2008: A good year to start a mulching biz?

[Gamma]

Well, I've been wanting to start a mulching business for the last two years and thought that I was going to be able to do so last summer. I hadn't made a final decision as to what equipment combination I was going to go with, but I was leaning towards either the ASV RC-100 w/Fecon head, the Fecon/Rayco 148 sized machine w/Fecon head or possibly the new Rayco C100L machine.

I have 44 acres of land that I had for sale that I was going to use the procedes from to pay cash for a new brush mulching machine and head, goose neck trailer and all the misc. tools and supplies to go along with it all. So of course the realestate market takes a nose dive and my land doesen't sell and I took it off the market about a month ago and basically put the brush mulching biz idea on the back burner for now. Then several days ago I get a call from my realestate agent saying that someone has contacted her and wants to know if I'd be willing to still sell my land possibly. So now I'm debating that if this person does want to puchase my land, whether I should sell it and start the brush mulching biz, or should I just pass on the offer to sell the land due to the current realestate market slump and related slump in brush mulching work that I seem to read about here on this forum.

I don't want to sell the land, spend approx. $100k purchasing equipment and supplies only to have there not be enough work out there to justify me selling the land. I would want to work full-time mulching brush and doing other related type work with my equipment, I don't want to end up doing only a couple of small jobs every month and make just enough money to cover my biz expenses such as insurance.

So what do all you brush mulchers think? Should I sell the land, pay cash for all the equipment and hit the ground running? Or should I sit on the land for now and wait for the realestate market to turn around and afterwards sell the land and start the biz?

 

[radman1]

I look at it differently. The selling of the land should not have significant impact on whether or not you start mulching. If you are really going to do mulching, base your business decision not on if you sell the land but instead on will the business cover all of my costs associated with this venture and yet give me enough additional income. What will it cost me for the machine, upkeep, business expenses etc. What will I charge? What is the going market rate? How do I get started? Buy used or new? Customer doesn't care how new your equipment is but instead is the job done right for what you charged.
If buy new, wait for low % financing on the equipment if possible.

Is the mulching market good enough to do that? Are you completely dedicated to that venture and are you will to take the risk? If the answer is yes, then the land can be used as collateral to secure the loan. Land rarely goes down for long in price. A slump now will be a turn around in a few years. Land that is paid for is nearly always a good investment.

 

[john_bud]

I've done a calculation on mulching expenses and came out to about $52 and hour for fuel, teeth, tracks, fluids, depreciation, insurance, maintenance and such. That does not include any loan costs or labor and is just machine centric. (Used Rayco 87)

Is that in the ball park? I don't have experience with mulching, but tried to piece the cost together from various posted information.

jb

 

[Robbie Hegwood]

My wife always said double my figures and go with that. And it was usually close. If you are starting out you need everything. A truck,trailer,insurance,business cards,advertising,more advertising, then we get into what if it breaks, and they usually break big. Pulling these tractors puts and enormis strain on your truck. My F-350 couldn't take it and we had to get a bigger truck. Also you have to be careful in your mulching for hidden objects and to stay within the tractors capabilities. Your customers will push you to cut bigger and don't understand the limitations of the tractors.

Now back to the original question. IF your equipment was paid for then things would be different. If ours was paid for we probably could have weathered the slump. And good used equipment would help. One nice new tractors verses two used tractors. If one goes down you have a backup, that would be a major advantage because the will break. It is a enjoyable business just very labor intinsive. If it get busy enough have a mechanic keep one tractor serviced and ready and he can run it to catch the slack.

Enough for now. Robbie

 

[Terra Firma Scott]

I told myself 2008 would be the year I pushed the biz a little more...Heres how its started so far-

Made some flyers and the first one I gave out landed a job! Good I'm thinking until I load up the CAT and head out to get some offroad for the transfer tank-going down the road and the ol tranny starts to slippin and bangin in the truck...Was able to limp it home...Ughhh-need to call my customer and negotiate a few weeks time..

As robbie implied-When the stuff breaks ,it breaks big usually....

Happy 2008!

 

[radman1]

Gamma
I also have to ask what kind of experience do you have with mulching or related business? Do you have experience with CTL, SS or other similar equipment? If you can't mulch all time, do you plan on using the machine for other projects?
I admit, don't know squat about mulching. Not enough trees/brush where I live. Never even seen one in this region. If there is a decline in the mulching in your area, why would you want to get into this business?

 

[DirtyWorks]

Gamma no one will have the "right" answer. It is entirely up to you to make it or go broke. You only get back what you put in. marketing is the key. Doing the work is the easy part no matter what equipment you go with. As for my opinion, (well you did ask for it) stay away from the ASV. way too fragile for the forest. You may be ok with it at first but you will eventually want to put someone else in the operators seat. You need a machine that can take a beating. As for the good year to start a biz ,2008 is just as good as any other. In my work a slump in the realestate sales is a good thing. If someone wants to get top dollar or sell their land faster, I help them get it presentable. It sets theirs apart from the rest. Also people would rather stay in their current land situation and just improve on what they have instead of going broke trying to buy something better. I know a lot of home improvement guys who are busier than they have ever been also because of the same reasons. does this explanation make sense? They would rather spend their money on what they already have.

GOOD LUCK with your biz. If it is what you want to do--DO IT!!

note sig line....

 

[john_bud]

Gamma,

Have you determined the amount of competition in your area? I called some consulting foresters to determine who was doing mulching. 1-2 guys do it, there were 4-5 but they went broke and moved. Yikes! Maybe call a few developers and see what they have for business too.

jb

 

[EddieWalker]

Every year is a good time for somebody to start a new business. It doesn't matter what the economy is or what the compitition is, there are those people that will start a business and do good no matter what else is going on. Usually, those people have a solid plan, outgoing personalities and positive attitudes. They are go getters that don't rely on others for work. They don't make excuses and admit their mistakes.

If you WANT to start the business, then now is always a good time to do it. Somebody else is doing it already and makeing a profit at it, you just have to do it better then they are.

For me personally, it's not a business that I'd want to be in. Too much capital into one machine that you are dependent on. Too much maintenance, repairs and cleaning. The idea of spending a day muching brush sounds awesome, but I think doing it for a day will be about all I'd ever want to do. Too loud, dirty, dusty and abusive for me.

At the going rate of $100 an hour where I live, it's not a huge proffit margin either. The money is there, but it wouldn't take much to lose money at it either. Especially if you have to hire others to do anything to the tractor, or to help out in the work.

My personal thought for making money right now is duplexes. Rental units are at a premium where I live, and what's available is pretty bad. The big money is into building apartment complexes, which are all over the place. But a quality duplex is fairly rare around here, and the demand for them is pretty high. Design them for renters with the expectation that they will not be taken care of and need repairs, and you'll make a profit on them. Or at least, that's what I'm thinking.

Eddie