Business plan

[horse7]

Originally Posted by digger2

....
Another thing i found out is there are some really weird people out there who seem to think you should pay them to do work FOR THEM !!!Some of them actually expect you to abuse your equipment
just to make the job go faster......FORGET THAT !!!!!!
...
Whatever you decide to do good luck and...........Oh,did i tell you about the weird people out there..... ...........digger2

I've been on both sides of the weird people scenario. Until you've done the job yourself, you don't usually have a good idea of the realistic rate work can be done-- and there are enough "weird" contractors that milk jobs that hiring an unknown is a risk.

OTOH, once I have confidence in the past performance of a contractor I don't need to worry about why this time a job took 12hr instead of 10-- or the last one 12 and this one was 10. There was some good reason for it. [I prefer to hire honest people by the hour not the job, it is almost always cheaper. Sometimes it simpler to just pay by the job tho]

[AndyMA]

Originally Posted by john_bud

Are you getting 10,000,000 coverage for that listed 1500 bucks? That's a pretty good deal.

John when I looked into it I found that anything over 1 million was virtually impossible to get for a new business.

Andy

[ksmmoto]

I think the biggest problem here that most are posting about is the $40.00 per hour. I started mine several years ago here in Central Michigan at $60.00 and I am raising my rates to $75.00 because fuel and other expenses are much higher.

I have been growing my tractor business real slowly, first because I do have other income and second because I don't want to make the mistake of losing money when I thought that I was making money. Keep checking the tractor and lawn websites and learn all you can, but don't be discouraged, everyone had to start sometime!

ksmmoto

[AlanB]

ValleyDweller,
I will jump in here as well. For cred, here is our website * Hanna Bechard * A Woman's Touch * Clarksville * TN * Landscaping * Lawncare * Patios * Ponds * and we have been in business since 92 or so. (and actually a bit before that in some respects)
I have a full time job, with insurance and all the bells and whistles (as you do as well) and the wife does the lawncare business.

What you are looking at doing is entirely reasonable. Many folks do it, and succeede, although many also fail. IMO you are doing it right by evaluating it before jumping in. It looks to me like you are taking the high road by being "legal" but most folks do not start that way, and they slide into being legal as the business develops and they learn more and more about what "legal" is.

My advice I would give you would be
1. Find a good small business CPA. Not some firm with lots of letters and names on the door, a guy like yourself, that holds a CPA and manages the books for other small firms. Ask others in similar small business's how they do it. This person is our most valued outside asset in our business.
2. Try not to buy the next "tool" thing, widget whatever that will make you a bunch of money. Try and work with what you have. (I am miserable at this)
3. Think long and hard about the LLC thing. While you will have many folks tell you (and I think I saw it in this thread) it will "protect you from being sued" etc. etc. or "protect your assets" take that advice with a grain of salt. You launch a mower blade through a window, the business will be sued, you will be sued, the mower manufacturer will be sued, the blade manufacturer will be sued ad infenum ad nauseum. There is a lot more then show on the surface to being an LLC and you still are out there on the line. We operate as a DBA, and constantly weigh out the benefits of going LLC.
4. Find the "right" insurance agent. Long story, but the "right" one will look out for you, and get you enough insurance without running you bankrupt. It is easy to talk yourself into an insurance hole. I just learned a month or so ago that I did not have liability insurance on the trailers behind my business trucks. My "previous" agent said, "well, do you ever tow a trailer in your business?" I about fell over.
5. Don't lowball. Easier said then done, and we get lowballed every day. Recognize that the guys bidding that price that you think you can do for half, many of them have done it for a while, and know what the costs will be and are trying to make a living. If you want to be in it for the longhaul, then plan on being in that line with pricing.
6. Don't work for nothing, or too lose money. There comes a time where you start dropping your price to where you have work, or get the job with the anticipation or promise that more work will come. (that seldom if ever works out) One of my mentors Chuck Shoope said too me, at the end of the day, you can go to bed broke and hungry or tired and broke and hungry. No need to be tired if you did not fix the broke or hungry problem.
7. The secret to making it in small business is too only work half days. The good part is, it does not matter which 12 hours you pick

The last of this long winded thing has to do with pricing.

We do not price things by the hour, or the acre, or the whatever, we price by the job.

There are two schools of thought from my standpoint. Lets call the first the "time motion study plan" or "detailed analysis" plan. That is the group that figures everything out, in mowing they walk the lawn with a measuring wheel and calculate running feet of trim time, they figure the square footage of lawn area, they figure travel distances etc. etc. there are computer programs and charts and graphs with circles and arrows on the back to be used as evidence against us

Then there is the us, which is actually more common then you would think reading bulletin boards etc. Which is, every yard etc. is different, and every job is different, you go out and look at each one, stare at it a while, and get a feel for what is going to be involved, and what the hassel factors are, you weigh it all out in your mind and shoot them a price. That is what we do. Sometimes we are high, sometimes low, but all in all, with the years of experience we hit pretty well.

Good luck, wish you the best, build partnerships carefully, work closely with your support folks, it can be a great deal.

[schmism]

for those of us that like to follow along but dont have much to add.

please post an acer per hr with your price.

If your running 3 acer's per hr on a 100hp machine and getting $120/hr but only list the price, you could see how it might seem high to us "small" guys running an acer per hr at $40/hr. (for example)

There was a comment about 3cents on the dollar for small business. I guess that depends on the business. My wife and I decided when her engineering job at a (largeish) firm decided to close the office in STL, not to move and instead take a job with a startup surveing company. She was employee number 3 and THE engineering dept. Everyone we talked to thought we were nuts.

In the 4 years sence then they have grown significantly. This year they are on track to gross over $2 million. (they hit there 1st quarter mark at 500,000 and 1st quarter is usually the slowest for surveying) The engineering dept still consists of her and a part time cad person. They employ 20 people now. (they are doing a bit better than 3cent/dollar)


Many of these discussions seem to go the way of "making hay" discussions. Seems the concensis on the boards is somehow it CAN NOT be done with a 50hp tractor and $5000 in used equipment. But there are a couple of people on the boards that ARE doing it and not killing themselves in the process.

I honestly feel the small business plan, at seemingly "impossibly low rates" is much the same way.

[Botabill]

One thing I've found helps in business is to be flexible. There are time when you are starting out that you need to low ball to get work. You may not be making a fortune but you are getting exposure. ALWAYS do good work even if you lose money. Your reputation will grow and your business will flourish. Don't turn down something new because you aren't familiar with it. Busness is an education and you need to keep learning new stuff. That new project or whatever may not make you money but knowledge is of great value in itself. If business gets too busy don't cut corners to try to get it all. Just raise your price to thin out the chaffe. You can always lower it when things get tight. A solid business more often has started from humble beginnings. I think most of us know a hugely succesful comapny that started in a back yard then grew slowly and carefully to huge proportions. Who here knows anyone that started big. It's a rare ocurence. Staring big results in big mistakes. Better to make your mistakes when you're small because the mistakes will usually be less expensive. These have been my experiences in business and have served me well. I should add that the business I was in was not excavation but I believe the same good practices are transferable to any business... at least in the community I live in.

[valleydweller1]

Originally Posted by AlanB

ValleyDweller,
I will jump in here as well. For cred, here is our website * Hanna Bechard * A Woman's Touch * Clarksville * TN * Landscaping * Lawncare * Patios * Ponds * and we have been in business since 92 or so. (and actually a bit before that in some respects)
I have a full time job, with insurance and all the bells and whistles (as you do as well) and the wife does the lawncare business.

What you are looking at doing is entirely reasonable. Many folks do it, and succeede, although many also fail. IMO you are doing it right by evaluating it before jumping in. It looks to me like you are taking the high road by being "legal" but most folks do not start that way, and they slide into being legal as the business develops and they learn more and more about what "legal" is.

My advice I would give you would be
1. Find a good small business CPA. Not some firm with lots of letters and names on the door, a guy like yourself, that holds a CPA and manages the books for other small firms. Ask others in similar small business's how they do it. This person is our most valued outside asset in our business.
2. Try not to buy the next "tool" thing, widget whatever that will make you a bunch of money. Try and work with what you have. (I am miserable at this)
3. Think long and hard about the LLC thing. While you will have many folks tell you (and I think I saw it in this thread) it will "protect you from being sued" etc. etc. or "protect your assets" take that advice with a grain of salt. You launch a mower blade through a window, the business will be sued, you will be sued, the mower manufacturer will be sued, the blade manufacturer will be sued ad infenum ad nauseum. There is a lot more then show on the surface to being an LLC and you still are out there on the line. We operate as a DBA, and constantly weigh out the benefits of going LLC.
4. Find the "right" insurance agent. Long story, but the "right" one will look out for you, and get you enough insurance without running you bankrupt. It is easy to talk yourself into an insurance hole. I just learned a month or so ago that I did not have liability insurance on the trailers behind my business trucks. My "previous" agent said, "well, do you ever tow a trailer in your business?" I about fell over.
5. Don't lowball. Easier said then done, and we get lowballed every day. Recognize that the guys bidding that price that you think you can do for half, many of them have done it for a while, and know what the costs will be and are trying to make a living. If you want to be in it for the longhaul, then plan on being in that line with pricing.
6. Don't work for nothing, or too lose money. There comes a time where you start dropping your price to where you have work, or get the job with the anticipation or promise that more work will come. (that seldom if ever works out) One of my mentors Chuck Shoope said too me, at the end of the day, you can go to bed broke and hungry or tired and broke and hungry. No need to be tired if you did not fix the broke or hungry problem.
7. The secret to making it in small business is too only work half days. The good part is, it does not matter which 12 hours you pick

The last of this long winded thing has to do with pricing.

We do not price things by the hour, or the acre, or the whatever, we price by the job.

There are two schools of thought from my standpoint. Lets call the first the "time motion study plan" or "detailed analysis" plan. That is the group that figures everything out, in mowing they walk the lawn with a measuring wheel and calculate running feet of trim time, they figure the square footage of lawn area, they figure travel distances etc. etc. there are computer programs and charts and graphs with circles and arrows on the back to be used as evidence against us

Then there is the us, which is actually more common then you would think reading bulletin boards etc. Which is, every yard etc. is different, and every job is different, you go out and look at each one, stare at it a while, and get a feel for what is going to be involved, and what the hassel factors are, you weigh it all out in your mind and shoot them a price. That is what we do. Sometimes we are high, sometimes low, but all in all, with the years of experience we hit pretty well.

Good luck, wish you the best, build partnerships carefully, work closely with your support folks, it can be a great deal.

Wow Alan, thanks! That was the kind of constructive advice I was looking for! I'm starting to think that I may just cut out the excavation end and stay with tractor work and lawn mowing.

Bidding by the job sounds like a good idea, when you figure it all up in your head do you have some sort of hourly base rate that you go off of?

Greg

[AlanB]

Yes, but it depends on who (or how many) are doing the job. The problem with, "hourly" and for the sake of discussion you say $40 an hour, then your wife, or 14 year old son will come out and help you, do you then charge $80 an hour? Or $60, and what will the customer be expecting. Nothing will upset your customer more then getting a bill for more then they thought it would be.

For us bidding, it depends on who / how many, and many times what epuipment, and how long the job is going to be, because you need to factor in travel time or setup time or transportation costs etc.

If I am pricing out machinery time, I figure it is worth at least the rental rates.

With lawncare, you should figure on making around $50 an hour. There will be a LOT of folks out this year with a murray and a homelite beating down the doors because money is tight and they will be lowballing a lot of the more established folks out of work. That said, come around June when their crapsman is broke and in the shop, and they were just charging enough to cover their labor and gas and cannot buy a new mower, and it get's hot, they will drop out and people will call back the more established folks.

One other thing that I hear from new folks that absolutely drives me nuts.

"I own all my equipment, bought and paid for, so I don't need to charge for it"

All I can say is BS, you better charge for it, or when it is dead and in the junkheap, you will not have money to replace it.

Look at what rental places charge for equipment, and figure that they are doing it for a living. Yes, they are making a profit, but you should as well if you have the $ tied up in the same equipment. That said, it can provide you a good guideline.

Another alibi fire would be

1998 Dixon 427, I happen to own a 98 Dixon, I think a 521 (23 Kohler 60")

What are you going to do when it breaks? (it will break) do you have the cash or credit to go down and pick up a new mower when you find you blew the bearing out of the left gearbox, stripping 3 gears in that thing, and when you order them, they send you the wrong parts,,,,, twice,,,,,,,,,, (plan for it)

Loyalty goes out the window amazingly quick if your customers yards do not get cut.

Good luck.

[jc7622]

Valleydweller,

There are a lot of naysayers and negative people in the world. Ignore them. Some people will run down everything you ever want to do. If you listen to them you will never do anything.

I am not in that line of work, but have hired a LOT of people on tractors, bobcats, excavators, dozers, etc. You can charge what the market will bear. If the going in rate in your area is $50/hour for brush hogging then you should charge $50/hour. Any more and you will price yourself out of the market - any less and you are leaving money on the table.

It isn't that hard to set up a business. I would set up some kind of business entity - Inc, LLC, etc. You can pay an attorney to do it for you or you can do it yourself. You will need to create an operating agreement or have an attorney do it for you (around here about $400). Then you will need to file your paperwork with the state. In OK it is the OK Secretary of State. I can give you sample of an operating agreement if you need one. Some states allow a single member LLC which is very simple. You should conduct all business through your entity instead of through you personally. Do not mingle funds from your business and personal account. If the business needs money, you can loan it to the entity and then pay yourself back. Keep it separate.

Youy will need a federal EIN (employer identification number) from the IRS. I think now you can get one over the phone. Now-a-days you will need one to open a business checking account due to the homeland security stuff. No big deal. Business checking accounts aren't any different than personal accounts at most banks. My service charge for my business account is about $7/month. If I have a lot of money in my account the fees are zero.

You will need general liability and workers comp. You might ask around in your area for some good places to get that. Talk to subcontractors in the building field and you will get some good leads. In OK a lot of people get worker's comp throught the state. If you do any work for other business you will need both of these insurance policies or they probably won't hire you. If they do hire you they will want to deduct from your check. They get audited by their insurance companies every year. They have to pay extra for every sub-contractor that they hire who doesn't have insurance.

If you are a good worker and a good manager of money and your time you can be successful at pretty much any business venture.

[Box5]

Around here people charge a pretty penny for any type of machinery work. If you have a mini excavator, its pretty basic to charge $120 a hour, plus a $100 delivery just to come to the job site. You can make a really good living with just a small dumptruck, mini excavator, bobcat/tractor. If you can stomach having to deal with finding ur next job each time, its a great way to live since you control how your business is run. If you were going to do this as a steady income, a mini excavator would be the best thing you could add for profit, a backhoe on a tractor wont be near as efficient as a excavator. But 40 a hour wont get it done when you consider your paying to run the business, you need to double that to see a good profit.