Getting Philosophical: The paradox of the one-person business

[Dougster]

I don't know how many of your customers are like me, but when a contractor shows up with rental equipment, I don't like it. It tells me that he is not properly equipped to do the job, and I probably have made a mistake in hiring him. I would make allowances for oddball equipment and special situations, but I expect the guy to have the basic equipment.

Funny you should mention that. I had the same comment from a potential client just yesterday. All I could think of was making darn sure that whatever I needed to rent for her job would be from a place that doesn't put big "Rental Equipment" signs on either side of the item!

Dougster

 

[Pete Milley]

In your original post you mentioned a larger compact TLB, but later you mentioned your Mahindra is too large(heavy) for a number of jobs. Would it make sense to buy a smaller TLB with turf tires to get those jobs? You wouldn't incur the additional cost of upgrading your truck/trailer, nor would you need employees. A smaller machine, could if need be, supply backup, albeit not optimum. Ceptic, leech fields, groundwater level, usually indicate softer digging, (I fully understand New England swamp and granite), so a machine with a lighter footprint and wider tires would be the way to go. This would also open the door for residential planting. Or am I way off base?

 

[Dougster]

In your original post you mentioned a larger compact TLB, but later you mentioned your Mahindra is too large(heavy) for a number of jobs. Would it make sense to buy a smaller TLB with turf tires to get those jobs? You wouldn't incur the additional cost of upgrading your truck/trailer, nor would you need employees. A smaller machine, could if need be, supply backup, albeit not optimum. Ceptic, leech fields, groundwater level, usually indicate softer digging, (I fully understand New England swamp and granite), so a machine with a lighter footprint and wider tires would be the way to go. This would also open the door for residential planting. Or am I way off base?

You are not off-base at all. In fact, I probably should have had an "Option (d) choice of a somewhat smaller TLB... suitable for patio work and over-septic work.

Going back in time, when it first became clear that my mid-sized (my opinion) machine was much too big/heavy for some jobs and too small/light for others... my very first thought was that I needed a somewhat bigger or smaller version of what I already had in order to expand on my job range. This I believed would be the cheapest overall solution... and most in keeping with my business plan and marketing approach. I made offers on several smaller TLB's... but none were accepted. I tried to buy one or two bigger tractors without backhoes (keeping New Hampshire in mind) ... but still failed. I slowly came to the conclusion that if the savings I sought couldn't be realized sticking with another used tractor, I might as well go with more heavy-duty construction equipment. I would "fight fire with fire"... at least in terms of my skidsteer and full-size backhoe competition.

And if it could have been a tracked skidsteer like an ASV-30/50/60 or CAT 247... it might even help out with my patio and over-septic system work.

Dougster

 

[Pete Milley]

I had to go to Texas and buy "grey" (I know how sensitive a subject that is here) to get what fit my plan and pocket. Best decision I've made, after leaving Taxachusetts in 1984. Whatever machine you buy will need to pay dividends even through those brutal winters. I don't envy you. Lay in a good supply of peanut butter.

 

[Dougster]

I had to go to Texas and buy "grey" (I know how sensitive a subject that is here) to get what fit my plan and pocket. Best decision I've made, after leaving Taxachusetts in 1984. Whatever machine you buy will need to pay dividends even through those brutal winters. I don't envy you. Lay in a good supply of peanut butter.

Obviously, you are a lot smarter than I am if you left this corrupt "progressive" state 23 years ago.

Our winters aren't nearly as brutal as they used to be (Thanks to fat Al Gore and his "Global Warming" thang)... and, in fact, it has been reducing my snowplowing income to a mere trickle. But it also keeps the heating bills under control and that leaves me more money for my stale bread and generic peanut butter (my basic, two-part, poverty diet).

No gray for me... you just don't find decent gray up here except in my beard... and I plan to stick with Mahindra if I do decide to revert back to the original bigger and/or smaller second tractor plan. I *do* very much like and trust the brand.

Dougster

 

[BarryinMN]

I've been reading thru these posts & am a little bewildered. Lots of expense side criteria but not much in the way of revenue generation, P&L, BS, IS and mighty cash flow impact.

Business is about the money not the machinery.

Depreciation is a non cash expense. If your business plan continues into the new location but starting from zero cash generation you might be collecting social security before reaching breakeven.

If smaller jobs double your net margin and additional smaller equipment investments pay back within 12 mos it makes sense.

If larger more competitive jobs add 10% to net margin plus additional heavy capital investment causes payback to be nowhere in sight...

If your pickup is used to plow but you are losing money why are you not adapting: doubling accounts now before the snow flies or cutting the capital investment or divesting entirely?

I don't mean to sound negative but the decision to buy which machine and when is an easy one if you know where you are going.

 

[motepoc]

I have been reading this thread from beginning, and I know several people have suggested getting an employee(s). And you keep saying that isn't an option. The whole reason for getting a second piece of equipment is to fill a certain niche. The best way to increase cash flow is to have both of them running at the same time. And you seem to indicate that besides the niche that you can fill, there is other niche's larger and smaller that could also be had if you had the right equipment. Well, IMHO, Having partners in a single business, that can fill those needs is the best solution. And you can't just think of those machines running 24/7. There is down time for Repairsw, routine maintenance, and one of the most important in any business, is down time for you. I realize that this means sharing profits with another, or 2. But it also helps get those jobs that you're now missing out on, and can share in the profit from those. Now, I realize that finding these people can be very hard, but it appears that what you are trying to do now is very hard too.
Just my 2 cents

 

[Farmwithjunk]

I might as well weigh in on this too. Maybe my old fashioned ways still have some merit. (Does success ever go out of fashion?)

First off, no matter what piece of specialized equipment you own, you'll always need something else. That's why there's rental/lease companies. The general contractor I work for has been in business for over 100 years. You'd have to go all the way back to the 1950's in order to find where we own most of what equipment we use. The "big ticket items" we own are things that work just about every day. Occasional use equipment is better off parked in someone elses lot when not in use. Customers don't care if our equipment has our logo painted on it, or Sunbelt Rental, or Hertz, or whoever. They care about bottom line and end results.

High overhead is the best thing that can happen....for your competitors. Both the company I work for and my own business are firmly based on "don't buy it unless you HAVE to have it". Rent or make due with what you already have whenever possible.

Learn to beg.... Ask your rental agency/dealer/supplier to give you as much help as possible. Free or reduced rates on pick-up/delivery. Lower rates on slow moving rental equipment. (Helps them AND you in the long haul) Ask dealers to let you demo equipment from time to time. You'd be suprised how many breaks they'll give a good customer. (either that or I'm just VERY persuasive)

Equipment that is bigger than you need most of the time is much better than equipment that is too small most of the time. All but a very few times, it'll be one or the other.

There's exceptions to every rule, mine included. But these basic ideas have worked well for me and my employer.

In the end, running a successful business is as much about weathering the low points as it is delivering in the busy moments. Watch that overhead and protect your operating capital.

 

[LoneCowboy]

Do you know the best part of running your own business?
You can pick your own hours.

You can work any 18 hours a day you want.


I've had this come up a couple times in the past few days doing bids. Could you do some grading work/dirt work. Yes, i can, but I tell you what, I'm not the best guy to do it and it's not my major thing. If you really want me to do it, I'll do it, but I suggest you call So and So (I really should make a real list of So and So's).

This is a big change for me of never turning down work. But sometimes things are outside my competative advantage and it's just not something we're good at. If they really want it, of course I'll take care of my customers, but I'd really rather do what I"m good at and have the exact right equipment for. (and of course I've been busy lately, so I can say this. )

 

[Farmwithjunk]

Do you know the best part of running your own business?
You can pick your own hours.

You can work any 18 hours a day you want.


I've had this come up a couple times in the past few days doing bids. Could you do some grading work/dirt work. Yes, i can, but I tell you what, I'm not the best guy to do it and it's not my major thing. If you really want me to do it, I'll do it, but I suggest you call So and So (I really should make a real list of So and So's).

This is a big change for me of never turning down work. But sometimes things are outside my competative advantage and it's just not something we're good at. If they really want it, of course I'll take care of my customers, but I'd really rather do what I"m good at and have the exact right equipment for. (and of course I've been busy lately, so I can say this. )

I had a phone conversation with a customer tonight. (mowing business) He wanted me to quote him a price on some grading and seeding. I could do his job, but it's not exactly my bailywick. And , like you mentioned, I'm busy too. (swamped actually) In order to do his job, I'd have to put off someone else. For the benefit of all parties, I sent him towards a finish grading contractor I know. (Who happens to be a cousin )