Hiring out equipment questions

[MikeB64]

Just got my new Massey Ferguson C2410TLB delivered. Here's my question....

Looking for ideas on how to market my tractor and services...

I plan to offer

Trenching and installation of conduit for electricians/utilities
Spreading of loam - bark mulch - gravel - hardpack, etc
Rototiling
General backhoe/loader work

I am planning to get a york rake and perhaps a blade in the very near future. I'm doing some calculations as far as expenses, etc. I am in New Hampshire and toying with charging about $50 and hour. If I do a job to say spread bark mulch, I'll charge by the hour......unless somebody can give me other ideas. Am I charging enough? The last thing that I want to do is to hurt any market that there might be.

Does anybody have any type of relationship with folks that sell landscape materials? I was wondering if it might be a good idea to approach a few companines that sell landscape materials to offer my services, and pay them say a perentage of my proceeds.

Open for any constructive comments or suggestions. I will add that I WILL be properly insured!

Thanks!

 

[kebo]

There have been quite a few posts about this before. The one common thing that always pops up is have you considered the liability aspect of working as a contractor?? Insurance?? Just something to think about along with all the other aspects of hiring out your tractor....

 

[CurlyDave]

In my area, and I recognize it is one the other side of the country, the guys with the big backhoes (80-100 hp) usually charge $80-100 per hour. Usually they tow the tractor out there on the back of their dump truck, and the use of the truck is included in the rate if you need it, but you only get one operator.

Most of that charge is for the operator's labor, only a small portion is machine costs.

With your smaller machine you may be limited to $50/hour as the most the market will bear. Whether this can be profitable depends on your situation. If you are doing it for extra cash it might be fine. The guys with the bigger machines are making a living at it, and have to make up for a lot of time they aren't working. If you are just doing it as a sideline, that may be a viable business.

I am willing to bet that if I needed a guy with a 100 hp machine for two solid months I could get him to work for less than $80-100.

 

[MarkV]

Mike welcome to the forum. Besides the insurance you need to check and see if you are required to have a contractors license in your area. Speaking of insurance, I sure hope that when you tell them you plan on backhoe work the rates are better in your area than mine. When I looked into it, a number of years ago, the amount of time I had and the size jobs I could do with a smaller tractor just didn't add up after seeing the cost of insurance that let me dig.

MarkV

 

[GreenWannabe]

Mike welcome to the forum. Besides the insurance you need to check and see if you are required to have a contractors license in your area. Speaking of insurance, I sure hope that when you tell them you plan on backhoe work the rates are better in your area than mine. When I looked into it, a number of years ago, the amount of time I had and the size jobs I could do with a smaller tractor just didn't add up after seeing the cost of insurance that let me dig.

MarkV

What Mark said. And you don't even want to find out how many hundred thousand you can be out if you hit a telco fiber optic cable (f'r instance) without being insured, or without calling before you dig.

 

[RickB]

Check out how much the insurance for the backhoe by itself is. Liability coverage for sub-grade work "here" is prohibitive.

 

[gibby123]

If you are set up as a business it will not be to hard to find meaningful work for the machine, if that is why you purchased it . If you bought it for your own property, I would recomend keeping it local and for what you intended it for. Yes the questions of insurance have been asked and all of the liabilities need to be addressed but when we look deeper into the the little issues like how much will it cost to replace a hydraulic line if one breaks on a job site or say you pick up a nail or roll a tire off a rim !!! are these expences that have been thought of for smaller jobs . It won't take long to eat up $50 or $60 bucks in the hour that you might have made , if you need to repair something.
In my landscape company we use dump trailers, people often want to rent them from me for cleaning up after construction/roofing jobs, etc. The cost to replace 1 tire, because of a nail,will set me back about $200 bucks and lots of time.The cost to hire a bumpster is about $250. With the travel to and from, and tipping fees at the recycling plant it doesen't leave much room for profit.
I guess what I mean to be saying is that lots of thought should have gone into this before any purchases were made. Also remember to stick to what the machine and attachments were make for, don't over do it!!!
Where I live , we charge $60 an hour plus travel time if it is greater than 50 km away

 

[john_bud]

Don't forget that some home owners will be real picky about any oil drips, etc. YOU need to have a lawyer write up the contract the customers will sign. You need the insurance, the license, etc. And you most especially need to make sure the diggers hot line (or what ever you have there) is ALWAYS called by you. NEVER trust the customer, you will be screwed!

Well that was the bad part. The good part is that a small machine may get you small jobs that others don't want to take. Be cheerful, confident, always prompt to appointments and never prevaricate. You can work your way up with honesty and hard work. PM "EddieWalker" to see how it can be done.

 

[MikeB64]

Thanks for all of the replies.

I want to be sure that everybody know where I am coming from.....This was/is not a shoot from the hip idea. I have given this plenty of thought.

I do have/have done done the following:

composed a business plan
established a busines bank account
have registered the name of my business with the state
applied for a federal tax ID number
researched insurance
have the proper vehicle/trailer
have over 25 years in the towing & recover industry, so I understand the value in using the corrrect size, type, working load limits of chains, continous loops, shackles and so fourth
experience in the utility industry, putting in conduit, pulling wire for power, cable TV, data & telephone, knowing the National Electric code, proper depths for conduit to be buried at, etc.

What I DON'T have is all the answers! There are awesome folks here that have tons of experiences. So, that was the intent of my inquiry.

I can't believe that anybody would do any type of work uninsured, and not call Dig Safe first, but, it's done all the time. I won't take that chance, have too much to lose!

I hope this does not come across as arrogant, that's not it all, I just wanted to let folks know that I have done my homework.

Thanks!

 

[MarkV]

Thanks for all of the replies.

I want to be sure that everybody know where I am coming from.....This was/is not a shoot from the hip idea. I have given this plenty of thought.

I do have/have done done the following:

composed a business plan
established a busines bank account
have registered the name of my business with the state
applied for a federal tax ID number
researched insurance
have the proper vehicle/trailer
have over 25 years in the towing & recover industry, so I understand the value in using the corrrect size, type, working load limits of chains, continous loops, shackles and so fourth
experience in the utility industry, putting in conduit, pulling wire for power, cable TV, data & telephone, knowing the National Electric code, proper depths for conduit to be buried at, etc.

What I DON'T have is all the answers! There are awesome folks here that have tons of experiences. So, that was the intent of my inquiry.

I can't believe that anybody would do any type of work uninsured, and not call Dig Safe first, but, it's done all the time. I won't take that chance, have too much to lose!

I hope this does not come across as arrogant, that's not it all, I just wanted to let folks know that I have done my homework.

Thanks!

Good for you Mike. It sounds like you have good plan in the works. Hope you didn't feel anyone was talking down to you here. We have seen a lot of people get a new tractor with the idea of side jobs paying for it but they have no idea what it takes to run a small business. Obviously you do so we will look forward to updates as you get it going.

MarkV

 

[Jeff244]

You probably know this already, but you may want to put a clause in your contracts that the homeowner is responsible for locating all utilities that Dig Safe doesn't, like electric run to the garage or outside lights etc.


Jeff

 

[LBrown59]

You probably know this already, but you may want to put a clause in your contracts that the homeowner is responsible for locating all utilities that Dig Safe doesn't, like electric run to the garage or outside lights etc.


Jeff

I was just thinking about this a while ago.
The dig safe calls won't cover private lines.

 

[MikeB64]

Now that's a great tip! That's why I asked the way I did, one person can very easily overlook something, this is a prime example. Thanks for the information!

 

[Jeff244]

A couple more things,

When you are working for a homeowner, you should get paid as soon as you finish the job. If they aren't home, arrange to pick up the check that evening.

It can get tricky working for builders and developers. They usually will not pay you as soon as you complete the job. Some of them tend to use subcontractors as their banks and don't pay them until the entire job is completed or building is sold. That is fine as long as you understand that ahead of time, and charge accordingly. I don't know what the laws are where you are, but in Illinois you have 90 days to file a lien. There are ways to extend it, but try not to let yourself get into that position. I'm not trying to scare you away from builders and developers, I'm just saying that a little extra caution may be needed. Most of them are good honest people, but I have been taken advantage of a lot more by them than by homeowners.

Jeff

 

[spruce Deere]

Is true. I started dabling in the "tractor on the side work". If you really start adding up ALL and EVERYTHING you need too, yes the list is long, you start to wonder how some guys even make it charging $30-$50/ hour. With a TLB like yours, Guaranteed thats not enough. Check out lonecowboy and farmwithjunk on different brush hogging and tilling threads... People in the know.

 

[2manyrocks]

Do you have to collect any sales or other tax from your customers where you will be working? If you are using the same equipment personally, then this affects or could limit your ability to deduct or depreciate your equipment. Have you talked with an accountant or tax advisor....

I wouldn't pretend to know whether you would be getting into work for which you'd have to pull a permit in your local area.

Do you have a list of contacts to go through to try to get work? If not, do you have some ideas where to start?

 

[LoneCowboy]

Liability insurance (not cheap for excavating), any real contractor is going to require $1million certification to even bid it.

workman's comp

your truck (and trailer) need to be registered as commercial and more importantly insured as such (more more expensive than a car)

your tractor (& inplements) get taxed now because you are using them in a business. It's sometimes called personal property tax, some states you get a plate, but every state taxes them somehow.

You may or may not need a USDOT number (check fmcsa website, they have a webpage where you plug in your info and it tells you if you do or not)
Some states (michigan I know) require anything over 10k to have a special license (not necessarily a CDL), some don't, check your state's DMV.
You are a commercial vehicle (whether you have a USDOT or not) and you'll need to meet those criteria regarding fire extinguishers, triangles, chaining it down, etc, (no paperwork but you do have to do it right). Most states require name of business and phone number on truck (many people use a vinyl sign)

advertising (adds up like you wouldn't believe)

bank account I see you have, registered as a company I see you have.

Can you store your equipment at your house? In some cities this is a big deal, in some they don't care. (zoning laws, etc)

fuel
transport time to get there and back.

replacement and repairs (teeth wear out, etc)

depreciation. Figure the cost of your machine over how many hours you expect it to last (3-4000 hours is probably a reasonable number for a compact) and divide by the replacement cost. Every hour on the machine adds that cost, otherwise you are using your machine up for free. Now you get to deduct this off your income as a non-cash expense, but you still need to be charging for it, otherwise you can't replace the machine)

Maintenance: trucks, tires (oh man will you go thru tires), the tractor (compacts are maintenance intensive, low hour intervals), trailer.

I doubt you've thought of all this, because the price point you've indicated won't even cover this.

I don't think you'll be able to compete. You need to charge close to the same as they get for a real backhoe (approx $100-120/hour) but you can't do the same work. Their only difference is higher depreciation costs, but probably lower maintenance (longer intervals).

You're working for free and putting your tractor to work for free for $50/hour.

Oh yeah, some states tax service work (NY I know for one), check into that too.

 

[LarryRB]

Lonecowbow has given you 90% plus of the needs, Here are some others,,, You need inland marine insurance to go on someone else' property with that compact trator.. If you have a freak fuel spill, broke a hydraulic line and didn't catch it until it pumped 10 gallons on the ground,,, Inland Marine will cover this... I did what you are going into for years.. The liability here in New England is probably the highest in the nation. To get a million minimum plus umbrella, being new if you can't prove operation hours on a given machine such as a 8 ft or shorter backhoe, that liability starting off can easily be $5500.00 and then some, Also, you have to have some kind of provision for blasting or removing large parcels of stone,.., NH is the granite state, is it not? What didn't stay there, moved right on down the valleys and covered all of Mass and 80% of CT-RI with your granite, stone, rock outcroppings and the like,, More times than not, you will not get far digging with a small machine before you run into a Titanic size boulder... Have provisions to cover this./I have a Kubota L48, commercial machine albeit a small one., I struggled constantly with hidden rocks, old pine tree root balls and the likes,,.. Good luck to you,, I haven't done a thing in two years, mostly economics and therefore the cost of insurance and I no longer have any interest in going off the property, When times get a little better I will sell- trade off this 48 for a 5740 cab with loader and this is all I will need,,.,, Take your time, do your homework and rehash that homework several times over,

 

[spruce Deere]

Well done lonecowboy. Our little scool district here requires a million buck certification just to plow parkinglot snow, With school NOt insession. A smaller excavator, cat 315 around here is $125 an hour, last checked. The local rental place here you are out $280.00 or around $70/hr, four hour minimum, just for a 28hp tractor with tiller. Food for thought.

 

[MikeB64]

Liability insurance (not cheap for excavating), any real contractor is going to require $1million certification to even bid it. Covered....insurance to cover my truck, trailer, all equipment and 1 million liability = $1500.00 per YEAR

workman's comp not neceaasry unless I hire somebody

your truck (and trailer) need to be registered as commercial and more importantly insured as such (more more expensive than a car)

Not necessary to register as a business as I am a D/B/A (doing business as) as far as insurance, see above.

your tractor (& inplements) get taxed now because you are using them in a business. It's sometimes called personal property tax, some states you get a plate, but every state taxes them somehow.

Have a CPA....ALL business expenses covered by 1040 long form....everything from lunch to tires, parts, fuel, etc. All mileage needs to be documented with destinations, purpose, etc.
All covered by doing the 1040 long form, all expenses are properly documented. This is straigt from a CPA that will be doing my books.


You may or may not need a USDOT number (check fmcsa website, they have a webpage where you plug in your info and it tells you if you do or not)

Not necessary, way under the 10,001 GVWR as per ICC + DOT regulations

Some states (michigan I know) require anything over 10k to have a special license (not necessarily a CDL), some don't, check your state's DMV.

I hold a CDL-A (tractor trailer) with a current medical card

You are a commercial vehicle (whether you have a USDOT or not) and you'll need to meet those criteria regarding fire extinguishers, triangles, chaining it down, etc, (no paperwork but you do have to do it right). Most states require name of business and phone number on truck (many people use a vinyl sign)

under 10,001 GVWR, those are ICC/DOT requirements, not necessary, although not a bad idea to have.

advertising (adds up like you wouldn't believe)
Depends on what you do, flyers, cards and word of mouth. Web address on vehicles as well as a nice clean lettering job works wonders. Keep truck, trailer and equipment clean...speaks volumes

bank account I see you have, registered as a company I see you have.

Can you store your equipment at your house? In some cities this is a big deal, in some they don't care. (zoning laws, etc)
Can keep it right here whereas I use all this stuff at home. If that becomes a problem, which I don't envision, have plan B,C & D as far as storage of equipment. Truck & Trailer used just for this, have seperate vehicle for personal use.

fuel
Calculated in hourly rate...both for truck & trailer

transport time to get there and back.
Mobilization fees....been calculated, even covering tolls

replacement and repairs (teeth wear out, etc)
Called consumables....calculated, check

depreciation. Figure the cost of your machine over how many hours you expect it to last (3-4000 hours is probably a reasonable number for a compact) and divide by the replacement cost. Every hour on the machine adds that cost, otherwise you are using your machine up for free. Now you get to deduct this off your income as a non-cash expense, but you still need to be charging for it, otherwise you can't replace the machine)

Part of the stuff that the CPA & I have come up with

Maintenance: trucks, tires (oh man will you go thru tires), the tractor (compacts are maintenance intensive, low hour intervals), trailer.

All part of the mobilization and operating expenses

I doubt you've thought of all this, because the price point you've indicated won't even cover this.

Impossible for you to accuratle state whereas you have absolutely no idea whatsoever what my overhead is!

I don't think you'll be able to compete. You need to charge close to the same as they get for a real backhoe (approx $100-120/hour) but you can't do the same work. Their only difference is higher depreciation costs, but probably lower maintenance (longer intervals).

Again, difficult for you to say, every geographic region has different economical challenges. How do you know what NH operators charge for a backhoe? Whereas you don't mention where you're located.

You're working for free and putting your tractor to work for free for $50/hour.

I don't beleive so


Oh yeah, some states tax service work (NY I know for one), check into that too.

You're based on income.