Owner Operator - Cost of doing business, etc.

[Doodlesock]

I'm thinking very hard about quitting my job as a power plant mechanic and starting a business. A small dozer business is one I'm looking at. I'm thinking about starting small like R Leo is doing.

If I understand it right a 1 ton with a gooseneck flatbed or dump trailer would limit me to a Komatsu D21 sized dozer. I've heard of guys, mostly farmers, hauling larger machines with thier pickups but the way I read the regs it isn't legal and I think it could turn out to be a HUGE mistake. Am I missing something there?

How do you small owner operators figure out what your operating costs are in order to come up with a minimum livable amount you can bid on a job?
Fuel, oil, grease, tires, and other consumables seem fairly strainghtforward and I think I could come up with an educated guess.
I don't have a clue as to how long to depreciate the equipment or how much on an annual/hourly basis to include for major repairs.
My mind goes in circles when I try to get all the details settled. :Banghead

How do you go about bidding a job?
Someone telling me a price of $X per hour and I'll work on it until I'm through wouldn't get my business as a customer. I wouldn't expect to get much business that way either.

If you bid a job saying you can complete it in 8-10 hours and it takes 14 hours do you eat it and learn from the experience or can you deliver a bid such that you can charge for at least some of those extra hours?

When you bid a job is it verbal or on paper?

I don't think a business degree is in my future. Have you read and been happy with books on running a small business?

Just full of questions aint I!!

 

[Steve Frazier]

Before you do anything, talk to an accountant and find out about all the government fees(taxes) that are involved with running a business. It gets nuts when you need to hire an employee. There are also insurance requirements that you'll have to meet, look at those expenses as well. If that doesn't break your spirit, move on to the next step.

Figure the cost of purchasing the piece of equipment you're considering, add in the cost of the truck to transport, estimate what it will cost to repair and maintain both the machine and truck over their life span, including tools. Then figure what you need to live at the level of comfort that you want to.

Add all these expenses up and determine the life span of the machine. Start multiplying your annual expenses by the number of years the machine will last and add that to the total cost of business. Now start dividing down by time until you come to the hourly rate, which will be determined by the number of days you expect to be able to work in a year. How does this number compare to what others in the same business are charging? You have to be somewhat close in order to get business.

I usually work up a verbal quote and if the customer agrees to the quote, convert that to a written contract. You need a contract signed by the customer which specifies exactly what you are doing for them and at what cost. A well written contract will be your friend if relations break down between you and your customer.

There's a learning curve on giving quotes, some you'll hit good others you'll miss and lose money. Once the quote is in a contract, you are legally bound to that price. You can write stipulations in to the contract for unknown variables, but you can't make the whole quote dependent on them. Doing quality work at a fair price will take you far.

 

[RKO]

I'm thinking very hard about quitting my job as a power plant mechanic and starting a business. A small dozer business is one I'm looking at. I'm thinking about starting small like R Leo is doing.

If I understand it right a 1 ton with a gooseneck flatbed or dump trailer would limit me to a Komatsu D21 sized dozer. I've heard of guys, mostly farmers, hauling larger machines with thier pickups but the way I read the regs it isn't legal and I think it could turn out to be a HUGE mistake. Am I missing something there?

How do you small owner operators figure out what your operating costs are in order to come up with a minimum livable amount you can bid on a job?
Fuel, oil, grease, tires, and other consumables seem fairly strainghtforward and I think I could come up with an educated guess.
I don't have a clue as to how long to depreciate the equipment or how much on an annual/hourly basis to include for major repairs.
My mind goes in circles when I try to get all the details settled. :Banghead

How do you go about bidding a job?
Someone telling me a price of $X per hour and I'll work on it until I'm through wouldn't get my business as a customer. I wouldn't expect to get much business that way either.

If you bid a job saying you can complete it in 8-10 hours and it takes 14 hours do you eat it and learn from the experience or can you deliver a bid such that you can charge for at least some of those extra hours?

When you bid a job is it verbal or on paper?

I don't think a business degree is in my future. Have you read and been happy with books on running a small business?

Just full of questions aint I!!

Don't take this wrong, I think you need to keep your present job and do a lot of more research on running a business. Start by working for someone that is in this business so you can get the feel for what needs to be done. There is a lot harder things to running a business than the bidding. There are Employees, machine cost, fuel maintenance, insurance, bonds, permits, taxes, legal fees & terms along with a lot more things. Then you have dealing with the customers, inspectors, engineers and other people that are dealing with a project.
Your comment ("If you bid a job saying you can complete it in 8-10 hours and it takes 14 hours do you eat it and learn from the experience or can you deliver a bid such that you can charge for at least some of those extra hours?") If you bid X amount of time/price, unless you have it in writing in the contract for some unforeseen problem, you better eat the extra time/money or you will not be in business long. You can't add to the contract because you don't know how long it will take.

Good luck

 

[coopers]

RKO is right, there is a TON to operating and owning your own business and bidding is the least problematic situation you come up against in my opinion. Keep doing research and make some connections with people and get to know this field a little more and slowly work towards your goal of owning a business. Maybe do some side jobs here and there for homeowners or for people you know or just network around with friends/family. You probably can't get into too much just because you'll run in to licensing issues and bonding etc. but I have networked around to where I get called every now and then for a dirtwork job. I'm not going into this full time but it keeps me busy and the extra cash is nice.

Blake
WA

 

[coopers]

Oh...and one more thing, I personally think an excavator or a backhoe would be a good first machine.

 

[Dwan Hall]

I don't think a business degree is in my future. Have you read and been happy with books on running a small business?

Just full of questions aint I!!

Best money spent before you even think of starting a business would be a course in small business. Nothing says you need to get a degree just the basics at first.

If you can't manage the paperwork the business will fail.
Of all business that fail 90% are due to mismanagement then any other cause.
Even a 1 man operation needs to manage his paperwork to get the full potential out of any business.

Keep your current job and take classes in the evening, weekends, or even your lunch hour till you feel you know what you are doing. it will pay off big time.

You are thinking of running a business and don't want to learn the books? You could do that but you will have to higher a book keeper which is expensive then you will have to learn to understand the books so you can check to make sure they aren't putting your profit up there nose.
In which case all you are doing is working for someone else.

In a business you have to cover your overhead. (there is to long of a list of things to cover here)
pay yourself a wage.
And don't for get your business needs to also make a profit. If it does not make a profit on top of your wage then again you are just working for a wage with the headaches of owning a co.
Working for a wage you can go home when the job is finished spend it with your family, go fishing, hunting, enjoy life etc. But owning a co. you never get to go home without business been on your mind.
If you have kids I would not suggest starting your one business unless they are old enough to spend time and want to work in the same field as you. Other wise you will have to split your time with them and the business and they both will suffer.

 

[Doodlesock]

I'm not taking any of your comments wrong. I welcome them and want to learn from your experience. I agree with you guys...I'm not ready. I'm hoping to be ready in about three years. I want to get input and ideas while I have time to act on them BEFORE I'm trying to make a buck.

Before I quit my real job I plan to buy some equimpment and start doing sidejobs as someone suggested.

I can take a class or classes at a local votech and get them partially paid for by my current employer. I have thought about taking one peratining to starting and running a small business. Sounds like you guys think there would be lots of value there.

A couple of you mentioned employees. I've picked the brains of some local contractors and have decided that I DON'T want to hire an employee.

I've thought about going the backhoe or excavator route but since I don't want to hire anybody I decided against it. I don't very often see a guy on a backhoe without a spade man and maybe even more support than that. I do see lone dozer operators more often than not. Am I using bad logic here?

 

[Dwan Hall]

I DON'T want to hire an employee.

Am I using bad logic here?

Some will argue on this point. not me. I have worked alone for going on 30 years and would not be ware I am today if I had to put up with employees.

After your business is established it may be worth a thought but till then only you will be responsible if your co. makes it or goes belly up.

 

[coopers]

I've thought about going the backhoe or excavator route but since I don't want to hire anybody I decided against it. I don't very often see a guy on a backhoe without a spade man and maybe even more support than that. I do see lone dozer operators more often than not. Am I using bad logic here?

This all depends...you can make as much or as little labor work as you want because you're the operator. If you are smart about how you operate you can get enough done without having to get off and do a lot of labor work, or hire someone for that matter. When we do our backfills with our excavator, we can easily grade the crawler with the beam and grade the yards etc and be done. But we take a second and get off and rake against the foundation so the ground looks good inside and outside the foundation. Just one extra step the customer sees and likes.

What type of work are you intending to do with a dozer? You can find jobs that won't require shovel work but require a backhoe or an excavator. I think you'll have a greater opportunity at work with one of those machines versus a dozer. But maybe other disagree. At any rate, you're always going to have some manual work to do.

 

[KSSS]

I would not make your equipment selections based on percieved additional labor requirements needed. Although I don't disagree, you seldom see labor with a dozer. Everywhere is different, but it would be difficult in my area to be a stand alone dozer driver and make a living. Perhaps if you had your dozer speced out with GPS and specialized in that type of work you could develop a profitable niche. A backhoe is more adaptable and easier to find work for. One really needs to look at your local market and see where you can fit in. That should be what drives your equipment decisions among other factors.

 

[Eric]

You guys give good advice. Here's my 2 cents. I'm new here so please don't think I'm steppin on toes here. This is an awsome site, and as a rescource it is incredibly valuable. I work in a copper mine and also moonlight with a guy who owns 3 excavators. He has been digging for about 25 years and he's good enough that he might touch a shovel twice a year. Me, not that good. I look at the shoveling as staying fit. Ha ha. We run a 312 Cat, An OLD 213 Eurpoean model Cat, and a J.D. 160 lc. All have BTI hammers. Normally stay bust 10.5 to 11 months a year.
I don't know what your soil is like there in Okie, here in SW N.M. it is hard as heck. Smaller equipment really doesn't fly here, unless you call us to bust it up for you!!! ALWAYS put a "rock clause" in your bid and contract. Also as for hauling with pick ups, some really small stuff o.k. But Stopping is another story!! Get a cdl and haul that way. Seen alot of wrecks when a guy ran out of brakes.. good luck!

 

[637slayer]

i have seen computer programs that do all the figures for you, the ones i seen were on a bigger scale but i bet there is one for your application.

 

[Doodlesock]

You guys give good advice. Here's my 2 cents. I'm new here so please don't think I'm steppin on toes here. This is an awsome site, and as a rescource it is incredibly valuable. I work in a copper mine and also moonlight with a guy who owns 3 excavators. He has been digging for about 25 years and he's good enough that he might touch a shovel twice a year. Me, not that good. I look at the shoveling as staying fit. Ha ha. We run a 312 Cat, An OLD 213 Eurpoean model Cat, and a J.D. 160 lc. All have BTI hammers. Normally stay bust 10.5 to 11 months a year.
I don't know what your soil is like there in Okie, here in SW N.M. it is hard as heck. Smaller equipment really doesn't fly here, unless you call us to bust it up for you!!! ALWAYS put a "rock clause" in your bid and contract. Also as for hauling with pick ups, some really small stuff o.k. But Stopping is another story!! Get a cdl and haul that way. Seen alot of wrecks when a guy ran out of brakes.. good luck!

I guess a "rock clause" is what I was asking about. A church here in town tried to develop some property they own and the project crawled at a very slow pace for a while. It eventually stopped and the site sits partially complete with several boulder outcroppings in it. They were dozed and hammered on but I think progress was just too slow.
The contractor did a bunch of work and deserves to be paid for it. The church didn't get what they wanted. It is a bad deal for all involved. I hope they talked it through before any dirt was moved so that everyone feels that they got a fair shake.

I am talking about a very small machine. Partly to steer clear of the CDL and additonal truck requirements and partly to keep transportation easy enough to be able to get in and out quickly. This way I can bid jobs that larger businesses wouldn't want to bother with.

My income expectations are fairly small and I hope reasonable. If I can clear 20-25 K a year I'll be fine. More of course would be nice.

 

[Doodlesock]

What type of work are you intending to do with a dozer? You can find jobs that won't require shovel work but require a backhoe or an excavator. I think you'll have a greater opportunity at work with one of those machines versus a dozer. But maybe other disagree. At any rate, you're always going to have some manual work to do.

There seems to be demand here for cleaning our old fence rows or clearing a path for new fences, driveways, house pads or pads for other buildings, clearing brush and small trees. Also pond construction but that, I think, would be beyond the capabilitied of a small machine. I guess a guy could build one but a customer would be better off hiring someone with something bigger.

 

[637slayer]

There seems to be demand here for cleaning our old fence rows or clearing a path for new fences, driveways, house pads or pads for other buildings, clearing brush and small trees. Also pond construction but that, I think, would be beyond the capabilitied of a small machine. I guess a guy could build one but a customer would be better off hiring someone with something bigger.

have you looked into a bobcat? here in wyo i see more and more bobcat services offered driveways to corral cleaning. all the ones i see driving around are on a 1ton pickup with a fith wheel flatbed.

 

[RKO]

Business

Doodlesock
Do some research and Get in to some type of construction that no one else is doing. There are hundreds of guys in the construction business and why fight with them over work. Stay away from general farm work, anyone, including the farmer can do that type of work. Site development is another one everyone is doing. Do some thing like Environmental or something that other people are not doing, or will not do. You might have to change type of work as time goes on but why compete with everyone.

 

[Eric]

Just to throw some numbers out there, we don't have 10k in this truck and trailer. it is a solid truck, paid 4k for it. It is ugly as sin, but is reliable for our area. <a href="http://s174.photobucket.com/albums/w109/ebeng5/?action=view&current=101_0588.jpg" target="_blank"><img src="http://i174.photobucket.com/albums/w109/ebeng5/101_0588.jpg" border="0" alt="Photobucket"></a>.
Hard to find a good Dodge or Ford for that much!

Sorry got the wrong code.

 

[d6peg]

I am new to this forum and think it is great. But I see alot of people talking about bidding jobs, we never have to bid a job. I may be wrong but doodlestock if you give a person an honest hour of work for your rate word will soon get out and you will have more than you can do. Just my 2 cents. It seems like when we used to bid jobs we always lost money. If a customer now wants a bid I will look at the job and figure out what it will cost then double it.

 

[Countryboy]

Welcome to Heavy Equipment Forums d6peg! :drinkup

 

[coopers]

I am new to this forum and think it is great. But I see alot of people talking about bidding jobs, we never have to bid a job. I may be wrong but doodlestock if you give a person an honest hour of work for your rate word will soon get out and you will have more than you can do. Just my 2 cents. It seems like when we used to bid jobs we always lost money. If a customer now wants a bid I will look at the job and figure out what it will cost then double it.

Isn't that bidding a job?

Blake
WA