I recently started my own company and need some guidance please!!!

I have a little back story just so you understand where I'm coming from, so please bare with me.
My name is Josh. I'm 27, and I've been an equipment operator for roughly five years, with another two as a laborer. I went to prison when I was 20 and worked hard in there for two years before I finally got to run a grade tractor to grade pads for new greenhouses at my prison. At that point I knew I wanted to operate more. I got out at 23 and found a job doing underground electrical for the main utility contractor in the city my parents lived in, learned as much as I could there for 2 years, then went to a company doing heavy civil. I met my former business partner there and I worked my way up to a crew lead before they did big layoffs. After that, I was a foreman/project manager for another utility company doing water lines, worked for some other big name civil companies, and realized I hated the the politics. I kinda started exploring options and realized I had a really solid network going so I hit up my old boss and we went into business together. I was in charge of landing us work, marketing, and then running the crews in the field, and he was supposed to handle bids, logistics, and any other similar duties.
Long story short, he ended up doing nothing to help me get this started, dragged ass any time he had to actually work, then underbid a huge job by A LOT. I went to pay our guys on a Monday and found out he had emptied the bank account with my whole life savings and the clients materials money in it, and never came back. I managed to remedy the situation and finished the clients project, but then they failed to pay me the last 50%. I,m in court getting that money and the money my partner stole now, but I need to learn how to bid jobs correctly and how to properly price out the equipment I own AND the equipment I rent on an hourly rate. I have a very limited knowledge base when it comes to this. I did research and found a site in Canada giving suggested prices for equipment with operators for 2019 and figured out the exchange rate from Canadian dollars to US dollars, but I'm really not sure if that's even close. Some of the other posts I've seen about this have been helpful, but I'm still unsure. I live in Colorado, and I'm not sure if that changes anything or not.

ANYWAYS....

For my CAT 299D3 tracked skid loader, I'm billing $100 an hour.
For my CAT 305.5E2 mini-excavator, I'm billing $80 an hour.
Those prices include operator and fuel, for now. Are they correct?

What should I charge for hauling my equipment to the jobsites? How do I figure out what to charge for rental equipment on the bigger jobs? What should I be charging for laborers and other operators when I need them? I'm at a loss here. I had four guys before for the huge job my partner screwed me on and I know what I paid them hourly, but I don't know what my ex partner was billing because he took all his information with him. I'm in a bad spot here and I'm currently working small residential jobs for homeowners. I am supposed to start doing all the excavation work for a plumbing company in Januwary, and I have a few other companies interested in using me for small piecework as well, but I need to know good prices to charge them or I'm just going to f*** myself more. Help please!

You should only make one post on the same subject. I think a lot of operators include travel time if the job is 4 hours or more within a reasonable distance. Small jobs or long distance, charge for travelling. You'd have to check around in your area what others charge for similar machines. Canada could be a completely different market. You want to be in the ballpark. You can be a little lower but too low and the established contractors will consider you the black sheep and never do anything to help you. Bidding comes with experience. Some jobs are better done by the hour. The archives on here should have some good info on bidding and what to include on contracts and unforeseen things that are charged as additional work.

I didn't mean to post it twice and I'm not really sure how to delete the other one. And I guess I never thought to just call my competitors and ask them what they charge... Does that work? Haha
Do you have any idea what a fair mobilization rate would be? $100? $150? I'm sorry to ask this cuz I tend to do most things on my own, but my brain is overwhelmed just trying to deal with my lawsuit and keep my own head above water. I appreciate your response either way, and Ill absolutely ask around after Christmas.

Some guys charge the hourly rate from when they leave, some charge per mile or you could just charge 1/2 an hour if the job is relatively close or an hour if it's more than say 35 minutes away. Hopefully your business name doesn't go by TheFriendlyFelon. It won't help attract business but sounds like your former partner should be using the felon part. If your client agreed to the price, they should be paying up. Just be aware that lawyers get their money regardless if you get yours or not. The only time they don't is in personal injury cases.

Fair on the skid maybe a little low. Excavtor is low. That is based on east coast pricing.

Honestly, work for someone else. If you are overwhelmed now wait until you have 4 major customers drag you out 120 days, end up fighting over money for small jobs becasue the small customers didnt have the money to begin with, your help is unreliable, insurance premiums are through the roof.

It just isnt worth the headache. If i wasnt so deep i would walk away and go work for one of the major contractors. And i would probably make more money with fewer headaches.

Amd the politics are worse when your the owner. There are some things i would like to say to some people but i cant...

You have to play the good guy with the customers while i poke our office to push harder.. 80% of my day is solving problems and if i do operate a machine i cant make any production because i spend most of the time on the phone. I have given up trying just wait until i get someone in.
I will be working christmans and new years to catch up on things that have been put off for weeks.

I think you can do well as owner. You are young enough to take your lumps and still recover. I do wonder if we have a recession coming. We are about due for one. Don't overextend. There are a lot of O/Os in your field.

One thing I would caution you, beware of emissions systems on modern diesels. These can break you real fast if they decide to go bad. Many mechanics do not know how to deal with them.

Here we are charging a 100 for a backhoe the rates going up right now to 110 I charge from the time I leave the gate to the time I get back for the most part. I run net thirty on all my customers and at 45 to 50 days I start chasing them for my money any business that has a hard paying you a grand for a small job will have a hard time on a big one

Learn how to pre lean jobs it helps in court and business partnerships rarely work especially when one side doestn know how that part of the business works

If you want to survive until you can get some cash built up stay in the for hire excavator service if your good you can stay busy and charge top dollar if you dont have 3 to 6 months worth of operating cash built up that would be goal number one.

Your young enough you can come out of this ok but you definitely will want to learn from the experience dig in cause it may take you a year or 2 to get where your not completely stressed

I always bill "net due".

No terms.

No partners.

Advise can be very helpful but remember its NOT unless to pray you way through every situation. God will give you an uncanny ability to supersede and overcome every obstacle,.....I should know I was in a very similar situation decades ago and He got me, not only through it, but I flourished and even out lasted many of the large companies,...GOOD LUCK, or I should say, GOOD PRAYING!

I cant solve your problem, no one can. Only you can. With that said, here's the advice I can give.

1- Know your costs. As an owner you need to have an intimate understanding of how much money leaves your business and when. Insurance, machine payments, cell phone bills, vehicle payments, etc. You need to know exactly what an employee costs per day, and how much you need to make per day to stay in business. Never work for less, or you're headed straight for bankruptcy.
2- !!!!!!!!!!!CONTRACTS!!!!!!!!! - Have one drafted by a lawyer, never work without it. Well worth the money. If you're in a bind, modify a free one from online, but at least have something written with clear scopes of work.
3- Get your money. Get your money, get your money, get your money. Can't do any work if you can't buy fuel, or pay the guys. I'm absolutely ruthless on payment terms, for very good reason.
4- Do the math. In my opinion, much of this game is about math. Understanding or figuring out equipment & staff production is math. Bidding jobs is math, making sure you don't get fleeced on financing is math. If you're not already comfortable with it, do what it takes to learn it.
5- Profit. Make damn sure you're profitable. Revenue dollars don't mean jack. Anyone can sell a million dollars of work, not everyone can sell a million dollars of profitable work.
6- Keep a cool head. Damn near any problem you will encounter can be figured out. Remember to breathe, have patience, and think.

Very few of our jobs are by the hour. Customers are given a lump price for the job. Most times you win, some you lose. Don't cut corners on jobs that you suddenly realize you are going to lose money on.. If you do quality work, word gets around. Do one half assed job and it will hang over your head like a big do not hire sign

Just a view from an outsider... Regardless of your competition. YOU can't charge less than your costs.(as NepeanGC said) Beware your current work. Your partner underbid work. You may be headed in the same direction until you KNOW your costs. The local guys may be very willing to use you because you're bleeding money to buy their work. If you can't compete on costs, then find a spot where you can. Low bidder is not always the chosen. Remember, you want to be safe and profitable, not busy.

This is great advice for anyone getting into the business -

NepeanGC said:

I cant solve your problem, no one can. Only you can. With that said, here's the advice I can give.

1- Know your costs. As an owner you need to have an intimate understanding of how much money leaves your business and when. Insurance, machine payments, cell phone bills, vehicle payments, etc. You need to know exactly what an employee costs per day, and how much you need to make per day to stay in business. Never work for less, or you're headed straight for bankruptcy.
2- !!!!!!!!!!!CONTRACTS!!!!!!!!! - Have one drafted by a lawyer, never work without it. Well worth the money. If you're in a bind, modify a free one from online, but at least have something written with clear scopes of work.
3- Get your money. Get your money, get your money, get your money. Can't do any work if you can't buy fuel, or pay the guys. I'm absolutely ruthless on payment terms, for very good reason.
4- Do the math. In my opinion, much of this game is about math. Understanding or figuring out equipment & staff production is math. Bidding jobs is math, making sure you don't get fleeced on financing is math. If you're not already comfortable with it, do what it takes to learn it.
5- Profit. Make damn sure you're profitable. Revenue dollars don't mean jack. Anyone can sell a million dollars of work, not everyone can sell a million dollars of profitable work.
6- Keep a cool head. Damn near any problem you will encounter can be figured out. Remember to breathe, have patience, and think.

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For reference -

I charge $85 per hour for a 279D. If it's running a brushcutter $100 per hour.
Don't own a mini.

My operating costs in AL are probably some of the cheapest in the country so take that for what it's worth.

As I have mention before, a normal profit is part of cost, which means that your equipment must be paying for itself and for an operator (even if it is yourself) to allow you to put money aside for maintenance and, when that unit needs to be replaced, to have enough money in the bank to replace it. From what I can tell, most independent truck owner-operators seem to ignore that "have enough money in the bank to replace it" rule of economics.

You can be

1. An equipment operator on someone else's equipment, or

2. An equipment operator of your own equipment, hiring out to others, or

3. An equipment owner who hires out one or more units with operators, either on a time (hourly?) basis or on a job basis (lump sum payment).

"Buying" work by quoting cheaper prices usually doesn't succeed in any business unless the competition is so slim that the competition is making more than a normal profit, but when you get into that situation, which is fairly rare, be aware of another rule of economics: "Excess profit (i.e., more than normal) breeds ruinous competition." What's a normal profit? Enough money that allows you to keep your equipment running, to grow enough money in the bank to replace the equipment when it needs replacing, to earn a living for you and your family that is equivalent to how your competition is living, but not so much that other competition is attracted into your market because of the excess profits that you and your existing competition are making.

Two simple rules -- "A normal profit is part of cost," and "Excess profit breeds ruinous competition."

Charge enough to make a normal profit, and give your customers a little bit more than they bargained for; the best advertising is when your customers sing your praises.

I try and bid all my work. I ran an underground utility company for several years before I jumped out on my own in 2008, for the next ten years it was great for me even in a bad economy. I was tired of living in California so I closed up shop and moved to idaho. At the time I had 20 employees and we were doing great but money cant buy happiness. As for running my company I was rarely the lowest bidder and I never advertised and was busier than I could handle even when the economy was in the tank. What I did do was go above and beyond for everyone, always did top notch work, never cut corners, always honest and jumped to fix any problem myself or my employees caused. I gave away a lot of change order work and did a lot of favors because they always led to more work. You'd be suprised how a 300 dollar change order on a 50k job runs people the wrong way. I usually had a little extra in my bids to cover stuff like that. Always showed up when I said I would and if I promised something I did it. Communication goes a long way in construction. That being said my backhoe in idaho is about 105 an hour, mini ex 85. I charge a 4 hour minimum and no travel time. I live in the sticks and no one would want to pay my time to get to town. Another thing I did as a company is not forget the little guy, I treated everyone with the same respect whether it was a 300 dollar job or a million dollar job. Those little jobs are great cash flow for in between bug jobs. I put a small crew together just for those little jobs and used those guys as more help on the big jobs.

Chris7810 said:

...The same respect whether it was a 300 dollar job or a million dollar job. Those little jobs are great cash flow for in between big jobs...

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Had large local contractors do small jobs for me as the project manager at several plants over my career. The small jobs gave the contractor an edge for the large job because they were familiar with the work rules, plant and people. And because they were a known quality, they didn't have to be the low bidder for the big job.

I NEVER LOST MONEY ON A JOB I DID'NT GET

f311fr1 said:

I NEVER LOST MONEY ON A JOB I DID'NT GET

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Ain't that the truth.

I doubt your area is much different than mine. I think you should be a $100 an hour on your mini ex. Lot of great advice on this thread.

Some I will restate:
Know what it costs to do business. Easy to say, not always easy to see.

Hiring help is extremely tough for the majority of companies right now. Chose wisely when it comes to hiring. Good employees are expensive, bad ones can bankrupt you.

Be innovative: it can be a crowded market, there is a lot of work right now and new companies are springing up everywhere. Reminds me of 06 and 07. When work dries up and it will, most will disappear. Be ready for it. You have to be innovative and continue to innovate. Do it smarter. Find an area that other contractors in your area don't fill or compete in. Maybe it is laser leveling for large interior pads, or Septic repair but find areas that are not being serviced and fill it.

Be proficient in what you do: In short you have to be good at what you do, know what your talking about, and be able to do it. Don't take work beyond your knowledge base. Partnering with other excavators can be a way to expand your knowledge base into areas you don't have experience in.

Be Diversified: This is huge, specializing can be good at times, but realize the markets are fickle, have as many income streams as you can be proficient in. That is what kept me alive in 2009-10. If all you do is dig foundations, when house starts fall off the cliff your **** is parked. It is often difficult to reestablish yourself as a demolition contractor at that point. Diversify but maintain proficiency, as stated your reputation is everything.

Be Someone you would want to do business with. Lets be honest, if you take the top three excavation companies in a given area, what separates one from another? A hole dug is a hole dug, putting something to grade within a tenth is grade. It is all about relationships! Being able to look at issues that come up as opportunities to show how you can handle them and keep your customer happy. Doesn't mean rolling over, but be fair and level headed, give when you need to and keep your ego in check.

I found that working with other excavation companies when I first started is a lot better than viewing everyone as the enemy. Enlist their help when you need it, and they usually will pay it back. I had some cool attachments when I first started in 1995 that few others had, and it got me on jobs with big companies. I still have those relationships 25 years later. Again make friends, play nice, don't under cut the market.

Last thing I will mention is
BE RELENTLESS: Being in business is tough, a lot of stress, long days, and somedays you want to say F it, I am out. The most successful guys I know never stop reaching and no matter how many times they got kicked in the groin they kept coming back. When your trying to get in with a GC and he wont give you the time of day, don't give up. Be Relentless in your drive to succeed. Self determination will take you a long way.