Getting Philosophical: The paradox of the one-person business

[Dougster]

Does it rain a lot there? Alright alright, I'm just poking fun at you. Maybe one day when I learn how to drive my tractor I'll do the same thing. My father-in-law (sorta, it's a long story) has been in the earth movinig business his entire life. He's prolly gonna soon call it quits and has a lot of stuff that I could get from him. But he prolly won't give me any price breaks

There is plenty of decent used equipment around. All kinds. That's not the problem. The problem is that there is only enough room and money left for one more addition... and I'm here trying to figure out what addition, if any, makes sense. No room for error this time. My little business is up against the wall. This next and last addition has got to produce for me... and I do mean dollars, not bills!

Dougster

 

[BTDT]

On the rainy days, drive around and see who has drainage problems, standing water, etc. Maybe take along a digital camera, and photograph the problem. Then approach the folks with a solution to their problem, hey I see you have standing water when it rains, I can fix that for you. Blah, Blah, Blah, Ka-ching! Peanut butter money.

 

[Dougster]

On the rainy days, drive around and see who has drainage problems, standing water, etc. Maybe take along a digital camera, and photograph the problem. Then approach the folks with a solution to their problem, hey I see you have standing water when it rains, I can fix that for you. Blah, Blah, Blah, Ka-ching! Peanut butter money.

Folks get arrested for that kind of behavior around here! But I do get your point. Even though I'm sure it pays, I've just never been into that level of aggressive targeted marketing.

Dougster

 

[Pete Milley]

Dougster:
I am in a similar situation here. With winter coming on, I've decided not to invest in any more equipment. I have also taken a night job, leaving my days open for small jobs, atleast until spring. I don't like working for someone else, but I need to keep a roof over the peanut butter. During the winter I intend to re-evaluate the dirtwork being done in this area and make whatever adjustment seems plausible. My target has been the residential market, but the foreclosure rate has really taken a toll on real estate and homeowners are scared to spend money in their yard at this point. I'll just see what the trend is over the next few months. Good luck!

 

[Dougster]

Dougster: I am in a similar situation here. With winter coming on, I've decided not to invest in any more equipment. I have also taken a night job, leaving my days open for small jobs, atleast until spring. I don't like working for someone else, but I need to keep a roof over the peanut butter. During the winter I intend to re-evaluate the dirtwork being done in this area and make whatever adjustment seems plausible. My target has been the residential market, but the foreclosure rate has really taken a toll on real estate and homeowners are scared to spend money in their yard at this point. I'll just see what the trend is over the next few months. Good luck!

I always say... "Keep your peanut butter dry"!!!

It does sound like we are in similar situations. And yes, I believe that the ditch digging market here is being affected to some extent by the turndown in real estate. But finding potential jobs is not my biggest problem. The inquiries are coming in regularly. Winning and executing them is.

My tax situation alone may push this next/last purchase into early next year, but figuring out what to buy is really driving me to drink. Can't plan or do much of anything until that decision is made. I've got three choices and it's like placing a bet on a big roulette wheel. No telling which one... if any... is the big winner.

Let me ask you this: What sort of luck do you have with home renovators. Not home owners or contractors... but folks who buy and renovate homes. Any luck there at all? I can't seem to crack that market worth a dang.

Dougster

 

[Reg]

Gotta do the aggressive marketing, just GOTTA do it.

80 / 20 rule;
As a sweeping generalization, if it is one machine make sure that it can do 80% of whatever the work is that you go after - big enough, small enough, right sized without being "feature encumbered". Corollary; go after work that your one machine can do 80% of.
For the other 20% rent/lease - even if it means barely breaking even.
Yeah, I know thats just helping the rental company to buy it, but there is little choice.
Diminishing returns; The next machine will either do less of your target work than the first one, or you will have to find new/different target work.
If it only does 80% of the remaining 20% it only brings in 20% of what your first machine does, so it had better be cheap or take on something else that is SIGNIFICANT.
Back-up; I have a tractor and a few tow-around toys, but no hoe (wanna one).
I'm close, could contribute time and effort at a pinch.
My busy time is on week-ends, mid week is often quiet.
Are you any good at grading ?

 

[Dougster]

Gotta do the aggressive marketing, just GOTTA do it.
80 / 20 rule;
As a sweeping generalization, if it is one machine make sure that it can do 80% of whatever the work is that you go after - big enough, small enough, right sized without being "feature encumbered". Corollary; go after work that your one machine can do 80% of.
For the other 20% rent/lease - even if it means barely breaking even.
Yeah, I know thats just helping the rental company to buy it, but there is little choice.
Diminishing returns; The next machine will either do less of your target work than the first one, or you will have to find new/different target work.
If it only does 80% of the remaining 20% it only brings in 20% of what your first machine does, so it had better be cheap or take on something else that is SIGNIFICANT.
Back-up; I have a tractor and a few tow-around toys, but no hoe (wanna one).
I'm close, could contribute time and effort at a pinch.
My busy time is on week-ends, mid week is often quiet.
Are you any good at grading ?

Your numerical analysis is right on the money (in my opinion)... and therefore you can see my problem of picking out a second machine. It's got to earn more with less potential market share. OR... it's got to replace the prime machine and do things better/faster.

I hate paying rental fees and will never get used to it. Same with subcontractors although I'm learning that certain subcontractors are really a very good deal compared to renting.

I do have some backup contractors who could take my place in a pinch... mainly skidsteer guys. So far, I have not called on them and they have not called on me. It will be a tough day when I've got to call them and turn over a hard-won job.

I am quite good at grading & raking (again, in my humble opinion)... in fact, I see it as my main marketing advantage over the skidsteer guys. Well, that and the backhoe capability.

Dougster

 

[zzvyb6]

Why haven't you considered renting the extra equipment you need periodically?

The rent is a small fraction of the total cost, a renter may consider a rent to own option, the cost is a business deduction, and the storage, maintenance, insurance is the owners obligation. If you deserve the reputation of an honest, reliable, safe, and fair renter, the owner may appreciate this and consider a long term "parnership" of sorts. Talk to them. (I presume there are a few nearby). There's a bunch around here that react positively to schedule far in advance. pay with cash, return clean and on time and not abused, recommend to other customers, and keep coming back. Pretty soon, they will recommend you to work with potential renters who want a job done, have been thinking of doing it themselves, have no time / skill and you can be trusted to do a "better than expected" job. That's my definition of "quality".

Works for me...

 

[Pete Milley]

Dougster:
I had some luck with renovators and local handymen till the market dried up and they are now in a holding pattern. The downside to working with them has been leadtime. They seem to do things spur of the moment, oftentimes creating scheduling problems. I like to keep them happy because they pay in cash on the spot. I bought my TLB with the intention of remaining a small one man operation. I believe there is a niche for this size TLB, it just takes time for the word to get out that it is available and affordable. I only charge a one hour minimum locally, and that has been well received. People here don't want to pay the 4 hour minimum charged by the big outfits. I do the jobs the big guys don't want. If I only work 20 hours per week, I pay for the machine and a liveable wage for myself. I'm banking on a rebound in the residential market next spring at which time I'll do what I think is right.

 

[Dougster]

Why haven't you considered renting the extra equipment you need periodically?

I rent equipment all the time. I have a great "first name" relationship with four local rental companies. But it can still grab away all of my profit in the blink of an eye... and the day any one of them recommends me for a job instead of pushing their own rental equipment is the day I have seen everything. I know these guys and it will NEVER happen. I know because I have tried to get names out of them and you'd have an easier time questioning a first degree murderer!

I am not against them. If fact, I am very glad they are there. But I prefer keeping my own money instead of handing it over to them whenever that is possible.

Dougster