How do I become an owner operator?

FnS · May 4, 2018

Hi guys! So I got a bunch of jobs/job offers and I need my own blade! I have a lot of experience running a finish blade and a bunch of contractors want me specifically for $115hr. So what do I do???
I need to start by renting or leasing at least a 140H size blade
How do I go about doing this? What do I need? Credit?
Do I need insurance?
Please help!!

Thanks in advance!

cuttin edge · May 4, 2018

Depends on the regulations where you live. If you're being hired on by contractors with their own equipment, they should be able to tell you what is needed. A grader is an expensive toy, is that gonna be enough money to make payments, bills, and fuel plus put a few dollars in your pocket after uncle Trump takes his share. Not sure what it's like there, but here fuel is more expensive than gas.

Mother Deuce · May 5, 2018

When I am contemplating leaping into the business abyss I always work it out backwards. Take your projected "known" gross income and start removing expense from it to see what is left for you after you get done caring for your blade. Do you use a 12 month year in Texas to calculate business income? In the great pacific northwest, I used a 10 month working projection because it rains a little ( build an ark volumes) and I figured I would lose 40 working days a year to weather and I would have to "carry" my expenses for 2 months. Know your working environment and any hidden expense it may harbor. You will need insurance business and auto if you are going to move it on the road. A reputable insurance guy (ask around) can help you as can people right here on the forum. Finding the gear is the easy part there are vendors lined up in platoon file to help you out with your need. Select one or find out who has the parts support for the machine you end up with in your area. If you don't spin wrenches yourself you will need to determine who is going fix it when it needed. Downtime is a curse for owner operators. You have the expense of the repair plus income producing hours lost. As an owner operator you have limited options to get rolling again (short term rental) until your machine is up. Have a lowboy? If not, how much does the local heavy haul person charge to move you. Going to drive it to the job? Accelerate your tire costs a little. Be prepared for the unexpected expense. Lease, fuel, tires, pm maintenance, and your wages costs per hour. You may find this interesting https://www.equipmentworld.com/oo-checkpoint-owning-and-operating-costs-2/ If you concur with this table and it's projected over all expense number at 92 dollars than at 115 per hour you will net 23 dollars an hour after expense barring unforeseen issues or expense. Can you beat this table... absolutely. It depends how much wrench work you can do yourself, the transport deal you can make, the financing deal you make, hours you can produce income annually and a whole plethora of other variables. Best of success in your upcoming endeavors.

FnS · May 5, 2018

Mother Deuce said:
When I am contemplating leaping into the business abyss I always work it out backwards. Take your projected "known" gross income and start removing expense from it to see what is left for you after you get done caring for your blade. Do you use a 12 month year in Texas to calculate business income? In the great pacific northwest, I used a 10 month working projection because it rains a little ( build an ark volumes) and I figured I would lose 40 working days a year to weather and I would have to "carry" my expenses for 2 months. Know your working environment and any hidden expense it may harbor. You will need insurance business and auto if you are going to move it on the road. A reputable insurance guy (ask around) can help you as can people right here on the forum. Finding the gear is the easy part there are vendors lined up in platoon file to help you out with your need. Select one or find out who has the parts support for the machine you end up with in your area. If you don't spin wrenches yourself you will need to determine who is going fix it when it needed. Downtime is a curse for owner operators. You have the expense of the repair plus income producing hours lost. As an owner operator you have limited options to get rolling again (short term rental) until your machine is up. Have a lowboy? If not, how much does the local heavy haul person charge to move you. Going to drive it to the job? Accelerate your tire costs a little. Be prepared for the unexpected expense. Lease, fuel, tires, pm maintenance, and your wages costs per hour. You may find this interesting https://www.equipmentworld.com/oo-checkpoint-owning-and-operating-costs-2/ If you concur with this table and it's projected over all expense number at 92 dollars than at 115 per hour you will net 23 dollars an hour after expense barring unforeseen issues or expense. Can you beat this table... absolutely. It depends how much wrench work you can do yourself, the transport deal you can make, the financing deal you make, hours you can produce income annually and a whole plethora of other variables. Best of success in your upcoming endeavors.

Wow! Very very well worded Sir! Thank you so much for the info!

td25c · May 5, 2018

Well said Mother Deuce !

We would start out buying an older unit that's already depreciated out . Do all my own wrenching so that end was never an issue .

On a new venture I would never spend any more cash then I could afford to loose . In other words had it factored to where if it all went south we could walk away from it & earn on another ball field .

Never did put all the " egg's " in one basket so to speak .....

Spotted a 720 Champion
https://www.machinerytrader.com/lis...pment/for-sale/23347183/1995-champion-720a-iv

EatsCookies · May 8, 2018

Find your local Small Business Development Center and ask them for help.
https://www.sba.gov/tools/local-assistance/sbdc

DIYDAVE · May 8, 2018

This question Reminds me of a story I once heard. A guy wants to marry a polish girl, he is really in love with her. But she won't marry anyone but a real Polish man. He goes to his doctor, one day for his annual physical, and tells him the whole sad story. Dr. ushers him into his office, and says wait here, and pulls a book from the shelf, and starts reading. Son, says the Dr., you are in luck, I can give you an origin change operation, its rather expensive, and somewhat risky, but it can be done. Overjoyed, the man asks the price, and what the operation entails, etc. Long and short of it is, he says go for it, lets get'er done!

Well He checks into the horespittle, and has the operation, and wakes up, with the Dr standing over him, sayin, Son, theres been a slight mistake, instead of removin 95% of his brain, they took 99%. Guy says to the Dr, " 's OK, brotha"...

Anyway, the point is when you wake up, from sleeping on the idea, sleep on it some more, do dillagent research, and Good luck!

Silveroddo · May 9, 2018

There's a lot of good advice given so far, biggest thing is to ask yourself what kind of commitments/hours your looking at and how realistic the offers are. Can you service everyone or are 3 guys going to want you on the same job at the same time? Most of the time if a contractor wants to hire you at $115 an hour its because that's cheaper than they can provide the service themselves and they're going to want to hire you for x hours on the day they want you so they don't have to own the machine and have it sit idle and have another guy on the payroll to keep busy (See if they are willing to pay a daily rate instead of strictly hourly) The working backwards thing is a pretty good rule of thumb. A lot of my contracts are government and budgeted for x hours per year. Take that times your rate and start deducting. Don't forget health care, retirement, and all of the other things you'll be paying for our of your own pocket.
I'm not saying it can't be done, but there are a ton of variables and from my experience (though your talking about a more specialized type of work than I do) a grader can be one leg in a three legged stool when it comes to having a business. You'll probably need at least 1 or 2 additional revenue streams to have a sustainable business.

stars&bars44 · May 15, 2018

To start renting equipment your gonna need credit. Most big rental outfits won't help you unless you've been in business for 3-5 years and have industry references. And as for insurance if your working for a contractor, and he's reputable he will have insurance but if you sub to him you will have to have your own policy. A big general contractor will undoubtedly want you to have your own insurance. As for equipment, time is money, you don't want to come up with excuses as to why your breakdown is holding up the job. Good reliable stuff means a lot, and it costs a lot to maintain. It's a lot more than just showing up, unlocking the door and going to work. But, it can be done! Put in the effort and you can be successful!!! Good luck with it!

CM1995 · May 16, 2018

I would take a hard look at $115 per hour - sounds extremely cheap for a blade. Of course equipment rates vary widely across the country and the world but that seems cheap for anywhere in the US.

How much per hr are you making now? If you aren't doubling what you're making now it's not worth considering IMO.

FnS · May 20, 2018

CM1995 said:
I would take a hard look at $115 per hour - sounds extremely cheap for a blade. Of course equipment rates vary widely across the country and the world but that seems cheap for anywhere in the US.

How much per hr are you making now? If you aren't doubling what you're making now it's not worth considering IMO.

I'm making $26hr

td25c · May 20, 2018

FnS said:
I'm making $26hr

With health insurance ?

CM1995 · May 20, 2018

FnS said:
I'm making $26hr

You would need to net, not gross, $52 an hour operating your own blade. That would leave $63 an hour to pay for the machine note, fuel, maintenance, repairs, insurance, business licensing and various miscellaneous expenses that seem to find a way to take a bite out of the bottom line.

The $52 an hour you would net would then be subject to income taxes which depending on your accountant takes another bite, 20-40% depending on Fed, state and local rates. Then your health insurance premium would come out of that as well.

I'm not trying to discourage you, I have always been in business for myself, rather I want you to be aware of what it all involves. Owning a small business is a roller coaster ride of highs and lows, successes and failures. In the end you need to win more than you loose - that's called making a profit.

td25c · May 20, 2018

Age play's a big factor in this as well . Young feller full of pizz & vinegar wants to step out quick & make some big moves in life . That's what we call " confidence of youth " . We all had it at one time or another . It's a good thing to have when ya get banged & bruised up a bit on a job . Young feller will heal up quick & learn from the mistake .

Like the old saying " Young Bull has more muscle , Old Bull has more experience ".

I don't heal up as fast as I used to so pretty careful about new ventures .

CM1995 · May 20, 2018

td25c said:
Like the old saying " Young Bull has more muscle , Old Bull has more experience ".

I don't heal up as fast as I used to so pretty careful about new ventures .

I hear ya' TD. I've been through the ringer, made a ton of money and lost a ton of money in this crazy business.

At this stage in my life I don't need the experience, all I am concerned with is the scope of work, the amount of risk and how much it pays.

td25c · May 20, 2018

Like the Old Man would say ..... Your Cruising for a Bruising on that job estimate . LOL !

td25c · May 20, 2018

No doubt CM ! The less drama the better for us .

That stuff is for the young fellers . Ya get to a point in life where you go with what works from past experience .

I aint discouraging anyone . You young fellers step out & go after it full throttle !

After 25 years make sure to come & visit us in the nursing home & bring a cold case of barley soda while we listen to your problems .

Hey sonny .... My bed pan is full , and hand me another barley soda .LOL !

FnS · May 21, 2018

td25c said:
With health insurance ?

Yesir

FnS · May 21, 2018

FnS said:
Yesir

In Alaska it's $43.60 hr with pension and health

Welder Dave · May 24, 2018

What are these potential customers paying other owner/operators? It almost sounds like they are trying to dictate a lower rate to pay you but you need to do some research and see what the going rate is for a good owner/operator. If you undercut the going rate too much you'll get a bad reputation from your peers. I've seen it with skid steer operators clearing snow. Some guy on the farm has a skid steer and figures he'll go into the snow removal business and cuts the going rate by $10 or $15/hr and then doesn't do as good of a job. I would think a grader would be worth at least $150/hr.

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