2 New Guys From Arkansas 2 Dozers 1 Backhoe Going Independent.

Hello everyone. I am going into business with my older brother. We have 2 Dozers a 450 and A 450c And one backhoe. We have decided to go ahead. And go into business for ourselfs. My older brother is a genious in his own right. Meaning he can not only operate the heavy machinery but we will not have to pay any extra cost for maintenance as we do that to ourselves. Or should I say he does that too. I've mainly been brought in to learn to drive the equipment and to do the behind the scenes work. We live in northwest Arkansas and I am currently getting ready to place an ad and make cards with the services that we offer. Any and all advice would be appreciated thank you. I'm thinking that we will offer a 3 hour minimum and charge from 80 to $140 an hour. Which will include of course operator and machine. I will be posting what all services we offer and more detail here soon and I would love to hear back from anyone the has been in that position before. Thank. can't wait to become contributing members of this community.

Welcome to HEF J&D's! There are plenty of company owners here that I know will give you guys some great advice.

I don't think you will survive long if you show up to a job for a $240 minimum. Heck, and electrician or plumber gets a $150 service call to show up to your house and they come in a van.

80-140.?? hold on to yer hat fellas..
"I" charge THAT & I don't have any equipment..Lol
THAT doesn't even cover the delivery cost.. let alone an operator..{Fuel, insurance, lunch}

Check rates by machine size in your area, you will be amazed at how HIGH they really are as the Hours charges start when the trucks leave the Home lot, Pay by hours on machine of use at site then pay from work site BACK to the yard is normal. You cut yourselves short to gain work and have a major failure in a machine or a legal issue on a job you may Not recover. You I presume already bought insurance for this, or at least priced it? Basically a Mechanics Liability as to damage to work site, damage to other facilities. As well there are grade contractor requirements for mud/spoil controls, site access limit controls and other regulations besides just having license to perform the work.

Not trying to scare you off this but if have not dotted all the I's and Crossed al the T's this could be a short lived high expense bad game plan.

Welcome to the forum J&Ds!

The first thing that you need to find out is what other contractors are charging for the same size and age dozers in your area. You don't want to be higher than your competition nor leave something on the table.

Next you need to determine what your operating costs are per hour/CY/SY or however you will be measuring what you do.

Here are several items to consider in calculating your cost - I will use hourly as it's the cleanest to determine:

Base machine cost - you can determine this in many ways. The way I prefer to is take the purchase price and run it through a loan calculator with a realistic interest rate. Pick your term, I prefer 4 year payoff on a piece of iron, and divide the monthly payment by 20 (4 weeks per month, 5 day work week). This will give you a daily rate or divide by 8 for an hourly rate. Use this daily or hourly rate whether the machine is paid for or not. Once the machine is paid for it starts earning it's replacement cost.

Fuel - Calculate how much fuel you will burn in an hour pushing as hard as your dozer will push. Estimate on the high side to cover fluctuations in fuel cost

Mobilization - What will it cost to get your machine(s) from the yard to the job and back? Are you hauling it yourself or paying someone else? Either way there is cost involved that you need to get paid for.

Maintenance - This is sort of a "wildcard" item as cost depends on many factors such as age of the machine, operating conditions, maintenance schedule, etc. Component failure and replacement is difficult to estimate but having something is better than nothing.

Insurance - You want to have insurance on your machines in case they stolen or catch fire. You will NEED General Liability to protect your self while working customers property and around the general public. Whether or not you need workers comp. depends on your customers requirements and local regulations.

Overhead - Figure how much it costs you to business before you crank the tractor. Local, State and Federal taxes, postage, accounting, communication, advertising, etc. This can be estimated yearly and broke down monthly to daily like your equipment cost.

Your salary - Figure what you want to make while running you machine. If you run or it pay someone else there has to be an operator in the seat. Do not make the mistake of pricing your services just to make lunch, gas and wages. There are a lot of risks owning your own business and you should be rewarded for taking and tackling them.

Profit - Last but not least and the reason to be in business in the first place. A 15-25% profit margin is humble and should be attainable although I don't know your market conditions. Profit should be left over after all the above expenses have been paid.

Best of look to ya'll, if you have any more questions ask away.

CM1995 said:

Your salary - Figure what you want to make while running you machine. If you run or it pay someone else there has to be an operator in the seat. Do not make the mistake of pricing your services just to make lunch, gas and wages. There are a lot of risks owning your own business and you should be rewarded for taking and tackling them.

Profit - Last but not least and the reason to be in business in the first place. A 15-25% profit margin is humble and should be attainable although I don't know your market conditions. Profit should be left over after all the above expenses have been paid.

Best of look to ya'll, if you have any more questions ask away.

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I had an auto repair business for 10 years. I made a good salary as a service writer in my own business, but the business made no profit. That is an ok situation, providing yourself a good paying job, IN THE SHORT TERM. It is not a good business plan for the long run though. A business needs to make a profit after the employees are paid (and you are an employee of the business).

Any more I generally size up the job with the given customer at hand .

Pull out the slide rule and it gives a pretty good idea what $ I can shake them down for . LOL

My people don't care about yardage , square footage , or time .

They want to know …… " What's this gonna cost up front ?" .

Don't blame them one bit as I am the same way .

td25c said:

Any more I generally size up the job with the given customer at hand .

Pull out the slide rule and it gives a pretty good idea what $ I can shake them down for . LOL

My people don't care about yardage , square footage , or time .

They want to know …… " What's this gonna cost up front ?" .

Don't blame them one bit as I am the same way .

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I generally just go to Zillow, see what the property is worth, monthly payment, etc, and take a wild stab at some multiple, of the mortgage payment...

Before you can determine what your going to charge, you have to first ask yourself why anyone would hire you since there is already those around you in business already, you need to figure out what your competitions weakness's are and focus on those, if its poor quality work, do good quality work, if its they don't show up when they say, do the opposite and show up when you say you will, if its low price work your after, your going to go broke fast. Just because you advertise doesn't mean you'll have business and paying customers, all those that don't pay will be the first at your door, you really need to say no to those on day one, the last thing you need is to do work for dead beats that don't pay and take up your time, if you do work for them and take them to court to get paid, it will scare off good customers.

I'd recommend you keep a day job and work your way in slowly and figure out what is needed in your area and how your competition functions before relying fully on doing this type of work full time.

For what its worth, I quit advertising years ago, all I got was people who wanted the cheapest bid possible, then complain when it didn't work or wouldn't pay the bill, word of mouth was the best for me and has been for over 15 years now, can't keep up, can't get it all done and always have a list to work off of, which brings about the next problem, you'll lose work due to not getting it all done, with rainy days, breakdowns, problems at the jobsite beyond your control for delays and the list is endless, people talk and even if its not your fault, you'll be blamed just the same, so pace yourself and don't take on too much at any one time, all anyone cares about is their project and it getting done, they never care your busy with someone else's job and theirs has to wait, so saying no not at this time is upfront and honest, people will accept that for an answer, it will also let them know they need to contact you ahead of time and know if they want you to do their work, they might have to wait a while till you get to them, this works for some, not for others.

We charge a moving fee and then hourly off the hour meter, keeps things really simple, especially when we're working on a dozen sites at one time, with weather delays and etc, we just drive to another site and keep working with more sets of equipment is how we found works best for us, otherwise your constantly loading and unloading and moving and getting nothing done anywhere it seems.

For what its worth, an old timer once told me, if your good at what you do, you can basically charge whatever you want and people will pay it verses hiring someone else who does poor quality work, over the years I've found that to be very true, but as they say first you have to prove yourself and get a name established for yourself and a reputation. Best of luck on your business startup, the first few years can be really rough, so hang in there.

Thats just what we hopeing for. Thank you for all and any info.

So should i charge more a hour or have a longer minimum or both in your opinion.

Ok thank you your input. How much should i be charging in your opinion? Thanks for all your help.

In the beginning you wil need to work harder, faster, maybe cheaper and especially better than your local competition. You need the work of mouth good reports. Try for repeat jobs. You will need to take the crappy jobs that others price real high because they don't really want them because, when you are really good you get to pick your jobs. Strive to get there.

Having said that you really need to consider a lot of the advice already given. Consider just this - when you are home you are NOT making anything. Zero dollars. Likely spending a bunch for parts. You need a high hourly rate to cover those dead hours. Some weeks you will work 70 hours others only 10. $140 an hour sounds like a lot of money but once you pay all the bills and yourselves a decent salary it gets chewed up fast. When you are on a job and things break you need to fix it fast and get back to work to meet deadlines. That means buying parts quickly from the expensive dealer, paying overnight air if needed and even getting the dealer to install it because they have all the tools to do so in the field quickly. All of a sudden your hourly rate starts looking pretty low. Ask me how I know.

As for rate, my feeling is you are quite low. Consider an onsite/delivery charge. You need to get paid for loading/unloading/hauling time. You can or can't break it out in the price but be sure to cover the time and expense.

We are so busy with our own work now I rarely go out. Most of what we go out for is custom digging with our tree spades. I get $150 just to load the machine and supplies. After that it is $3.50 a mile round trip. I price the digging so we get $300 an hour for an ASV ctl, 2 spades, supplies as needed, with 2 men. I figured $120 an hour for supplies, $40 per hour per man and that leaves $100 an hour for fuel,oil,grease and some profit to pay the bookkeeper, insurance etc. Not a lot left for just in case stuff.

Remember to pay yourself. Well. With self employment taxes it really gets expensive on April 15th.

#1. I quit hourly work almost 20 years ago. 99% of my work is bid work. I got tired of customers who "think a job should take 6 hours" when in reality it should take 16 hours to do the work properly.

#2. I am known as the highest priced dozer company in my area. Its something I take pride in. I started off learning from some of the best golf course shapers 30 years ago and took that knowledge and expertise to start my own company 20 years ago. A professional job done right the first time goes a long way for being able to charge a premium price. There are always customers that want the job done at the cheapest price, I simply tell them I am not your guy. On the other hand, my reputation that I have built over the years have produced many more customers who are willing to pay a premium price for professionalism, honesty, integrity and most of all referral from previous customers.

#3. I remember what a guy told me when I asked him about starting my own dirt contracting company. He said " son, just remember this. I would rather sit at home than go to work without making a profit. Your machines will not be worth anything if you are not making money while wearing out the dozers. If I sit at home and have to sale them , at least I can get my money back on the investment"

#4 . You have to advertise, but you have to advertise to your target audience. Don't waste dollars where the dollar will not pay off. Back when I started, I would drop off my business card EVERYWHER I went, stores, Walmart boards at entrances, restraunts , tape them to gas station pumps when I would fill up ect. If I was there, my card would be left.

#5. When I started my business I lived off the crumbs from the other contractors some had been in business for 50 years. One thing I learned about the crumbs..………...was I could charge more than normal because people wanted the work done but the big guys who were so busy couldn't get to them for weeks or months. So part of my business plan was to have a 1 day minimum charge ( back then I owned a JD 450G that I charged 600 a day for). I could knock out two or three small (crumbs) jobs in a day therefore I could make $1200-$1800 per day for a 450G. . At the same time building my customer base for professional work for years to come.

I agree with so many of the comments already made on this thread especially the one about a plumber or electrician showing up with a tool box and a van...………………….……..Don't be afraid to charge what you have to charge to make a profit. Don't base your price off of other dirt contractors who will be out of business in the next year or two just because they don't know how to charge.

good luck and God bless

td25c said:

Any more I generally size up the job with the given customer at hand .

Pull out the slide rule and it gives a pretty good idea what $ I can shake them down for . LOL

My people don't care about yardage , square footage , or time .

They want to know …… " What's this gonna cost up front ?" .

Don't blame them one bit as I am the same way .

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I'm a hybrid version in the commercial world of how you do it TD.

I'm 80% hard bid and 20% - give an estimate of what it's going to cost with unit prices and the final cost will be paid on how many units it takes.

On the commercial hard bid jobs there is always unit prices for change order items - CY of import/export, CY of unsuitable soils and rock excavation both trench and mass. This is where the hybrid kicks in - national chain stores take the low bid up front however rarely pay attention to the CO unit prices. AKA the agreed upon shake down.

In addition to that, there are the notes on the bid drawings like - " unable to determine where this pipe goes - contractor to verify and notify engineer of conflict". On this particular job I did a quick site visit and determined the CMP pipe in question went right under the proposed building pad which resulted in a $100K change order. That project is buried somewhere in the middle of my "Projects" thread. When they are lazy doing their due diligence on a site, it costs them money.

I like the way you think CM

Great points !

Something else I would add is keep in mind the contractor / customer marriage .

This relationship is key on any size deal in the long term .

The " Deal " needs to benefit both parties . Contractor makes a little coin from the job that helped the customer grow or improve there home site or business .

Best part is after years of working together & building trust customer will ask you to do the job & send them a bill for it .

Like the old saying " Take care of the customer and they will take care of you "

All that aside there will be some jobs a feller needs to "pass" on .

Customer wanting something done that's not realistic for the cost .

Like the President would say …. " Sometimes you have to walk " .