I want to start a small excavation business...need advice!!

[muddstopper]

I will echo some of the other comments about contracts and insurance. First have a contact that says what you will be doing and how much it pays, whether by the hour or set price. It doesnt matter who hires you, it seems they think that since you are on the site anyways, it wont hurt to get you to dig one more hole to plant one more tree, but they dont expect to pay you extra for the extra work. A rock Clause is your friend. It could mean the difference in you starting a hole and not being able to complete so you dont get paid, or you start a hole you cant complete because of rock, but you still get paid.

Having insurance, including workerscomp is always a plus when dealing with other contractors. It means they dont have to furnish it for you and reduces their liability, as well as their cost of doing business. It also lowers a homeowners liability if you or one of you workers get hurt on their property. As a homeowner, it is their responsibility to make sure you are insured and they are liable for you if you get hurt, your having workers comp lowers their liability. Most homeowners dont realize that if they hire you and you get hurt, they are responsible for you. They think if they are paying you to do a job, they are not responsible, not true.

One of the best and fastest ways I found to advertise and build a buisness requires little money. Go to your local builders inspector office and ask for a list of all their licensed contractors. Get a list of all the area realitors. Make a brochure of some of your work and mail it to everybody on those list. Include a buisness card with the Brochure. People tend to forget about and throw away brochures as soon as they look at them, but business'es will keep the business card as a possible future contact. Next time they need a contractor, they will search those business cards and you name will be there. Best thing about Realitors and other contractors, those are the folks that tend to have repeat business. Homeowner advertisement and advertiseing to the masses is expensive, tends to be a one time jobs, and those are the people hardest to please. Target advertiseing took us from $40,000 a year to $250,000 in one season. That will pay for a lot of stamps.

One other thing to consider, Get a Dunns number. this will put on a nationwide list available to other contractors. That way if some out of state company gets a contract on a big project, they can look at the Dunns list of contractors in that area and see your name. Large companies like to hire as much local as they can, it cuts down on the expenses of having to move in their own people and equipment. I have had all kinds of calls from companies from all over the US asking me to bid as a sub on everything from Walmart Stores, to power substations, some local and some not so close. You do have to be a legitimat business to get on the Dunns list, but if you want to grow your business, you need to be there.

 

[RPPaving]

Hey guys, im still curious as to what hourly rates i could charge for these particular jobs

 

[JD 4520]

Market dependent, amount of business and competition, size of equipment, experience and other factors affect pricing.

 

[swick1]

The minimum price should be your costs + 10% profit imo. Remember taxes and overhead in this calculation. I don't work for less than $50 per hr for 3 hrs unless I'm bored, which I've only been once.

 

[MarkV]

Don't forget insurance when you figure your hourly rate. When you start doing a digging business the insurance rates get pretty high. You will most likely need commercial insurance on your truck also.

MarkV

 

[muddstopper]

First you have to figure your true cost of doing business. Simply chargeing enought to make equipment payments and fuel wont put much money in your pocket. Things to consider, are replacment of the trackhoe once its worn out, or money for parts and repairs. You already own a truck, well charge somethin for that to. otherwide, when you have to replace it, you wont have the money to do so. Same for the trailer. Add something to cover your phone service, you will be using it for the business and it is a expense. Hw about accounting services, even if you do it yourself, your time is valuable and must be paid for. Got a storage shed to keep the trackho under, or an office. Right there is another expense. Insurance isnt cheap and how do you get paid if you are broke down waiting on parts. Got to add a little something for just those situations. Figureing out the actual cost of doing business isnt easy to do the first year you are in business. At the startup, you dont have any previous cash flows to make a accurate decision. Sometimes it takes 2 or 3 years to figure out what your actual cost really are. What ever you do, dont start out cheap just to get business. If you do you will find it awful hard to raise prices if you find you need to. And always charge something for equipment amorization. I can give you a brand new piece of equipment and if you dont charge enought to replace it when its worn out, you will be out of business in a very short time.

 

[handymansvs]

Hi,
Two pieces of advice come to mind that I totally ignored and learned they were true the hard way. These are : "Do not invest in Yellow Iron!" "I would have made some good money on that dirt job, if I did not have to move the dirt!"

Joe

 

[wcampbell47]

One niche might be using small machines that don't tear up people's property and can fit through reasonable sized gates without taking down fences or damaging trees. People have concerns that contractors either don't want a small job or will make a mess of their yard and damage their trees. If you promoted a willingness to do small jobs in a yard friendly, driveway friendly way, there might be something there. That would also leverage the fact that you have a truck and can haul away dirt/debris, something the homeowner typically can't get rid of.

I specifically bought a light weight tractor because I'm on a lot of nice yards in the area. I don't leave ruts and tear up the grass like a skid steer or other tracked machine. If you go with the excavator how do you get debris from the back side of the property out to the street/drive where the dump trailer is? Another machine?

 

[kevincook]

Hi,
Two pieces of advice come to mind that I totally ignored and learned they were true the hard way. These are : "Do not invest in Yellow Iron!" "I would have made some good money on that dirt job, if I did not have to move the dirt!"

Joe

What do you mean by "yellow iron"?

 

[amazincaucasian]

Hey guys, im still curious as to what hourly rates i could charge for these particular jobs

Lots of variables there. Around here...60 an hour for 7000 pound mini ex. Same a mid-size skid steer. I charge more for clearing and stump removal. To be honest, I usually price it way high so I don't get it. Just personal preference, but I stay away from it because I usually break something. Get hooked up with a public utilities company if you can. Water service repair, electric company, communications, after a while you'll probly get tired of dealing with the public and the pay is good with utilities. Also you'll learn what they need and become real good at doing it. Working with the same guys all the time is a good deal, you learn what they want and they learn what you want.

 

[amazincaucasian]

After reading my post, I see I wasn't very clear on the hourly rates. I've always charged the same no matter what I'm doing. EXCEPT when I'm messing with trees. Trees fall the wrong way and crash windows and lights, breaking roots is hard on pins and bushings, and you get slapped in the face with branches and scratch your machine up. Last year a friend called and asked if I could help finish a job. Seems his operator was pulling up a stump with a PC200 and it came free and jumped in the cab with him, breaking his sternum. Doesn't matter how good an operator you are, stuff happens with trees. Sometimes it happens in yer lap. I know people will say it's part of it, but IF you can stay busy doing other things, I would. There's lots of jobs you can do with a mini excavator:
-small ditches
-septic tanks
-trenching for water lines, phone, electric, gas
-prep for concrete
-culvert installs
-placing rip rap for erosion control
-digging for geology studies
-digging graves
-bury livestock
They even have augers and compactors and who knows what else for these things!

Now the dump trailer is a good thing, but I think you'll wish you had a dump truck. They're lower and easy to load, but you can quickly wear out a pickup pulling that thing around loaded, and for the price of that truck you coulda had a single axle dump truck that's made to handle a load. Somethin you can haul a load AND pull yer machine to the job with at the same time. Just think about the specs on a dump trailer...you're hauling 7 tons, would you rather go down the road with a trailer that has 10 ply tires on 16" wheels, or 16 plys on 22.5's? Not being a smart-aleck, just giving you a perspective on it. I looked at them too when I started, but now after seeing and feeling how much 14,000 to 16,000 pounds is on a 2 ton, I'd kinda be scared of em. A friend of mine hauls cattle locally. From the mid 1980's till about 2000, he used dually pickups. Well they'd last a couple years, maybe three and he's shell a transmission or rear end and get a new one. Spent alot of time at the tire store too. Then he bought a wore-out F800 Cummins for under 10 and he's still driving it. I knows he's been running it hard for over 10 years and it was VERY used when he bought it.

That being said, if you use a dump truck or trailer along with your digger or loader, you can make double the money per hour. If you live out of town you have a great advantage. You can stockpile material for jobs, and sometimes stockpile dirt you got paid to haul away, then use it later to make mo money

Sorry bud I got carried away. Anyway, always be honest. That should go without saying. I picked up a storm shelter dealership last year and guess who most of my business came from? People I'd done jobs for previously. They saw I was dealing and installing tornado shelters and said, "Well that guy was dumb and kinda hillbilly, but he did what he said he was gonna do, showed up on time, and didn't gouge us or add any hidden fees". That goes a long way. Fast talk and big promises don't impress people around here. Probably anywhere. Word of mouth and all that good stuff....you know

When you hit a good lick, don't go blow the money on whistles and tin tooters. Go buy tools and equipment that'll make you more money.

 

[RDrancher]

amazincaucasian makes a very good point regarding dump trailers vs. dump trucks. For quite awhile I thought I wanted a dump trailer for my business, but after renting one quite a bit this past summer I've noticed what a strain it is on my truck. And being able to load up your machine and take a load of trash or left over material with you when you leave the job is pretty handy.

On the same topic...older, single axle dumps will begin to flood the market in the next couple of years coming out of California. There will be many good deals to be had.
On-Road Heavy-Duty Diesel Vehicles (In-Use) Regulation

amazincaucasian - If you don't mind, could you share what year your F800 is, mileage, engine, trans, etc?

 

[amazincaucasian]

amazincaucasian - If you don't mind, could you share what year your F800 is, mileage, engine, trans, etc?

Yes sir it's a 1995 with a 5.9 Cummins 12valve turbo with about 230,000 miles. Has an Allison AT545 (4 speed automatic). If you bang the breaks, it downshifts nice. You can downshift it like a manual too. Not sure exactly what it gets on fuel mileage, but it's really good. Course not quite as good as a pickup with the same motor, but pretty dang good. It's a little gear-bound, but it has to be cause the motor's a little small for the truck. Well, small by today's standards anyway. To me it's fine but nowadays folks think you need a 400 hp diesel in a pickup truck. This truck is only 170 hp if I remember right. Truck weighs 10,400 lbs. Has a 12 foot bed. Pretty much like driving a pickup. I end up using it like a pickup and get groceries, lumber, hay, pull a stock trailer, whatever we need. It's under CDL

If I had to change anything on this truck, I'd put a cab guard on the bed. Once in a while getting loaded at the quarry, rock will bounce up and peck the back glass. And it has an electric motor on the dump instead of PTO. It's a little slower than a PTO setup but still better than a shovel. Harder to tailgate rock with the slower dump speed. It wants to come out in shifts. It will dump about 8 tons, depending on if they load me heavy on the front or put it right in the middle. Everything else that didn't suit me, I already changed. Installed a big toolbox under the bed (not seen in pics because for some reason all my pics are from driver's side), mounted a place for a shovel and rake on bed, put in a block heater because these trucks don't come with grid heaters, put a sweet CD player in it, and a CB radio so I can aggravate the real truck drivers

I love the automatic, love the size, manueverability, reliability, everything. If I got another truck, it would be the same thing just newer. This truck has had almost no problems in 4 years. Not fast at all but dependable. Very interesting about the California trucks. I've noticed these trucks for sale pretty cheap with low miles. Ex-municipal trucks

Here's more pics if you're like me and love pics

 

[muddstopper]

I think what ever you hual with is going to depend on the type of work you are doing. I had a f450 flatbed I pulled my trailers with. The flatbed didnt dump and usually had a hydroseeder mounted on the back of it. I made the hydroseeder removeable instead of permanate mount so i could use the truck for other things. In the bed I had a gooseneck hitch to pull my 28ft gooseneck trailer for moving my TN75 NewHolland tractor. I also had a reesehitch for bumper pull of my 18ft tag along and my 12ft dump. The job I had to do set the perimeters of what trailer or piece of equipment I took to the job. For large hydroseeding jobs of course the machine set on top of the flatbed, but I still needed hydroseeding supplies so they went into the dump trailer hooked behind the truck. I could pull up to the fill site, drop the trailer, fill the machine and do the job, Hookup when I'm done and move on. No double tripping or extra truck to hual equipment and materials. If I had to do lots of prep work before seeding, I have set the hydroseeder on the gooseneck, along with the tractor, with materials loaded on the truck. It all just depended on the situation as to how I would get the job done. One thing I always tried to do was plan. I didnt like returning to the shop once I left and I didnt like taking more vehicles than neccesary to get the job done. I had other trucks and trailers if I needed them, but they cost money to run and increased overhead if they werent really needed.

 

[RDrancher]

I love the automatic, love the size, manueverability, reliability, everything. If I got another truck, it would be the same thing just newer. This truck has had almost no problems in 4 years. Not fast at all but dependable. Very interesting about the California trucks. I've noticed these trucks for sale pretty cheap with low miles. Ex-municipal trucks

Here's more pics if you're like me and love pics

Thanks for the lowdown on the good looking truck. And I hear you on the current high HP diesel fad. Maybe for the guys driving their truck to the office, but for everyday work it doesn't make much sense to me. I've been looking at a lot of single axle dumps lately including the ex-municipal trucks, especially those with room between the cab and bed for a cross box for tools, spares and stuff. I'd need mounts for a broom, shovel and landscape rake as well. I'm only interested in Fords and Internationals and nothing with a CAT 3126. I've heard too many bad things about them.

You also re-sparked my interest in storm shelters. When I first moved here I made a wholesale deal with a concrete shelter manufacturer. I took out one year ads in all of the major yellow pages and received exactly ONE call. Funny thing...the call came four years after the ads expired! I hadn't thought about marketing them to my current and past customers. Good idea. :thumbsup:

And thanks for the pics. We ALL love pics!

 

[amazincaucasian]

sorry nothin here I screwed it up

 

[mikehaugen]

if you are in a "richer" area, maybe in-ground swimming pools would be a thought. Also, with all of the "green" thinking, rising utility costs, and possibly falling unit prices, I think geothermal heat pumps will become more popular and they require a lot of underground piping. Try to maybe get together with a couple HVAC guys that are interested in installing them.

These are relatively small jobs that I think could be done with a smaller excavator.

 

[amazincaucasian]

Sorry RDrancher that didn't work. I'm trying to post up a link to a truck. I'll try again...

Kubota U35, International Dump Package

RD-For me the storm shelters have been a good deal but seasonal, of course. I haven't been doin em that long. I can hook you up with the manufacturer if you might be interested

mikehaugen-yes I tried to do geothermal systems too that's a great idea. Didn't work for me because all the heat/air places around here already had backhoes. Good idea for somebody starting out I think

 

[RDrancher]

Thanks AC. Looks like a great business start-up package. Maybe the OP is paying attention to the thread...?

The only problem with the concrete storm shelters is the weight. Unless you can back the delivery truck up to the install location, they're pretty heavy to set. I'd be interested in talking to your manufacturer.

 

[amazincaucasian]

PM sent to ya RD
And no problem man anything I can do. If you're like me, you can't git enough lookin at equipment! I been eyeballin that Kubota in that ad for a week. Don't need the truck really but I need to upgrade to a newer hoe. But I'll probly wait till spring before I buy and it'll be gone so I thought I'd share it. After lookin at my posts, I hope I haven't got off topic too much. I'll try not to hijack the thread. I think this is relevant to what he should know starting out. Yes I agree with the concrete thing. There's a company about 20 miles from me that makes concrete structures for storm shelters. They're pretty good, and I talked to them about installing em too BUT....that's all I'd be, an installer. I can't haul em, can't move em, but a guy with a 3.5 ton machine or bigger can set these fiberglass ones right where you want em and have enough reach for the hole required. I wouldn't try to get into the storm shelter business with anything smaller than what I have. A 11,000 lb machine with heat and air would be tha cat's meoww.

RPpaving- what's the public water supply set up like there? Do they have their own equipment? Many don't. Well, around here the water departments in town have backhoes, but the rural water districts hire excavating guys to dig. Could be something to check into. Like I said if you can get yer foot in tha door with public utilities work, you won't have as many sleepless nights wondering if the phone is gonna ring.It'll be there