Newbie Getting Into Business

Best Practices for Newbie Getting Into Business

Actual Question

Top Replies

Do some of you charge per hour or do you charge a flat fee for the job?

Small jobs, less than a day most folks are fine wirh hourly but bigger jobs are better done witb a bid. There's a knack being able to look at a job and know how long it will take.

Operating costs will depend greatly on the machine, small, medium large etc. pneumatic tires or foam filled, or maybe solids or tracks depending on work areas. Lots of variables to even hazard a guess.Your dealer can help with the operating costs if they have a rental fleet. If its a Cat dealer they have a performance handbook (aint cheap) that will give you a very good baseline on owning and operating of everything they make.Good luck.

Thanks for all the help! I've done a lot of research around my area and it is looking pretty promising. I am going with a Cat 236D. Price wise, quality of service and overall value is what I really like about Cat.

Where are you located?

More Replies

JNB said:Where are you located?Click to expand...San Angelo

Yeah, that's quite a ways from my location. If you worked the South to Southeast DFW area I could refer some work your way. You never know though, I've had folks call from as far away as Austin.As far as business advice, I'd make good contacts and rent most of your attachments at first. Same goes for an excavator. Unless you've got work for one a lot of the time, it's nice to rent just the right size machine you need for the task. And one more thing...Find a niche and scratch it til it bleeds!

Thanks JNB. Yeah I'm going to keep it simple for now. There are one or two attachments that I am going to buy with the SS. I will rent the others and eventually buy what I really use a lot in the future.

I think a good business plan is in order.

You should have a marketing plan, invest some money in website, tell the people what are you doing in this way you will start to have a small database of customersVideo, photos to build a portfolio

Hey bud are you offering financing?

rkf63k10,Greetings from Abilene, I started a part time business very similar to what you want to do. Not getting rich with it but doing ok. I am heading out here in a few minutes to drill some fence post holes for a welder that I have recently developed a business relationship with.I have had pretty good luck advertising on Craigslist. I also have ads up on a few other local boards. I suggest putting up a nice ad on CL listing what you want to do with some pictures of your equipment and some good before and after pictures of projects you have done.I have a 2007 NH L190 skid loader along with several attachments that I have acquired over the years.Best of luck with your new business,Tim

One thing to keep in mind, or at least check with your dealer, often times rental stores will not rent out attachments (that require hydraulics) to run on your machine due to cross contamination of hydraulic oil. If you buy a Cat and have them do your services, or at least use their oil, they may make an exception.

rkf63k10 said:Howdy from Texas! New to the site, but not new to heavy equipment. I know this has probably been asked a million times on here, but here it goes any way....I worked for a Telephone Coop for 24yrs. In June my wife got a great opportunity to work as a nursing home administrator. I was really burned out at my job so we made the decision to move. Anyway, I've always liked general dirt work and related construction. For 9 of the 24 years of my old job I worked line construction. I operated backhoes, trenchers, bore machines and cable plows. I have the opportunity now to start up my own small business. I'm not in it to make a ton of money, just enough to pay my bills and make a little profit. I will do lot and land clean up with a skid steer starting off. Then maybe later on get a mini ex and do some excavation work. Where we live there is a lot of home and oil field construction going on. I plan on getting several attachments for the SS since they are so versatile. I have the truck (paid off) and I plan on buy-in a 82x16 dump trailer. The SS will be financed probably. I know there's a lot that goes into starting a business, i get that. What I'm needing to know is the operating cost of the SS and what I'm going to charge for my service. That's where I'm stuck.:Banghead Any help/suggestions would be appreciated! By the way this is a great forum site!Click to expand...Hi there,This is my first post and not sure if this is okay but you mentioned you might be financing the SS... We specialize in equipment financing and have a good program for startups. Feel free to send me an email me an if you have questions about financing or if you just want to pick my brain:[email protected]Good luck with your venture!Joe,

Well, I've got all my equipment except for my SS. I should be here sometime after the17th of November. I'm still struggling with coming up with a price for my services. My biggest problem is setting my price. To high I lose a bid, to low and I don't make enough to pay bills. This is all new to me so I've been trying to do as much research as possible. I've been going to the local small business resource center and getting good info there. I really haven't found out what other operators are charging. I've talk to several builders around here but they really won't tell me what they pay for having work done for them. I will have a pretty nice set-up. I have a rock bucket, land plane, auger with a few different sized bits and the regular bucket on my machine (Cat 236D closed cab, NICE!). Plus I have a 82"x16ft dump trailer. Yeah I probably went a little crazy getting all this at once, but I wanted to provide services that are not really offered around here. I know that my cost of op is around 40-50 per hr or so and to make a profit I would have to charge 75-80 per hr. Charging by the hr would be the easiest, but there are going to be situations where I would have to charge more or less. That's where I'm stuck! I'm so ADHD and OCD it's ridiculous! I guess I'm afraid of not setting my price right the first time.

I stay away from hourly unless it's an add on to work I am already onsite doing. Hourly work never allows me to get a "homerun" on a job.That said I know someone who says $10/hr for every $1000 spent. So $50k truck +$60K(?) Skid Steer And Attachments+ $7k(?) for dump trailer= $117K which is $117/hr as a starting point. I feel 120-150 for smaller equipment is probably right (machine and operator), although you wont get rich working hourly (certainly not saying my way is making me rich either). Eventually something will go south. It takes a lot of small hourly jobs to buy a new rubber track or final drive motor...Also don't short change yourself. Don't think because you bought the truck, trailer or machine for next to nothing you shouldn't charge the equivalent of new replacement cost.Another tip would be have a minimum # of hr per job. The idea behind this has at least two good arguments. 1st what would it take to rent that machine for the day? I don't know a rental yard that does hourly, it's by the day- maybe a half day at some rental stores. 2nd would that rental cost include drop off and pick up? Not likely. You should be getting paid to get the machine to and from the job.And lastly, just remember this advice is worth what you're paying for it- so there is that to consider.....

There will be a challenge getting bids by the hour I think, especially before you've established youself as a good operator. People want to know what it's going to cost them up front unless they know you are good, honest and efficient and that they aren't going to pay for your lack of experience or technique. (Not saying this applies to you but this is what people will questiond) With contractors, you will have to first get your foot in the door (make sure you are ready for that because you'll get one shot) and build a relationship to get their continued business. With other customers doing odd jobs you will be better being able to bid the job because they will want to have a few estimates. Unless it's word of mouth then they may already have been told that you are a good guy and resonable.So, figure your hourly expenses for the machine based off a 2k hour life for depriciation, maintenence, misc, and fuel. For your machine you will probably be in the $40 range. Then add transportation costs, overhead is a fixed expense, and you need to be making money too, $25/hr isn't enough to make it worth it. Then guess at how many hours it's going to take you add add a bit, maybe 10%. Smaller jobs cost more per hour to make a profit, it's the same with everyone so don't be shy there. It will take you time and experience to bid jobs well but that is how you will get the most work. It's better to lose a bid than loose money and/or make yourself look like you don't know what you're doing. People won't badmouth you as much for being expensive as they will for not making them happy if you do the work. If the guys that u derbid you doesn't make the customer happy they may call you next time anyway, or tell their friends they should have given you a try.

Thanks guys! That helps a lot! I just want to do a good job for my customers. That's how I was raised. I just don't want people to think I'm too high on my price is all. I love the business and I like people. I worked 24yrs for a phone coop, met and knew a lot of people and I know how a lot of those people think. Some would pay $2000 to clean and prep a site, some only $500. I come from a small community and a lot of them would think $500 is way to much! So that's where I get my mindset. We moved here in June so I don't know the people here yet. What I would like to do is just check out someone else's operation and see how they work. Not to compete, but just to learn more!

So based on what I'm reading from you guys, per square ft would be a good price scale to work with. Looking at a job is going to take some learning, but I think I've figured out a way to price my service. Taking in consideration of what the job site looks like and how hard/long it will take me to do it. I've got to sit down and do some figuring today! ugh, Math!

Not in your area so I can't say what your market will bear as far as hourly rate. But here I would bill your machine at $70 a hour with just a bucket, anything else hydraulic driven on the front I would add another $10 a hour for it, so if you are auguring post holes I'd charge $80 a hour for it. As for a minimum, If its within about a 15 minute drive one way its a 2 hour minimum, if its more then a 30 minute drive one way its a 3 hour minimum just because at that point I feel the cost of fuel and added time it takes to get there adds up. You could take the easy route and charge a mob fee, say a $150 just to show up, but that can cause some hard feelings if you are only 10 minutes away. Not sure what you would price at per sq. ft., maybe concrete tear out or blacktop? The only thing we charge a sq. ft. price for with the loader is finish grading and that also includes the sod lol. Most stuff, rough grading, basement backfill, general dirt moving is by the hour. There is definitely a learning curve to it.

Hourly, square ft. it's all going to depend on the work I have to do i guess. My hourly rate is around $75 with a 4 hr minimum charge. Most SS rentals are $300-$500 depending on the machine. I know it's a learning curve, but I'll get there eventually. Thanks for all of the help and suggestions! God Bless!

Starting out you can charge by the hour and tell the customer they're paying for the work that is actually done. With a little experience you'll be able to give a ballpark estimate. If it takes a little longer than you think it should have, take 1/2 an hour off (on a job more than 3 hours). Have a 2 hour minimum or 3 if it's a long ways away like said above. 4 hours would be nice but until you get established, you need the work. Advertise in community papers that go to new districts where houses are being built. Put signs up in gas stations and convenience stores if they let you. Drilling post holes always charge by the hour and not by the hole. You can charge extra per hour for drilling holes. The reason you don't charge by the hole is because you never know what you're drilling into. You get into some clay that packs on the auger or the auger gets stuck in the hole, and there goes all your profit. Also don't try to drill deeper holes all in one shot. Lift the auger up a few times while drilling to let it clean and also so it doesn't get stuck. Watch out for customers that want the moon... a whole lot of work done and seem to be made of money. I had a few like this and they were happy with the progress but come time to pay they had all kinds of complaints and thought they could negotiate the price. On one I just lowered my price to get the heck out of there. Get a slip tank to carry diesel with you and use your grease gun religiously, especially on the bucket pins. It's so frustrating to be on a job that takes a little longer and you have to leave to get fuel. Jerry cans are a giant PIA!

I copied and pasted this from a spreadsheet that I created to determine what hourly rates should be. On the spreadsheet I can change the information as needed (like fuel prices) and it re-calculates the total.I have a 20% overhead factor in there; this may be more than you need, but don't underestimate the cost of insurance (liability, etc .etc .etc.), purchasing and maintaining pickups, trailers, lasers, grade rods, grease guns, broken glass, etc. Our overhead last year was 24%, but we have a number of pickups, trucks, lasers, trailers, generators, pumps, you get the picture.Also, don't under estimate the labor portion of the equation, even if you don't have any employees. You will have both the employee and company portions of Social Security and Medicare, State Withholding, Federal Withholding, etc. At first you will be able use your depreciation to offset your withholding, but somewhere along the way the piper WILL be paid.Hope this helps!This is based upon rental rates; ownership should lower your expenses, but this will keep you covered.Machine 287CFuel Gal/HR 2.25$/Gal $3.90Fuel Total $8.78Rent $30.00Sales Tax $1.80Prop Tax $0.00Labor $45.00sub total $85.58Overhead 20% $17.12sub total $102.69Profit $10.27Mileage $0.00Per Diem $0.00Total $112.96

Thank guys! Y'all have been a lot of help! I do appreciate it! Yeah, it's been tough to get going. Since the oil boom has stopped around here people are watching what they are spending. It's a tough market right now even though there is still a lot of construction going on. I thought I was doing the right thing by getting all my equipment together now, but it has seemed to bite me in the butt! Can't get work lined out and I've already have payments coming up. Hopefully things will pick up soon!

You must be a registered user to add a comment. If you've already registered,
sign in. Otherwise, register and sign in.