Dirt Moving I finally started a business with my Kubota!

[PAPPASMURF]

After several years of throwing the idea back and forth in my head, I finally decided to start a business. I have a 2011 Kubota L3200 with BH 77 backhoe and for years I have been asked hundreds of times to do side-jobs for people. I took some of them up on the extra money to be made, but it had to be someone I knew, or family mostly because I wasnt doing it as a legitimate business. Word-of-mouth spread quickly and I realized that this type of extra work could actually be profitable if it were done the right, honest, fair, and legal way, so after a lot of research and money, I took the plunge and started a light grading and backhoe service called "Diggin' it" LLC. I wanted to share a few things with folks that might be thinking of doing the same thing to help them decide if its a business you should get into to. I have read a few posts from time to time here about this subject and wanted to give a few pro's and con's about what it takes and the risks.
First, ask yourself what type of equipment you have and if you are able to transport all of the equipment in a safe and timely manner for jobs. I have an 18 foot trailer with dual axle brakes rated for 7,500lbs which just does the job for a Kubota L3200 w/ backhoe. Also, ask yourself how much time you have and how much work and what type of work you can handle because when word gets out you can stay busy if you do a good job. I have a full time job in law enforcement and about 3 years until I can retire, so this is a part-time business for now for a little extra income. Insurance is a MUST. Getting a liability insurance policy for your business should be a no-brainer, but I have met a few people that dont have any insurance doing this type of work. It's only a matter of time til that bites them in the posterior. I found that the insurance companies will classify you like they do any other "grading" company, so regardless of having a $350,000 dollar excavator or a $30,000 Kubota, you are still a grading company if you move earth at all, so be prepared to get hit with a hefty insurance premium!
One of the biggest questions you can ask yourself is how much do I charge? Most companies charge by the hour with a minimum of 2 or 3 hours to start. The hourly rates (for Alabama anyway) range basically from 75 to 350 dollars an hour depending on the type of equipment being used. Most Bobcats and loader/tractors are in the $100 per hour range with a minimum of 3 hours in my area. After a lot of experience and trial and error with this system.....I charge by the job, not by the hour. Its a win-win most of the time for both the customer and me. Charging by the hour can short change me or even the customer depending on the circumstances of each job. Each job has its own challenges and unforeseen problems that can arise which makes guesstimating how many hours it will take to complete a difficult task. Most of my customers agree that one flat rate for the work done leaves no surprises to them unless something major comes up on a job site that could never have been predicted ahead of time (i.e. hitting bedrock under soft soil that my equipment cant break through). I also do a "Locate" of any utilities before I start any job. "call before you dig" must be done as utilities do not always run where you think they do or where your customer believes they do. Speaking of digging, I have found that a backhoe is the money maker in this line of work, but it also comes with a lot of liabilities and need of skill / experience to operate safely and effectively so take that into consideration. The overhead for maintenance overall will go up significantly, as will fuel costs, but I have found that if you have experience and do a good job you will continue to make money and will have repeat customers who know they are getting a much better deal than the "big boy grading companies" could ever offer. The big boys will tell you they dont have the time or the need to do small jobs (its not cost-effective for them), so your business is not only welcomed by them, but encouraged (no competition from them).
My business is booming right now, but understand that this type of work is also seasonal. I get 5 or 6 months of steady extra income, then it dies off for 5 or 6 months, so managing your money is a must. Anyway, I hope this helps anyone thinking of doing what I'm doing. The work is hard, but its also fun most of the time with lots of seat time. Check out my facebook page at: Diggin' it

Thanks for reading and let me know what you think!

 

[MinnesotaEric]

Cool!

I wish you well!

Was getting commercial insurance a hassle? If not, who'd you run with?

Insurance has been my biggest problem as I'm in the middle of putting together a plan for my own side business with my tractor and I'm actively shopping for a 35 size mini-excavator.

I've also decided that I'm going to get a CDL too so that I can get a dump truck and tow everything around.

 

[PAPPASMURF]

Thanks Eric.....Auto Owners insurance had the best deal. It wasn't so much a hassle as it was a surprise at how much it was for a basic policy.

 

[sea2summit]

That is awesome. I've done a few odd jobs for folks that see me on the tractor and I've thought about putting a shingle out.

Mind throwing a ballpark number out for that insurance?

 

[Fallon]

Thanks for the info. I've got the same L3200 (no how though) & was thinking about trying to do the side gig thing as well. To much insurance & bureaucracy though once I dug into it. At least for the amount of hours I could have worked on a side gig.

For now I'm trading tractor work for help fencing, or doing a few small side gigs for friends & good neighbors.

Definitely interested on hearing how much you got insurance for though if you don't mind sharing.

 

[mikesee]

Fantastic, excellent work!

 

[Sprinklerman]

Get the insurance company to classify you as landscaping , moving dirt and digging is in the landscaping rating

 

[MinnesotaEric]

Get the insurance company to classify you as landscaping , moving dirt and digging is in the landscaping rating

Good tip.

My tractor insurance costs about $32 an hour, the tractor itself about $27 an hour to run based on 3000 hours before a major malfunction. Insurance is killing the dream, so to speak.

 

[PAPPASMURF]

Insurance is not as bad for some folks who can afford to pay an extra 100 to 150 dollars a month for a liability policy. A million dollar liability policy was around $1400 a year, so that's approximately $ 116 a month. For me that's high considering a landscaping policy is less than half of that, and this is a part time venture. Sprinklerman, I tried the landscaping angle, but once they find out you grade driveways, install drainage pipes, or dig a hole of any sort you are automatically in grading, not landscaping. If you did get an insurance policy as a landscaper and had an accident of some sort involving using what is considered heavy equipment as opposed to lawn equipment the insurance company wont cover you. Checked on that as well. If your going to do any earth moving on a level that front loaders and backhoes do you cannot get landscaping insurance to cover you.

 

[CDN Farm Boy]

Good tip.

My tractor insurance costs about $32 an hour, the tractor itself about $27 an hour to run based on 3000 hours before a major malfunction. Insurance is killing the dream, so to speak.

$32 per hr for the insurance? Wow, they either saw you coming or your area for insurance is just nuts. All of a sudden I don't feel so bad about my own. I just transferred mine from my business policy to my farm policy and the rate is about the same, approx $300 for the year. That $300 is just the tractor portion, my general liability was about $1800 for the year before the tractor. I was rated for general construction, landscaping and grading, including digging for sonotubes etc for decks & fences with 2M coverage and additional rental equipment coverage beyond the standard. At 150 hrs/yr on the machine, it costs me a whopping $2/hr for my insurance on it.