Part time tractor business

[Spiffy]

This topic has been discussed often enough but since part of it is time relavant, I'm starting a new thread.

My utility tractor type needs (that exceed the AG machines I currently have) are probably on the order of 100hours + all those ongoing tasks a person finds after a purchase.

I can't justify a machine for that alone, but I think I'd enjoy growing a small business around it. Say trenching, light BH, fencing, variety landscape (stump cutting, tilling, plant holes, etc.) as well as general FEL work.

OK the question: besides up-front costs of say $30K(and figure yearly interest on that value); maintenance, fuel, and insurance what am I missing?

Also, I got the insurance quote for just under $1K/year for a $1M umbrella, $10K "incidental" (e.i. hitting a water line also causes mold to grow in someone's basement), and the machine itself (including "value gap"). When they break it down, it doesn't sound too nasty, but still $1K is a good chunk of change at start up (they do bill monthly though). A couple "insurance features" were cheaper with other insurers, but this quote was "all or nothing".

Am I completely nuts? /forums/images/graemlins/crazy.gif Or might I come out ahead on this?

Thanks guys! /forums/images/graemlins/smile.gif

Oh, I'll be hitting some pretty idle months soon, but my logic is get my own work done, get real comfortable with the machine and be ready at the first thaw. Logical?

 

[beenthere]

Is there a demand for that kind of work where you are? Others doing it now, would be a clue to such demand. Are you thinking of landscaping business-type work?

Where I live, there is pretty easy access to rental units, and that would be the competition if I were to think about such an endeavor.

Truck, trailer, attachments would probably be needed for a well-rounded business.

Hope it works out for you.

 

[Spiffy]

Thanks beenthere!

Irronically, I'm using reverse logic on the rental guys: they're charging pretty nasty rates (though doing the same math I am for this, they need to, just to break even) and keep adding equipment at both ends of the spectrum. I'm not an "artsy" type person who visualizes landscapes, several doing that part anyway, but as far as I can tell, a good percentage of those have a horsepower gap [unless I'm missing something: the 40-50HP range in utility machines is under-represented around here in general].

The attachments and trailer are part of the deal. My truck has some serious age, but would get by for a while.

Keep them coming! Thanks /forums/images/graemlins/smile.gif

 

[Farmwithjunk]

You've covered the "big ticket items" (tractor/implements/insurance/maint.)

Now the "nickel and dime" stuff.

You're going to get every dreamer in the world wanting you to give estimates and free advice. (BTDT,got the tee shirt /forums/images/graemlins/crazy.gif /forums/images/graemlins/tongue.gif) Figure time and expense involved with that.

You'll need to advertise. From a basic sign in the front yard, to newspaper add, to yellow pages, to infinity. (BTDT, took the tee shirt off my back)

It was mentioned about truck and trailer. Add to that, chains, binders, tires on the truck and trailer, insurance and maint. on them too.

If you do work for hire, and haul your tractor, and the truck/trailer/tractor exceeds 10,000lbs, figure on a CDL, and associated BS involved with that.

Unless you do this "under the table", figure tax preparation expense. (and time)

The problem is, in todays world, it's almost impossible to run a small, part-time excavating business, LEGAL, and still make a profit worthy of all the effort.

Now I didn't say IMPOSSIBLE, I said ALMOST impossible.

Anyone else have a parade that needs raining on? /forums/images/graemlins/crazy.gif /forums/images/graemlins/tongue.gif /forums/images/graemlins/frown.gif

 

[2nstonge]

You might come out ahead the first year, not by much, but it will depend on the competition in your area.

I did the same thing this year with a smaller tractor; JD 4110. I had justified the purchase based on a bunch of projects on my property (and a good deal on the tractor) and then figured I could offer "Backyard Tractor Works" to my customers - I have a handyman/home improvement business. In my area there's a glut of excavators/dump truck/bushog guys that want the big projects. The landscapers really focus on the weekly contract lawn and garden work. I sensed that the average home owner had a need - as did I - for a days worth of 'light' tractor work at a fair price. My niche is the 1-2 day 'backyard' projects. So, I started with tilling. Figured 15-20 the first year would be a good start - did 32. Paid for the tiller and the landscape rake. Got a box blade. Gravel driveways are the norm around here, did enough drives to pay for the box blade and make a few payments on the tractor. Have done some trenching, post holes, patio excavations, etc. It's not full time, maybe 1-2 days per week but it's paid for the machine and trailer. I have no doubt that if I spent a few $$ on marketing and networking (other than my current customer base) that I could rachet the tractor business up to probably full time - at least for the 6 months out of the year when the ground isn't frozen!

Sounds like you have your equipment, logistics, and legal stuff lined-up - big question is do you have a market in your neck of the woods? Talk to some local landscapers, see if they'll give you referrals. Talk to some builders, see if you can do the lawn prep for their new houses. My opinion would be not to try and compete but to find an under-served niche and exploit it. It could be alot of fun.

I don't think your nuts, I think you just need to find out where the sweet spot is and decide if you can afford to take the risk.

Good luck, -Norm

 

[Spiffy]

<font color="blue"> Anyone else have a parade that needs raining on? </font>

No doubt, I need some of that too. Thanks!

Chains binders and stuff, no problem. But maintenance on that type of thing....good call (chains do magically disappear).

Advertisment; that one I haven't decided what routes to take. Anywhere in SD, if you do anything good, word travels fast....even faster if you're bad! /forums/images/graemlins/crazy.gif

Tax's; I have no intentions of cheating Uncle Sam, but, except some initial advice from experts; I plan to do most the ongoing paperwork myself. Things may have changed recently, but it seemed like CPAs were more baffled with farming taxes than small businesses; so right or wrong, I'm not too afraid of it.

 

[Spiffy]

<font color="blue"> My opinion would be not to try and compete but to find an under-served niche and exploit it. It could be alot of fun. </font>

Thanks! Sounds like you enjoyed [and are enjoying] your venture. /forums/images/graemlins/cool.gif

I'm still just guessing that my intuition on the niche is right; if I actually wound up full time and could make "full time salary"; great; part time and break even [counting my own tasks] great! Now if I can't get any business or I have to work 80 hours to get "4 hours profit", that wouldn't be so good.

Not sure that the profits are easy pickings, but the risks don't seem too overwhelming right now. Also, since I'm looking at a used machine, I don't think depreciation would kill me if I had to get out.

 

[Farmwithjunk]

I may be the luckiest person to ever call himself a farmer. I managed to find a good CPA that is a farmer too. He understands the game. I spent 10 years farming before I hooked up with him. They weren't exactly glorious years. From day one, year one, I started turning a profit when I got my CPA/farmer. And there's been some GREAT years since.

He lives by the same motto my father did, and I'm trying hard to follow.

IT'S NOT WHAT YOU MAKE, BUT WHAT YOU SAVE!

 

[Jstpssng]

One other thing I haven't seen mentioned; collecting money after the work. Not only from people who don't pay at all, but also from those who agree on a price before the work, but hand you a check for less when you're done.

 

[curt1]

Non-payment or under payment= Trip to the Magistrate court. I have had a couple of people try the non-payment thing over the years. Never answer their phone or return messages. Not to mention two or three invoices ignored. They think if they ignore you long enough, you will give up.
If you haven't received payment after a couple of months, and have sent at least 2 invoices to them, then all you have to do is take your copies of the invoices to the Magistrate Judge and pay $61 for court costs...plus have the work or home address of the person. Then the court serves them through the Sheriffs office and they will have to pay you the court costs and whatever they owe you. If they don't, they will have to go to court, where most likely you WILL receive payment. And if they don't pay, you can put a lien on their property, garnishee their wages, etc, etc..
And the Courts here REALLY don't like people who write bad checks. /forums/images/graemlins/frown.gif
I would not worry too much about non-payment or under payment. If someone under pays you, tell them as soon as they hand you the check or cash, that they owe you the total amount of your estimate. Most people will do the right thing. Just be very firm with your estimate. Good luck.


Curt