Hi, all.
I'm in the process of establishing a business and plan to buy a 5000-series Deere. To justify the expense, I've found 2 farms that are willing to rent the tractor. Any thoughts on what I should be charging? Per hour, I'd guess, rather than per day? It'd be owned under an LLC, so I'm not really concerned with liability - and they are friends that I would trust would care for my tractor as well as they do for their own.
Depending upon what your business is, it could be a good idea. I own an agricultural & ground works business in Spain, and although most of our work is done using our own drivers, we do occasionally let kit go out on self drive. Just a few things to consider first:
1 - On self drive, I always charge by the day. An hourly rate is fine, but then you would also need to allow for delivery / collection of the machine, and trust the hirer to keep an accurate record of hours worked (remember the hour meter normally records hours at 1500 rpm - so almost certainly wouldn't reflect the actual time worked, and an idling engine wears just as quick as one that's at working speed.
2 - Check your insurance, and make sure you are covered for hire / reward. With regard theft etc... we make any hirer (including close friends) sign a legal waiver that it is their responsibility to have the machine insured against theft and damage. Ifthey choose not to insure it, then the waiver means we could pursue any costs through court (not that we've ever needed to).
3 - The tractor will need to be kept in tip top condition, with all safety equipment and decals fitted, otherwise you could open yourself up to an unwelcome claim against you if an accident happens. As it will be owned by an LLC you may also need to prepare risk asessments for daily checks and routine operations - in the UK this is now mandatory for all hire equipment.
Just a few ideas - in my experience letting machinery out on self drive can be costly, and definately don't expect it to stay shiny for very long! Even friends will abuse your kit in ways that you simply wouldn't do...
A possible alternative would be to set up a machinery ring. It is like self drive, but you would agree in advance how many days the other farms would definately use the machine in 12 months, and apportion all running (insurance, tax etc) and routine maintenance costs accordingly. For example say the machine works 300 days per year, 100 days of which are on the other farms - they would need to pay 33% of the annual running costs & maintenance. You may also ask them to pay 33% of the purchase cost, or simply charge a fee to reflect that you still have sole ownership. If the other farms require the machine more than 100 days (or the time apportioned), then agree a set price in advance for additional use.
Machinery rings such as this are now proving very popular in europe, as it allows farmers and small business to invest in new machinery which is often only required for short periods, but frequently (eg. harvest machinery / loaders etc...)
