now, don't let her quit until a year later, you'll need the income.

If you think owning the business is the way to riches, you're probably doing it for the wrong reasons. I've actually never made as much money working for myself, as I have working for other people. That's the paycheck money, at the end of the year money, not counting what I've put back into the company. But you can't go out and spend money that you've invested in the business, on a trip to hawaii.

I can say that I enjoy what I do, but if I lost it all tomorrow, or sold it all, I would be just as happy to go hop in a seat of a crane for someone else.

Very well said. Sometimes people start a good business and then for various reasons it doesn't work out. The problem is some people who have been self employed get too much of an ego or something(feel sorry for themselves or were wronged, etc.) and feel too proud or it is below them to work for someone else. They either want a management position or figure they should be getting paid more. Not a lot different than kids getting out of high school and figuring they should be getting $30/hr. right off the bat. When my dad got screwed by his former partner, all the customers knew my dad was the core of the business. The business had the market share by a big margin. It took a while (10-12 years?) but after a couple difficult years my dad went to work for the biggest competitor ( he stared his career with them). He increased sales 110% in the first year. It forced his former partner to sell the business and in a few years the business closed. My dad had the expertise but was more than happy to work for someone else and share his knowledge.
 
Joined
Feb 24, 2018
Messages
19
Location
nova scotia
Some of the guys mentioned it, but I'm curious why you need a excavator for a pit that you don't own. If you need a excavator on each end, a truck in the middle, and its just you, I don't see that working. By me the quarries all load you.

If you're borrowing 200k, you better have 100k of your own money/ assets/ equity to operate on. If you don't have that kind of money on your own, you're probably borrowing too much. Yes, you have to spend money to make $, but you have to be realistic also. If you only have 20,000, you don't have any business borrowing that kind of money. Sure, there's all kinds of people that do, but they really shouldn't. They're the ones that when times get tough, end up having to take a bankruptcy and start all over. Not that a bankruptcy is the end of the world either, its just something I'd rather not go through.

You mentioned your "profits" at the end of the year, and how that depends on breakdowns. The equipment is going to breakdown, and when you least want it too. And they can all break down at the same time. Really. The site excavator can launch a rod through the side of the block, and you're going to have to spend 15k, right then, in order to keep working. And it could eat the hydraulic pumps the very next day. The same goes for the dump truck. And it probably won't happen at the end of the year when you have the profits from the year to work with, it could happen on day 2. Have you got 30k to fix it with? Want to go to the banker on day 2 and ask for the money?

They will break when you can least afford to fix them, and /or when you need them the most to finish up a job. Then not only are you not billing money, but you're spending $. That goes back to the having a pretty big nest egg.

Just another what if: You finish your first job, the second job you have all lined up, and now there's permit issues. Every week they tell you: "next monday, we're starting". They may be the big contractor that you really want to get in with and do their work, so you want to be there when they say, but that could go on for a month. Two months. That job may never happen. But even if you only miss the first month, that's a hole you have to climb back out of, and they aren't going to pay you for. I bring this up, because I've had it happen. Multiple times. I even bought a crane for a job that was supposed to be three years ago, and hasn't happened yet, but is "still in the works". That I had a "start date" for. Now I've gone and done a lot of other work with that equipment, but if it was the only job I had lined up, that could get ugly in a hurry.

I don't know how familiar you are with the insurance requirements, or plates, registration, taxes,business permits, etc. But just be aware that it all costs way more than you think it will.

Your dad has 30 years in running his own business, and isn't steering you wrong, listen to him. It doesn't matter a lot that it wasn't in the excavation game, its still a matter of managing expenses and assets and return on investment. Its a lot of $, no matter who you are, to step into another 200k of debt, a lot worse just starting out.

If you want to try it, buy the site excavator, pay to have it hauled, and buy the dirt/gravel, delivered. If it doesn't work out, sell the excavator and go back to work for someone. If you can't afford to buy the first excavator, of the list of equipment you want, you don't have enough $.

As far as the business owning and satisfaction thing. I think if you enjoy working, and what you do (whether that be dirt work, banking, plumbing, or greeting people at walmart) owning a business can be a good thing. If you're unhappy now, working for someone else, I generally think you won't be any happier working for yourself. You'll be just as unhappy, only with a lot more stress and pressures.

Double those pressures if you and your wife are both quitting jobs and doing this "together". If she works now, don't let her quit until a year later, you'll need the income.

If you think owning the business is the way to riches, you're probably doing it for the wrong reasons. I've actually never made as much money working for myself, as I have working for other people. That's the paycheck money, at the end of the year money, not counting what I've put back into the company. But you can't go out and spend money that you've invested in the business, on a trip to hawaii.

I can say that I enjoy what I do, but if I lost it all tomorrow, or sold it all, I would be just as happy to go hop in a seat of a crane for someone else.
The quarry supply’s a loader for their crushed stuff but the fill and gravel is all privately owned . Everyone here has a pit loader or excavator and the truck drivers load them selfs .
I certainly don’t have 100 k saved ( who does in the low middle class) but i do have assists I can borrow against but that doesn’t get me too far .
As far as insurance we have a quote from my insurance company for 2 mill coverage , every piece insured and life insurance on the loan . Went to the dmv and got exact numbers on registering trucks and the permits I need so I have surely done my homework on that end of it meaning our numbers are on point except for the two major variables break downs and how much work comes in.

This isn’t a angle for me to get rich no but you have to understand that the 3 competeters in my area are all small family owned so ... having said that those are a direct dead end job , I’m at where I will be for the rest of my working life ( I’m 34) . A young man with some ambition and drive doesn’t like dead end jobs . I’m not unhappy at my job they are actually good people but excavation is my career not just a job if you understand .
 

AzIron

Senior Member
Joined
Jun 14, 2016
Messages
1,541
Location
Az
no one is telling you not to start a business but the term be careful what you wish for comes to mind. dreams are awesome but it doesnt take much for those dreams to become a nightmare. owning a business is like having a pet monster now you have it now you have to feed it or it will eat you. mix some debt in on top of low cash reserve and it will make you eager and desperate. when your desperate to stay afloat your eager to take jobs you shouldn't touch and remember doing the job is only part of it keeping the outfit going is another and getting paid is a whole thing unto itself one bad job the size you want to start out at will break you nothing flat in your first and probably second year and like crane op said i hope your wife has that income cause you will need it.

i would say to float that much iron you better be grossing over 25000 a month and you need at least 60 days of full throttle operating money in the bank just to open your doors. even if you run your billing on net 30 it still will be like 45 days to get paid from the time you roll the cash out for the job expenses. so how you going to buy fuel let alone anything else you will need starting out. start small it will surprise you how you can grow healthy from that with minimal debt and if its anything like my outfit you may not end up not wanting to work for the customers you chased first cause you feel into better ones with a completely different niche

you have come to a good place to ask questions most everybody here likes there job so much they come here and talk about it after work. and almost all the advice given is from people who have been in your shoes and had dreams of there own, the experience and advice they offer cannot be bought.
 

DMiller

Senior Member
Joined
Feb 21, 2010
Messages
16,434
Location
Hermann, Missouri
Occupation
Cheap "old" Geezer
Had the delusion illusion for awhile myself. Saw trucking in and around my area as a tad bit high until priced equipment, maintenance(and I do most of my own) insurance, license, fees for bond for certain jobs, cannot perform government work as not registered correctly or able to short time line supply large volumes machines/workers as contractor but could sub contract which knocked rates in the head. Then considered small time pond building or light excavating, LOTS of foreseeable issues as to engineering, runoff control, time frames in and required out or done by. Working as a one man show did not allow much free time or spare convenience time as sick or injured where contracts can be called forfeit. Thought about general trucking, too many locally already having issues making loads, grain hauls same, then equipment and so on. I am still working for someone else.
 

crane operator

Senior Member
Joined
Mar 27, 2009
Messages
8,275
Location
sw missouri
I understand wanting to run your own business, but you may not be able to do it in your area, or maybe on the scale you want, or in the time frame you want.

I'm just throwing out things that I've had happen to me, and to people I know, and you have to be realistic about the debt load. Look at your competitors. You say they are all small family owned operations. If you are going to go compete with them, but their debt load is nothing like yours, they make more $ every job, and that means you can't really compete. You may be the best operator in the world, but that isn't going to be what will sink you, the debt will.

Use your age to your advantage. You have time, I understand wanting it all, but you have to live with what you can afford, and you really can't afford the debt, unless you have someone that is going to bail you out if you need $50,000 tomorrow. I've never had that other person. The banker is not going to be that person, and you don't want him to be. You may have family that could do it- but that's a whole different set of problems, and it doesn't mean much if its not your money. You have to be that "bailout" person yourself.

It may mean you get rid of any car you own newer than 15 years (for sure no car/truck payments), and a nice house that has a house payment, and live in a small house, and drive junkers for the next five years, and eat peanut butter sandwiches, and save every nickel. Then in 5 years from now you can roll the dice and lay it all on the line, throwing in the saved money, equity in your house, and cash in all your pension/ ira/ 401k money, and pray it works - (and if it doesn't you don't burn your bridges), and with the 5 years of savings you might make it. And you might not make it, and have to be able to live with that.

That's about my story.

I was older than you are now, and I had saved for more than 5 years. I bought out a retiring guy who hadn't even had insurance in his last year, and bought the shop facility and the one crane he had left. The numbers were close to yours, only I was buying a shop facility and less equipment (banker was happier, real estate doesn't drop in value with use quite like equipment). I still have some debt from the shop. And there have been a lot of times where it was touch and go, and I had saved the nest egg/bailout money that I'm talking about, on a low middle class income (and my wife didn't work after we had our first, who just went to college this fall).

My kids are all in high school/college now, and can remember only one family "vacation" that lasted more than a weekend. I don't think I've ever bought a car made in the same decade that I have owned it. We've got big holes in the vinyl floor of our kitchen, there's plywood showing through under my feet right now. Our appliances certainly don't match. I run some equipment made in the late 70's. Daily. And fix it ourselves.

I don't want to say any of this to brag, or want you to think I've got it all figured out. It could all end tomorrow if one of my guys dumps a crane and someone is hurt, or they run into someone at a stoplight. I've been blessed to have some good guys work for me, and had some great customers, who I'd like to think would want me to come work for them again if they needed me.

I just have been in your shoes, and had those numbers, and if you don't have $75,000 to get started with, you probably shouldn't borrow the $200,000. And $75,000 is what I would consider the minimum.

If you only have $20,000, don't do it. You could lose the 20,000, the banker will sell the equipment at auction if you miss for 3 months straight, and send you a bill for the difference plus lawyer fees. You'd recover, but it would take a while.

If you want to do it with the $20,000, buy a $20,000 excavator. Spend 10, borrow 10. Use the other 10,000 as operating capital. Get it hauled for you. Hire the trucking. Keep your wife working. If you can't make it with the $20,000 start up, you sure cant make it with $200,000.
 
Joined
Feb 24, 2018
Messages
19
Location
nova scotia
I understand wanting to run your own business, but you may not be able to do it in your area, or maybe on the scale you want, or in the time frame you want.

I'm just throwing out things that I've had happen to me, and to people I know, and you have to be realistic about the debt load. Look at your competitors. You say they are all small family owned operations. If you are going to go compete with them, but their debt load is nothing like yours, they make more $ every job, and that means you can't really compete. You may be the best operator in the world, but that isn't going to be what will sink you, the debt will.

Use your age to your advantage. You have time, I understand wanting it all, but you have to live with what you can afford, and you really can't afford the debt, unless you have someone that is going to bail you out if you need $50,000 tomorrow. I've never had that other person. The banker is not going to be that person, and you don't want him to be. You may have family that could do it- but that's a whole different set of problems, and it doesn't mean much if its not your money. You have to be that "bailout" person yourself.

It may mean you get rid of any car you own newer than 15 years (for sure no car/truck payments), and a nice house that has a house payment, and live in a small house, and drive junkers for the next five years, and eat peanut butter sandwiches, and save every nickel. Then in 5 years from now you can roll the dice and lay it all on the line, throwing in the saved money, equity in your house, and cash in all your pension/ ira/ 401k money, and pray it works - (and if it doesn't you don't burn your bridges), and with the 5 years of savings you might make it. And you might not make it, and have to be able to live with that.

That's about my story.

I was older than you are now, and I had saved for more than 5 years. I bought out a retiring guy who hadn't even had insurance in his last year, and bought the shop facility and the one crane he had left. The numbers were close to yours, only I was buying a shop facility and less equipment (banker was happier, real estate doesn't drop in value with use quite like equipment). I still have some debt from the shop. And there have been a lot of times where it was touch and go, and I had saved the nest egg/bailout money that I'm talking about, on a low middle class income (and my wife didn't work after we had our first, who just went to college this fall).

My kids are all in high school/college now, and can remember only one family "vacation" that lasted more than a weekend. I don't think I've ever bought a car made in the same decade that I have owned it. We've got big holes in the vinyl floor of our kitchen, there's plywood showing through under my feet right now. Our appliances certainly don't match. I run some equipment made in the late 70's. Daily. And fix it ourselves.

I don't want to say any of this to brag, or want you to think I've got it all figured out. It could all end tomorrow if one of my guys dumps a crane and someone is hurt, or they run into someone at a stoplight. I've been blessed to have some good guys work for me, and had some great customers, who I'd like to think would want me to come work for them again if they needed me.

I just have been in your shoes, and had those numbers, and if you don't have $75,000 to get started with, you probably shouldn't borrow the $200,000. And $75,000 is what I would consider the minimum.

If you only have $20,000, don't do it. You could lose the 20,000, the banker will sell the equipment at auction if you miss for 3 months straight, and send you a bill for the difference plus lawyer fees. You'd recover, but it would take a while.

If you want to do it with the $20,000, buy a $20,000 excavator. Spend 10, borrow 10. Use the other 10,000 as operating capital. Get it hauled for you. Hire the trucking. Keep your wife working. If you can't make it with the $20,000 start up, you sure cant make it with $200,000.
 

Vetech63

Senior Member
Joined
Aug 10, 2016
Messages
6,362
Location
Oklahoma
The thing that has hurt me over the years are the things you have no control over. I was making great money and had plenty of work in my11th year of self employment then BAM!........9/11/2001. Everything died almost immediately. Jobs got cancelled or delayed indefinitely. Speculation was that things would be back to normal within 6 months........I struggled for 5+ years after that, and things were never the same. I went from having perfect credit and debt control.........to losing my home, vehicles, and my credit destroyed. I recovered without having to bankrupt but it was a long and painful road. I changed the way I did my business from lessons learned and did very well again then The end of 2013 BAM! Oil takes a record tumble and I watch companies I have worked for years start going under and I'm trying to keep them from taking me with them. I again struggled for years but was better prepared this time. I avoided debt, made sure I had 1 years income saved, and diversified your customer base even more. To this day I refuse to borrow money and will never have another banker own me.

I guess the moral is......You can never be too prepared. Too many times things happen that you have no control over. You have done everything you are supposed to do.......and trust me, it's an awful feeling knowing there is nothing you can do, and you watch everything you ever worked for start to disappear before your eyes. I still have survived and am again busy.......still wondering when the next disaster may occur and hope I'm ready for it.
 

Birken Vogt

Charter Member
Joined
Nov 30, 2003
Messages
5,305
Location
Grass Valley, Ca
One more thought. When I started my business I was working for someone else in a good job. People knew my skill set and I had done a little on the side and were practically jumping up and down telling me to go into this business full time. That way I knew the market was open so I jumped in. There were no strong competitors and still aren't.

I would not want to try to wedge myself into a new venture with good competitors already established. If they are hostile enough they won't haul for you or whatever, they could easily put a squeeze on you by lowering their rates until you are gone, or something like that.
 
Joined
Feb 24, 2018
Messages
19
Location
nova scotia
I understand wanting to run your own business, but you may not be able to do it in your area, or maybe on the scale you want, or in the time frame you want.

I'm just throwing out things that I've had happen to me, and to people I know, and you have to be realistic about the debt load. Look at your competitors. You say they are all small family owned operations. If you are going to go compete with them, but their debt load is nothing like yours, they make more $ every job, and that means you can't really compete. You may be the best operator in the world, but that isn't going to be what will sink you, the debt will.

Use your age to your advantage. You have time, I understand wanting it all, but you have to live with what you can afford, and you really can't afford the debt, unless you have someone that is going to bail you out if you need $50,000 tomorrow. I've never had that other person. The banker is not going to be that person, and you don't want him to be. You may have family that could do it- but that's a whole different set of problems, and it doesn't mean much if its not your money. You have to be that "bailout" person yourself.

It may mean you get rid of any car you own newer than 15 years (for sure no car/truck payments), and a nice house that has a house payment, and live in a small house, and drive junkers for the next five years, and eat peanut butter sandwiches, and save every nickel. Then in 5 years from now you can roll the dice and lay it all on the line, throwing in the saved money, equity in your house, and cash in all your pension/ ira/ 401k money, and pray it works - (and if it doesn't you don't burn your bridges), and with the 5 years of savings you might make it. And you might not make it, and have to be able to live with that.

That's about my story.

I was older than you are now, and I had saved for more than 5 years. I bought out a retiring guy who hadn't even had insurance in his last year, and bought the shop facility and the one crane he had left. The numbers were close to yours, only I was buying a shop facility and less equipment (banker was happier, real estate doesn't drop in value with use quite like equipment). I still have some debt from the shop. And there have been a lot of times where it was touch and go, and I had saved the nest egg/bailout money that I'm talking about, on a low middle class income (and my wife didn't work after we had our first, who just went to college this fall).

My kids are all in high school/college now, and can remember only one family "vacation" that lasted more than a weekend. I don't think I've ever bought a car made in the same decade that I have owned it. We've got big holes in the vinyl floor of our kitchen, there's plywood showing through under my feet right now. Our appliances certainly don't match. I run some equipment made in the late 70's. Daily. And fix it ourselves.

I don't want to say any of this to brag, or want you to think I've got it all figured out. It could all end tomorrow if one of my guys dumps a crane and someone is hurt, or they run into someone at a stoplight. I've been blessed to have some good guys work for me, and had some great customers, who I'd like to think would want me to come work for them again if they needed me.

I just have been in your shoes, and had those numbers, and if you don't have $75,000 to get started with, you probably shouldn't borrow the $200,000. And $75,000 is what I would consider the minimum.

If you only have $20,000, don't do it. You could lose the 20,000, the banker will sell the equipment at auction if you miss for 3 months straight, and send you a bill for the difference plus lawyer fees. You'd recover, but it would take a while.

If you want to do it with the $20,000, buy a $20,000 excavator. Spend 10, borrow 10. Use the other 10,000 as operating capital. Get it hauled for you. Hire the trucking. Keep your wife working. If you can't make it with the $20,000 start up, you sure cant make it with $200,000.
You know .... oddly enough you sound similar to myself in some ways . So you did make it going to the bank but you had some cash flow of your own ... I will surly consider that as we have been doing a cash flow projection tonight and it’s easy to see what almost everyone is saying .

Starting small (a mini ) in my area is tricky cause we don’t have infrastructure going up like others ( subdivisions and such you could do well just digging electrical trenches for example) im quite rural and the rocks here are retarded so you become out matched easily ( my current boss has a 6 ton mini and I run it a lot) .

Renting equipment I feel the rental company makes the dividends ( as they’re in business to make money no different than anyone else and I’m sure they’ve done their homework to know what the market can stand for a rental rate) and you're left with a potential customer hopefully .

I’m 34 with a wife and 3 year old , we out right own our home , basically zero personal debt but her car and my truck . My point to that is I almost always say if we can’t outright buy it we don’t need it right now BUT with business and heavy equipment your talking much higher stakes and figures , it would be very very difficult to save 75,000 dollars .
 

Tarhe Driver

Well-Known Member
Joined
Nov 16, 2015
Messages
241
Location
Savannah, GA
Occupation
Comm. Real Est Appraiser-Retired cargo/helo pilot
Trucks. Easy to own. Many owner-operators competing with each other for work (and, in the process, "buying" their jobs)). Almost none of them set aside money for equipment replacement for when the truck wears out and a newer truck is needed. Ergo, it's usually cheaper to hire trucking than to operate your own. And in thos steady, future economy in a smallish town (which has never occurred in my 70+ years), is there in your budget dollars to set aside for the reserves for replacement oh your equipment when it needs replacing, which the aforementioned truck owner-operators so seldom do? Before you act, I strongly encourage you to sit down with an accountant who is well--versed in your industry. God speed and good luck.
 

catman13

Senior Member
Joined
Aug 22, 2011
Messages
435
Location
oregon usa
Occupation
refrigeration engineer/excavation contractor
this is all great advice, I don't want sound negative but some things to think about.
1) my dads neighbor was logging and his foot slipped off of a wet track hit his blade on the way down and passed away 3 days latter from blood clot.
or you get permanently disabled.
dumps the whole mess on your wife and child.
2) when she gets tired of breaking even and leaves.
3) I bought a d5h xl did a few jobs and in the middle of a job lost the transmission 22,000.00 dollars latter it was fixed , the only thing that saved it I was working fulltime , and I could take small loan because I had a full time job.
 
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