New business venture

[Jmiller26b]

My dad owns a small construction company and we live on a farm so I have ran tractors some and have only ran a skid steer and mini excavator one time. I did construction with him growing up and through college but after working in an office cubicle without seeing the outside for hours at a time I can tell it is time for a change.

I am wanting to purchase a tracked skid steer (compact track loader maybe a John Deere 333G or Cat 299D3) with a mulcher and trencher attachment as well. My thinking is that I could start up this business while still working my job and slowly transition full time as I acquired jobs. Working late nights and Saturday and Sundays to get established. I would do just about anything I could with the skid steer and hopefully could move into larger dozers and excavators as time went on. Trying to get some rough ideas before going all in and want to give a strong proposal to the bank.

1. Asking the impossible here... how much on average (% estimation) in gross income do you expect to put towards maintenance and repairs throughout the year?
2. Do you do most of the repairs yourself or hire someone?
3. Do you own your own semi and lowboy for transporting your dozer and excavator or do you hire it out?
4. I would imagine it's like anything else these days as in they are all pretty good... but is there any brands that have a reputation for being reliable and not having a lot of down time? (Another impossible question I know)
5. What can I expect to pay for insurance on a piece of equipment, as in does it normally cost like 3 times as much as your pickup would?... something like that for a rough idea.
6. How are heavy equipment jobs billed to the customer? Hourly or by the job? If hourly do anyone have an idea what the hourly rate for a skid steer, dozer and excavator would be in Missouri?
7. Eventually I would like to have a 100hp skid steer, 175-200hp excavator and around a 200hp dozer. Could I make this a relatively efficient setup for a multipurpose business...forestry clearing, pond making, terrace building, lot grading, culvert fixing...and the list goes on.
8. Depending on how the machine was treated I know... but how many hours on a machines like these is alot? Like 100k miles on a car roughly equal to 4000 hours on a machine?
9. Is the cold or slightly frozen ground hard on these machines in the winter months? Or do guys just keep on running?
10. The skid steers that I am looking at are about 12k pounds so I am getting a fairly large gooseneck but would really like to pull with my 2500HD duramax instead of moving to a 1 ton. Do you think I should make the switch for these larger skid steers?
11. What is the fuel burn rate on these 100+ hp skid steers? 3-4 GPH or so wide open?

 

[CM1995]

Welcome to the Forums Jmiller! You've asked a lot of questions that I have some answers for but it's Taco Tuesday so I'll have to get back on the ones I can answer for. Meanwhile we have a lot of knowledgable members that will probably chime in.

 

[Jmiller26b]

Welcome to the Forums Jmiller! You've asked a lot of questions that I have some answers for but it's Taco Tuesday so I'll have to get back on the ones I can answer for. Meanwhile we have a lot of knowledgable members that will probably chime in.

Thanks CM1995! I know I am asking a lot but I want to be prepared! lol I appreciate you taking the time to chime in! Hope you had some Taco's today I actually did myself!

 

[jonno634]

Welcome... I am not a contractor but did switch from a cubicle job to the farm years ago. A few things I have read/heard about. I’d suggest you try renting different machines to do jobs to get started, but with very little seat time, jobs may be hard to get as you won’t be as efficient as someone whose been doing them. So, I’d suggest finding a job as an employee doing the types of work you plan to do. I would narrow your scope of jobs to a few, to get started, such as septic/ponds or demolition for example. Learn the skills needed, then set out to do jobs yourself. You may even find a mom/pop outfit, that would transfer a business to you in a few years, this in my opinion would seem very useful. (Yes, you’d have to buy them out or ... but would be a good way to build experience).

estimating time
Estimating materials
Estimating machines needed (or other labor)
Lots of regs for different types of jobs (depends on area I guess)
Bookkeeping
Building a budget and following it
Marketing and finding jobs (many homeowners prefer nice looking equipment, over old beat up stuff... experience could overcome that, but it’s still a hurdle).

as I said I am not a contractor, but basically everything I mentioned relates on taking on farming as well. Btw, love not sitting in a cubicle anymore (just miss the $$) Have a happy thanksgiving!

also, just an FYI this should probably be in the general information forum instead of excavation.

 

[JDCrow]

Good morn! Kudos to you for wanting to make your own path. I kinda second what’s stated above, you would be miles ahead to go and work for someone to get an idea how jobs are done. There is a lot more than just pulling levers. Skill and efficiency are learned, and it’s hard to make payments on machines and run yourself in the ground in the process. If you’re and Instagram or Facebook junkie, follow some guys to get an idea on some of the jobs they are doing, you might find some in your area.

I have seen a lot of guys get into machines when there is 0% interest and construction is booming only to lose it all when the economy takes even the slightest dip.

 

[Jmiller26b]

Welcome... I am not a contractor but did switch from a cubicle job to the farm years ago. A few things I have read/heard about. I’d suggest you try renting different machines to do jobs to get started, but with very little seat time, jobs may be hard to get as you won’t be as efficient as someone whose been doing them. So, I’d suggest finding a job as an employee doing the types of work you plan to do. I would narrow your scope of jobs to a few, to get started, such as septic/ponds or demolition for example. Learn the skills needed, then set out to do jobs yourself. You may even find a mom/pop outfit, that would transfer a business to you in a few years, this in my opinion would seem very useful. (Yes, you’d have to buy them out or ... but would be a good way to build experience).

estimating time
Estimating materials
Estimating machines needed (or other labor)
Lots of regs for different types of jobs (depends on area I guess)
Bookkeeping
Building a budget and following it
Marketing and finding jobs (many homeowners prefer nice looking equipment, over old beat up stuff... experience could overcome that, but it’s still a hurdle).

as I said I am not a contractor, but basically everything I mentioned relates on taking on farming as well. Btw, love not sitting in a cubicle anymore (just miss the $$) Have a happy thanksgiving!

also, just an FYI this should probably be in the general information forum instead of excavation.

I tried to initially but it wouldn’t let me? I just went back and it looks like I can now for some reason. I will move it there! Thanks for the tip and for your response! Very helpful! Thank you!

 

[Jmiller26b]

Good morn! Kudos to you for wanting to make your own path. I kinda second what’s stated above, you would be miles ahead to go and work for someone to get an idea how jobs are done. There is a lot more than just pulling levers. Skill and efficiency are learned, and it’s hard to make payments on machines and run yourself in the ground in the process. If you’re and Instagram or Facebook junkie, follow some guys to get an idea on some of the jobs they are doing, you might find some in your area.

I have seen a lot of guys get into machines when there is 0% interest and construction is booming only to lose it all when the economy takes even the slightest

I agree 100% thanks for your response! I really appreciate it!

 

[AzIron]

Borrowing money for a part time business will stretch you well beyond what you think also if your borrowing money how long can you wait to get paid I have certain accounts in excess of 75 days to pay my price reflects this but you gotta make it there

Insurance is usually based on gross revenue

I own my own transports but my buissness model wouldn't work with out them a huge portion of our work is day long jobs so my machines live on a lowboy we do excation service for anyone that needs it big or small and mainly by the hour with backhoes and mini exs

Dont be discouraged and dont let any of us tell you you cant but you need hands on experience with someone that's already established you have no idea what you need to learn and it will put you off to a very limited and potentially expensive start up

 

[CM1995]

1. Asking the impossible here... how much on average (% estimation) in gross income do you expect to put towards maintenance and repairs throughout the year?

Depends on the age, type of machine, operating conditions and maintenance schedule.

2. Do you do most of the repairs yourself or hire someone?

All services are done in house. Simple swap repairs are also done in house. Complex repairs are either done via independent mechanic or dealer.

3. Do you own your own semi and lowboy for transporting your dozer and excavator or do you hire it out?

We do not as our jobs last at a minimum 2 weeks too many months. It's cheaper for us to hire out mob and put in the bid.


4. I would imagine it's like anything else these days as in they are all pretty good... but is there any brands that have a reputation for being reliable and not having a lot of down time? (Another impossible question I know)

All of them will wear, break and require repairs. The most important aspect of heavy equipment ownership is the dealer and the relationship you either have or build with them. I'm a Cat guy and have great service out of Cat equipment with a couple of duds that my dealer worked through. It's a 20 year relationship for reference.


5. What can I expect to pay for insurance on a piece of equipment, as in does it normally cost like 3 times as much as your pickup would?... something like that for a rough idea.

You will need to get bids on insurance as there are too many factors to even throw a dart at. Being a start up you will pay more than others that have more years of proven experience and loss ratio.

6. How are heavy equipment jobs billed to the customer? Hourly or by the job? If hourly do anyone have an idea what the hourly rate for a skid steer, dozer and excavator would be in Missouri?

Depends on your customer base and business sector. We're in the commercial market only and our work is hard bid or negotiated. Either negotiated or hard bid have unit prices for unforeseen items like unsuitable soils.

You will need to price your work for what you need to make on your time and investment. Part of pricing your rates is figuring out what others in your area are pricing. Do not let someone else set your rate. Sometimes others are doing work so cheap that it does not makes sense to get into that market.


7. Eventually I would like to have a 100hp skid steer, 175-200hp excavator and around a 200hp dozer. Could I make this a relatively efficient setup for a multipurpose business...forestry clearing, pond making, terrace building, lot grading, culvert fixing...and the list goes on.

This is another question you will have to answer mostly on your own - no one knows what you need to make or the customers you will working for. There are many owners on here that work a diverse set of customers. Each one of us has a different perspective depending on their customer base.

Our main performers are 50K LB zero swing hoes with 279D Cat CTL's and trench rollers. A 953C track loader, D5G dozer, 533E compactor and various attachments round out the mix.

8. Depending on how the machine was treated I know... but how many hours on a machines like these is alot? Like 100k miles on a car roughly equal to 4000 hours on a machine?

Again it depends on the machine, how it was operated, where it was operated and how it was maintained.

9. Is the cold or slightly frozen ground hard on these machines in the winter months? Or do guys just keep on running?

Can't comment on that as I live in Alabama..

10. The skid steers that I am looking at are about 12k pounds so I am getting a fairly large gooseneck but would really like to pull with my 2500HD duramax instead of moving to a 1 ton. Do you think I should make the switch for these larger skid steers?

How many miles a year will you be pulling a 12K CTL on a gooseneck? Obviously the more miles with a smaller truck will wear the smaller truck out quicker.

Keep in mind a newer 1 ton at 13K+ GVW with 14K trailer is Class A CDL territory in every state. No biggie - just get your CDL if you don't have it already


11. What is the fuel burn rate on these 100+ hp skid steers? 3-4 GPH or so wide open?

To be honest I have no idea.

Just my $.02 in bold in the quote above.

 

[CM1995]

I tried to initially but it wouldn’t let me? I just went back and it looks like I can now for some reason. I will move it there! Thanks for the tip and for your response! Very helpful! Thank you!

Well you just started another thread on the same topic something We here on HEF discourage as it just muddles up the board. I am going to close the other thread, reference everyone to here and move this thread to General Industry questions.

 

[Jmiller26b]

Well you just started another thread on the same topic something We here on HEF discourage as it just muddles up the board. I am going to close the other thread, reference everyone to here and move this thread to General Industry questions.

Sorry about this! Thank you for helping me out though! For the life of me I couldn't figure out how to close and move threads...this is my first forum experience ever...

 

[CM1995]

Sorry about this! Thank you for helping me out though! For the life of me I couldn't figure out how to close and move threads...this is my first forum experience ever...

No worries.

 

[suladas]

Agree with the others, if you have that little experience running equipment it would be well worth it to get some experience working for someone else, it will save you a lot of time and money in the long run. I quote jobs based on hourly rate for my equipment, then a set amount for mobilization for my large hoe, any jobs that require services, manholes, etc are more complicated to quote but for standard sanitary and water I have a price per foot. I do all my own repairs that I can, mechanics are not cheap. The shop I use for stuff I can't do is $130/hr plus shop supplies for truck, for equipment I think rate is close to $200/hr, plus their markup on parts, etc so it gets very pricey very quick to the point that for a lot of repairs i'm better off spending the day doing them instead of working on a job, it's also very valuable to learn more about the equipment, and while doing repairs you may see other issues early. I use my dump truck to move my track hoe, it's much cheaper then paying someone and the truck is good for other things and gives the ability to price small 1-2 day job that people who have to pay for moving cannot compete on.

I have found dealer support is the most important thing in terms of equipment brand, all the major brands make good stuff. I think for large equipment like hoes and dozers higher hours 6-8k is a must starting out to keep the cost down, if they were looked after decent they will still be very reliable. But on a CTL price won't change much so an extra $5-10k buys you a lot more machine.

I run year round, it's definitely harder on the equipment in many cases and some jobs take a lot longer and cannot always charge enough to cover it, but it's a tradeoff to keep busy in the winter. This winter I decided not to bother. That's one of the things I get to enjoy though because I don't have all brand new equipment with massive payments, everything is paid for. The other guy who has $600k+ in payments has to work all year round or will go broke.

The other thing starting out for someone else will help you is you'll be far faster at doing jobs. If you start out yourself, it's going to take you much longer to do a job, so you'll be making a lot less then the others guys for the same job, and it might be tough going. I would say a guesstimate for doing a basement now compared to 3 years ago i've probably cut the time it takes down 25%.

My first few years were rough, I taught myself everything and took a lot longer to do jobs, had a few expensive breakdowns, and had massive payments and it almost cost me everything. I was luckily able to sell a bit of stuff regroup and buy all the equipment I needed and have it paid for.

If you're borrowing money to buy I would recommend starting small, just one piece. Don't buy a ton of stuff with massive payments. The gamble might pay off, but it also might not and it could cost you a lot of money and a tough lesson. You need money set aside for repairs, fuel, material, payments, etc. You will be surprised how many people will pay you when they dahm well feel like it, maybe in 60-90 days. Maybe in 180 days. Get a good contract outlining payment terms, charges for extras, timelines for customers to bring up deficiencies in work, you'd be amazed at how many people don't say anything until its been 45 days and time to pay that they have an issue with the work. Also don't think you need to take every job that comes to you, think about if you want to do the job and work for that person. Don't be afraid to walk away if you don't think you'll make money on it. I don't regret any jobs I didn't do, but I do regret many I took and made nothing on, or even lost money on. The office stuff is harder and more important then running the equipment and will have you pulling your hair out many times.

 

[4bz]

I have a neighbor who owns and operates a road building business. He has a fleet of excavators, trucks, motor graders, and tractors. He told me once that if you bid on jobs, there are two ways that most people go. One is bidding to get the job, the other is bidding to stay in business. If you always try to be the low bidder and get the job, you will always have work and be busy. The downside is that your business may not be able to survive if a hardship occurs (like a major breakdown in a critical piece of equipment, or the extended illness of you or an employee). The other way to bid on jobs is to estimate how much compensation your business will need to do the job and stay in business over the long term. You will likely lose a significant number of bids to other companies, but your business (and your future employees) will be better off.

 

[CM1995]

If you get every job you bid then you're too cheap. If you hardly ever win a job you're bidding too high.

It will take some time to build a business and get into the type of work you want to do that is profitable. Relationships need to be built as well as your reputation. A good reputation and relationship with the owner or GC can make a difference when competing bids are tight.

Recently I received some great advice from a friend of mine who is a GC that builds those green national coffee houses among other specialized restaurants. I asked him if he was bidding a fast food joint that was coming up for bid in the same commercial development we were finishing a large retail store.

He said and I quote - " I don't do that type of work for that type of money anymore."

Best advice I've heard in years. However it does takes hard work and time to get to that point.

 

[NepeanGC]

Know your numbers. And what the job is worth. What things cost to do, and what they're worth don't always line up.

My favourite saying for cheap GC and clients is 'I don't need to go to work to lose money. I can do that from the comfort of my own home'

 

[Jmiller26b]

This is awesome! You guys rock! I appreciate each of your replies beyond just a simple thank you, but THANK YOU!!!

 

[AzIron]

One thing to remember when your on borrowed money and making payments is that obligations makes you take work at prices you should never do in other words debt can make you desperate when times are tight if you wouldn't take that job when your busy you shouldn't take it when your slow

 

[CM1995]

Know your numbers. And what the job is worth. What things cost to do, and what they're worth don't always line up.

My favourite saying for cheap GC and clients is 'I don't need to go to work to lose money. I can do that from the comfort of my own home'

Similar advice my Father gave me many years ago - "You can either be tired or hungry - never be both".