Business plan

[Oldtrout]

Valleydweller, I own a similar type of business,I am not sure how business laws work in your neck of the woods however here I had to put my machinery in the companies name,tractor,mowers etc. in other words I had to show some capital equipment before I even started. I had to set up a business account at my bank ...that alone is 50 bucks a month ,compared to the 12 I pay for my personal account.

I would strongly suggest that you talk to an accountant before you do anything its well worth it, yes its another 1200 bucks a year,(in my case), but worth every penny. I don't want to discourage you but I think you will find that 3000 bucks to start up is a tad low. You can make a fair living doing property maintaince,tree removal,etc but it will take a few years to become established. I am at the stage now where I have 4 employees ...which means more equipment...which means more work...which means more expenses....However I enjoy it and can actually take a salary after 4 yrs.

I would sooner be an idle fool than a busy fool.......

[AchingBack]

Before I retired, one of the services I offered was brush cutting with a WALK-BEHIND, D & R, 24" cut, field and brush mower. This was back in the 1990's. I charged $40 hr. WALKING, and was never short of jobs. I figured the home owner had two options: Rent a mower for $28.00 hr, rush home to do the work and get back to the rental yard, asap, to save money, or pay me for the time and trouble saved in not doing the job themself.

Now that I have a tractor, if I were going to work commercially, I would not leave my house for $40.00. With all the liability, insurance, licensing, bonding, etc., my minimum would be $55 - 60.00 and a two hour minimum charge.

The best way to charge is usually by the job. That way, both parties know up front what the price will be. The operator feels more free to take his time, and the homeowner doesn't pace back and forth while clutching his wallet, and worrying about the hour meter ticking away.

[PaulChristenson]

Originally Posted by LoneCowboy

I gave, for free, 5 years of hard won numbers and advice and I'm getting argument instead of "hey, that's good stuff, let me go look at my numbers".

It's like everything in life...stuff available for free is ignored...now if you set up a website and went around the country selling seminars about this stuff like Tony Robbins...you'd be a rich man...

[valleydweller1]

Originally Posted by LoneCowboy

compete away
let's see who's around in 3 years, the guy at a reasonable price or the guy at $40/hour.
no additional money to be put in and all costs attributable to the busines bourne by the business.
But let's be honest with the costs and price it in the range of what you really should be and not pretending to be a lowballer because you know something we all don't. It gets old and I've seen it all winter with plow guys.

Certainly you can make money by doing it faster, or better or with something new and inventive. But doing it for free isn't competing.

I saw some ad locally for some guy who will bushhog (5' bushhog) for $30/hour I'm thinking of hiring him as a sub until he goes under, it shouldn't take long. save me the wear and tear on my equipment. The costs to operate anything are higher than that.

If i'm so wrong, go call a couple rental yards. Rental yards make less than 10% overall profit on average and they get great pricing from the manufactuer since they buy a lot of stuff. Around here a 30hp tractor with a 5' bushhog rents for $400 to $500 an 8 hour day. with you running it and fueling it hauling it and taking all the risk.

They work real hard to recover their costs and their costs (40 to 50 an hour) are pretty similar to what I outlined above. Without insurance, etc.

Why is that?

I gave, for free, 5 years of hard won numbers and advice and I'm getting argument instead of "hey, that's good stuff, let me go look at my numbers". Go ahead, try it, call me in 3 years, tell me the piles of money you are sitting on at $40/hour.

So I guess it's the $40 an hour that seems so wrong? I'm only going that low because I'm new, have a smaller tractor and will take longer than others. I'll be very up front that my work may be cheaper per hour but it will take longer. My plan was go go up when I got more experienced, ie - quicker.

I respect your opinion and advice, I'm not trying to argue with you. If I recall correctly I ended by post with "I'll definately have to readjust some figures."

Thanks again,

Greg

[swampvol]

Originally Posted by LoneCowboy

compete away
let's see who's around in 3 years, the guy at a reasonable price or the guy at $40/hour.
no additional money to be put in and all costs attributable to the busines bourne by the business.
But let's be honest with the costs and price it in the range of what you really should be and not pretending to be a lowballer because you know something we all don't. It gets old and I've seen it all winter with plow guys.

Certainly you can make money by doing it faster, or better or with something new and inventive. But doing it for free isn't competing.

I saw some ad locally for some guy who will bushhog (5' bushhog) for $30/hour I'm thinking of hiring him as a sub until he goes under, it shouldn't take long. save me the wear and tear on my equipment. The costs to operate anything are higher than that.

If i'm so wrong, go call a couple rental yards. Rental yards make less than 10% overall profit on average and they get great pricing from the manufactuer since they buy a lot of stuff. Around here a 30hp tractor with a 5' bushhog rents for $400 to $500 an 8 hour day. with you running it and fueling it hauling it and taking all the risk.

They work real hard to recover their costs and their costs (40 to 50 an hour) are pretty similar to what I outlined above. Without insurance, etc.

Why is that?

I gave, for free, 5 years of hard won numbers and advice and I'm getting argument instead of "hey, that's good stuff, let me go look at my numbers". Go ahead, try it, call me in 3 years, tell me the piles of money you are sitting on at $40/hour.

Translated: It ain't as easy you think.

I do understand where you're coming from. I get undercut by 'fly by nights' all the time. But when someone is trying to start out on their own, even my own employees, I don't try to scare them off from "living the American dream" .





To the OP..go for it!

[roccon31]

Originally Posted by valleydweller1

So I guess it's the $40 an hour that seems so wrong? I'm only going that low because I'm new, have a smaller tractor and will take longer than others. I'll be very up front that my work may be cheaper per hour but it will take longer. My plan was go go up when I got more experienced, ie - quicker.

I respect your opinion and advice, I'm not trying to argue with you. If I recall correctly I ended by post with "I'll definately have to readjust some figures."

Thanks again,

Greg

i am also in the same business, and started out the same way, EXCEPT i never had a low rate. i started out working 60 hrs a week at my full time job (in excavating and paving) and doing my tractor thing on the weeknights and weekends, but i charged 55+ per hour. i am fully insured, etc. my rates have gone up significantly over the last few years with fuel, tires, oil, implement costs, materials costs, etc. YOU WILL LOSE MONEY at 40 an hour. remember the gvt gets close to 40 percent of every dollar you make!!!!!! i actually sat down and did some math at the beginning of this year, and with all associated costs of this business, including income tax, at 65 per hour, i would make 19 dollars an hour in my pocket. i could get 23-30 an hour running a dozer at my old job if i wanted to, so why work for less? needless to say, my rates are well over 40 per hour now, like double.

the biggest problem with your logic of starting low and going up, is that by the time you are ready to go full time, YOU have cut the rates so bad, that the business is no longer profitable, and you sell your equip. dont forget, there are 10 more guys like us every week, and they all work cheaper than us, just because they cant add. DO NOT become one of them!

i live in an area where a triaxle dump truck, 7 years ago, made 55 per hour at 1.30/gallon of fuel. tires were about 125-150 each. now, so many people have cut the rates, that at 4.40/gallon, and tires costing about 350 each(times 12 every 30k miles, ~6 months), the rates are at 65 an hour. do the math at 60 gallons per day. these guys are making less money than they EVER have, all because of fly by night rate cutters. they now are willing to lose money every time they turn the key, just to keep wheels turning. makes no sense to me.

good luck on your venture, but until you figure out EVERY cost involved, via experience, you will be working for free. trust me.

[blagg]

Most small business's are lucky to make 3 cents of every dollar earned!!! Its a fact of life. And you will be married to it. I like my weekends off from my day job to play on my Kubota on the weekends!!!!

[Willis Fecon Bushhogging]

Originally Posted by roccon31

i am also in the same business, and started out the same way, EXCEPT i never had a low rate. i started out working 60 hrs a week at my full time job (in excavating and paving) and doing my tractor thing on the weeknights and weekends, but i charged 55+ per hour. i am fully insured, etc. my rates have gone up significantly over the last few years with fuel, tires, oil, implement costs, materials costs, etc. YOU WILL LOSE MONEY at 40 an hour. remember the gvt gets close to 40 percent of every dollar you make!!!!!! i actually sat down and did some math at the beginning of this year, and with all associated costs of this business, including income tax, at 65 per hour, i would make 19 dollars an hour in my pocket. i could get 23-30 an hour running a dozer at my old job if i wanted to, so why work for less? needless to say, my rates are well over 40 per hour now, like double.

the biggest problem with your logic of starting low and going up, is that by the time you are ready to go full time, YOU have cut the rates so bad, that the business is no longer profitable, and you sell your equip. dont forget, there are 10 more guys like us every week, and they all work cheaper than us, just because they cant add. DO NOT become one of them!

i live in an area where a triaxle dump truck, 7 years ago, made 55 per hour at 1.30/gallon of fuel. tires were about 125-150 each. now, so many people have cut the rates, that at 4.40/gallon, and tires costing about 350 each(times 12 every 30k miles, ~6 months), the rates are at 65 an hour. do the math at 60 gallons per day. these guys are making less money than they EVER have, all because of fly by night rate cutters. they now are willing to lose money every time they turn the key, just to keep wheels turning. makes no sense to me.

good luck on your venture, but until you figure out EVERY cost involved, via experience, you will be working for free. trust me.

I bet valley dweller is sorry he asked these questions LOL, so Ill add a good point. I know someone that started out by low balling us, on every job. He did take our customers (some of them) after about a year, he went up on his prices, to match ours. The customers (most of them)dropped him and came back to us. They really didnt like it, when he did this, without any notice. He just sent the bills in with the $10 per hr addition.
After this I saw his machines for sale, in the local paper.
Its all well and good, to have a side job, I always did it, when I worked for the other guy, BUT!!!!!! your prices have got to be in line, with the other guys.
Im finished, goodbye

[Erik_in_Hoyt]

I charge friends and family $40 an hour -- primarily to cover fuel and maintenance - and I'm not trying to make a business out of it.
around here the "big toys" guys were charging $95 an hour 2 years ago - now it's more and they toss fuel surcharges in on top of it.

lower rates while learning are all well and good, but don't do it as a cut rate with the intent to raise your prices later, do it as a "new customer special". instead of $40 an hour with a 2 hour minimum, go $50 or $60 an hour with the second hour half price -- then your bill shows 2 hours at $60 an hour for $120 with the new customer discount of $30 off that second hour for a otal of $90. (or 2 hours for $100 with a $25 discount for a total of $75)
also make a distinction between "clock hours" and "machine hours"

when I'm doing mixed work, especially where most of the job is not with the machine running, I charge $25 an hour for me and my hand tools plus $40 a machine hour - because if I'm not running the tractor at 2600 rpm, machine and clock hours aren't the same.

good luck!

[john_bud]

Valley,

It's some very good advice from our local resident full time pro doing this (Thansk LC, for sharing your hard won numbers with us).

In your figures, I don't see a general liability coverage for a rock getting tossed by a blade thru a picture window and into an infants crib. Or a blade breaking and flying 100 yards then thru a wall and decapitating a man eating dinner. (Things that happened to people I know ...) Or you pulling up a fiber optic line and crashing 2-300 houses. Are you getting 10,000,000 coverage for that listed 1500 bucks? That's a pretty good deal.

You will possibly need a USDOT number for the truck (some require it at 10,001 and over, some don't until 26,001 - so check.) The numbers are cheap, but the other stuff is expensive.

You should also get a separate checking account, credit card etc for the biz side. In fact, get 2 or 3 separate accounts under the biz umbrella and fund them from each job's payment to build up a cushion for new equipment and for maintenance, taxes, etc. I would also eventually get a separate biz computer with an external back up for biz records. Don't forget the accounting software and tax prep expense.

Last, you should also plan on a trip to a biz lawyer and set up an LLC. Transfer ownership of all the equipment to the LLC to help protect you in case of a serious accident.

Also, your startup expenses seem to be on-going. Insurance, advertizing, etc.

While it sounds negative, it's not. Just unvarnished view of reality w/o the sugar. Given you already have the equipment and apparently the money needed to start, why not give it a go? A number of 55-65 and hour may be more accurate. Successful people will be successful, it's all about attitude and smartly doing what people are willing to pay you for neatly, orderly and promptly.

Good luck!

jb