I am looking into getting into the backhoe business by which I mean buying a backhoe and doing jobs with it and renting it out so I got quite a few questions before I do this. A little background I live in a ranching community and there is tons of work for a backhoe to do and not many of them around. The few of them that are around charge so much money to rent or come and do a job that most of the ranchers will not use them in less the job is critical. What I would like to do is offer backhoe rental and work for a way cheaper price because I think in this community that is the only way to make money is to do more work for a cheaper price. Questions 1. Do you think this is a good business idea? 2. What do I need to know about renting equipment to somebody? 3. What kinds of insurance do I need? 4. Do you think use of fuel and other services is a good way to discount the price? (fuel me up get the backhoe for cheaper) 5. What backhoes do you recommend? (will have to be a used one only got 30,000 to spend at the most) 6. What features are best on backhoes? (Would like a backhoe that can connect accessories to on the hoe like thumb auger etc.) 7. Has anyone ever tried what I call the Wal-Mart approach to equipment rental and use?(Wal-Mart approach is the use of equipment for a very cheap price) 8. Should I just trash this idea and move on? (I have experience in the equipment rental industry I worked as a mechanic for a couple different rental places while in college and have ran farm equipment since I was eight years old.)
Sorry, I can't answer ANY of your questions for you, but I can tell you some of my observations. I have seen several small independent rental businesses go out of business in the last few years, the one with used equipment, a few skids, a mini excavator, maybe a backhoe, a small utility tractor, all the attachments, and then the tools, tents and tables. There is plenty of competition around HERE, you can still get the machines from other businesses, often for a higher price than the ones that went out. Don't know what that says about the walmart rental model? Regarding renting your machine out, what do you do when the machine never comes back and none of the contact info works? the other problem I've found is that the hourly cost of operating the machine (+hourly rental charge) is so high that it costs less to have an experienced operator do it, than to have a homeowner piddle around with the meter running. Regarding fuel, checking oil, etc. personally I'd never trust a renter to touch my machine (just like as a landlord it's a terrible idea to let renters "fix up" a place). Assuming you're good with equipment, you will know when the machine sounds wrong or isn't operating right, a renter will snap a hose off, see the oil spray and still push it till it won't go no more. If you have the experience, enough work within a driving radius, a way to transport the machine and can make it work financially (business plan, expenses, not just the purchase) then I say go for it as an owner operator.
The Walmart idea scares me. Machines cost money. Moving them, running them, maintaining them, NOT maintaining them, insuring them, repairing them, fuel..... it all costs $$$$$$. I remember when I bought my first skid loader, I did it on what I call the 100 hour principle. I ran it for 100 hours at a competitive market rate, and, without fuel and my labor, it's paid for. Yeah, my old Case was under 7 grand. It worked, and I made it to 300 hours without anything going wrong. But then it happens The starter went. $235.00 A drive motor hose from the tandem pump blew out. On a Sunday. In a hospital parking lot. $95 for the hose, $116 for the 10 gallons of 10w-30, and $60 for a new filter. $50.00 worth of kitty litter, and 4 hours with a pressure washer. $1100.00 for new tires after the old ones wore through to the foam fill. And I feel like I take good care of my kit. I can only imagine what it would be like if I hadn't been charging like I needed to, and had some homeowner beating the tar out of it. Walmart sells cheap because it buys cheap. You will more than likely have to pay the same for diesel / tires / etc as the next guy, which makes it that the only dollars cut are the ones that go into your pocket
if i was you id buy a 40-50 hp tractor with a backhoe attachment and quick connect loader bucket so you can use a large assortment of odd and end attachments but also use an auger off the pto, snow blower ect. and then use it as a side job helping out people you know, renting stuff to peoples expensive because no one takes care of anything they rent and to insure equipment properly especially for renting is very expensive. you could start a LLC small company with basic insurance and run a tractor with an assortment of attachments from forks and buckets to backhoe, snowblower, auger and even a stump grinder. thats probably your best bet, tractors are cheaper to move, fix and parts are easier to get/ make. just my 2 cents.
Hey thanks guys for all the advice i really appreciate it!!
I think if there is a need like you discribe in the area, then it's a great idea, I would not rent it real cheap, i would try to do as much of the work as you can yourself or with you operator, but still the renal idea can work just not my first choice 30k will get you a plenty good enough machine, imo the best 2 brands for backhoes are john deere and case a cat would be a second choice but they are still a good machine. For me the 2 most important things for a backhoe to have is 4x4 and extend a hoe.
When I tell a customer how much I charge and how much they could rent it for , they usually let me do the job. Thus saving repair on my stuff.
#1Yes #2 Don't do it #3 I have never been in the rental business but you might need more liability? #4 No I would not rent it without the operator. (you) #5&6 I have a CAT 426B and I like it. It has the three in one bucket and is very handy for farm use. 4X4 is very nice also. #7Never rent to a rancher or farmer. Buy the way I'm also a farmer. They have lets say some special ways of destroying a machine. #8 I think you could do alright if you don't rent it out to folks without you in the seat. Renting it cheaper without you there is even worse. I mean what happens if someone tears a line off the bottom like a tranny cooler line and burns the tranny up? And yes limbs,fence posts, rocks and other ranch items can and will do this kind of damage. Have you priced the tires off of a backhoe lateley? One burried t post will ruin your day I promise.
Don't work cheap. If you go with a cheap price 2 things will happen: 1. You'll be a raging success for a brief period of time. You'll know when that period is over because you'll not only be unable to continue to work at the low rate that you started out at, but you'll have to find the money to make the needed repairs and maintenance to your equipment. (Many people have tried this approach, you can buy their equipment at bank auctions or under the MUST SELL headings in your local classifieds). 2. People aren't going to take you seriously if you're too cheap (think about it, people might buy throw away tools at Walmart, but when they need a quality item, they'll spend more for Snap-On etc.) Don't market your services in the paper plates isle if you want to build a quality reputation. Price your work fairly, do good work and treat your customers right. If there's as much work as you say there is, your reputation will travel.
I'd like to know what price you are saying is high for rental cost for the few backhoes around, just out of curiosity? The cost for operating and maintaining backhoes are not cheap, you probably know that. Just for a basic service on our backhoe is 350 dollars (that is with us doing the servicing), you put hours on them pretty fast. Also, we go through plenty of hydraulic hoses, bucket teeth and many of other things. This stuff breaks with our people operating it, renting it out I couldn't imagine what kind of stuff would be broken. We charge 75 dollars an hour for backhoe and operator; this does not include hauling it to the jobsite. We also have lots of other equipment to help offset our cost, if we just had one backhoe I would expect we would charge a little more. IMHO there is only one backhoe that is worth buying and that is caterpillar. I have been told that komotsu makes some pretty good equipment but have not had or used any of their stuff before. John deere and case are ok but made cheaper than the CAT's, just look at the material the buckets and outriggers are made out of and how some of the hydraulic hoses are ran, they are just not as durable. I also agree an extending stick is very nice to have but not a necessity depending on what kind of work you are doing. All of our backhoe's have extending sticks but it is one other thing that can break, we have had an operator bust the extending stick cylinder before, it wasn’t cheap to fix and you have to have some kind of lifting equipment to take the stick apart. I think what you want to do would work and I think you could get a decent backhoe for 30,000 dollars if you already have the equipment to haul it. One thing you may want to look at later on is getting a dump truck to haul your backhoe with, we make a pretty good chunk of money with our backhoe and dump truck. Just make sure you have a really good estimate of your operating cost before you set any kind of prices, although you can change them later on. I wouldn't rent it out either; you can’t trust other people to take care of your only piece of equipment. To me a backhoe is one of the easiest pieces of equipment to wear out pins and other things on. I'm not sure why they are worst than other equipment but the pins all seem to wear out fast if you do not grease them and if it is used improperly.