Hello everyone! Since this is the "General Industry Questions" section, I am hoping I can be VERY general... I have very little experience in the industry, but I decided to start a service company {yikes}... Any advice for a complete n00b?
I think that's a bit too general. Service? PM service, on site? Welding service? Specialty service, ie electrionics diagnosis, regen and engine related, what? What service are you planning to provide?
Well.... my background isn't in heavy equipment, but my partner has decades of experience as an onsite mechanic... We are still figuring out our strategy, (Literally formed the official company today). So far we have one service truck (In the pic) that we bought and will get to Tx this weekend. Looking into a lube truck and should have one by next week. He's been on one of those bad boys since he started, but this is the first time he will be in one of his own! He's got the experience on the ground both in moving metal and electronic diags. Our main focus is going to be to keep machines moving so clients stay productive. I know I'm still kind of all over the place, but like it's too late too look back now! Here's a couple of specific questions I'd love some guidance on: 1.) What's a good place to look for good mechanics either with experience, or who want to get into the field (for a lube truck, or for onsite work) 2.) Where can I find good deals on used welders I'm so glad I found this site! I've been doing a lot of reading and it's great to see so much good information from professionals! Thanks again for any help!
What is your experience? If your partner is a mechanic then get him out making money as much as possible ASAP. I presume (hope) you are the business savvy type. Keep your books current and don't let slow pay customers slide away on you.
Start here, HeavyEquipmentForums I think yer in fer a rough ride.
I'm sorry, I don't want to discourage, but man?! You look for input and advice afterwards? I don't know if yer ballsy or ill prepared or just that confident in your one wrench. Have you looked at your small business insurance, workmans comp, federal requirements... How about specific training for certain sites. A lot of customers subscribe to this insurance rating thing, where if your risk is too high, you don't work for them. What about customers who want 90 and 120 days to pay? That's most of your municipalities there. Is the business in your wifes name for women and minority owned business preference? What about tool insurance on that rig? What's she weigh in at. Over 26k? How about log books for the DOT? I would start with your tech. Does he know anyone worth their weight to bring in? Are you going union? Have you considered it. In my area , no one works heavy equipment without union. Maybe theres a crafts guild or something of that nature you could tap for help. I would not entertain the idea of an apprentice, who would train him? A go fer, maybe or mechanics helper, but no apprentice. Again, not bustin balls, or discouraging. I think you guys are brave "**" for stepping in. Im just asking if you weighed it out against the benefits.
That's the plan! My background is in Operations/Logistics, so I'm working on the back end stuff... He is still technically employed which will give me a few weeks to get everything in order on my end before we move any wrenches... Is this industry known for slow paying clients? As in, not paying when the invoices come due?
Awesome, will def check this out... Also, That's what she said!
Probably all of the above... You're definitely not discouraging, and I appreciate your thoughts! Like I mentioned before, I have no experience in this industry so I don't know what to fear.. (which I count as a positive) I'm learning a lot about the biz, and I know I have so much more to learn... The payroll/compliance/insurance stuff I'm pretty well versed in, but I'm sure I'm gonna find some industry specific stuff there too... To answer a couple of your questions, we are going to keep our vehicles under 26k gvwr for the time being to avoid the DOT stuff... It takes a little more work to find the rigs, but for the time being I think it's our best way to go. We are definitely starting with my partner's contacts, especially for the lube truck.. The PM side of things should be pretty busy from the jump... We are lucky enough to be minorities ourselves, so that doesn't hurt! You're absolutely right about the apprentice, btw... My partner said the EXACT same thing almost word for word! =) Thank you for all your input again, ... Like I said, I don't know if brave or stupid is what we are, but there's no looking back now! I do appreciate your perspective, especially when I know I don't know enough to fear!
hats off to you for jumping in feet first its better to have 5 happy customers than 10 that are mad its going to be quite the challenge for one guy in the field to make enough billable to keep both of you going even in the short term and grow your buissness keep in mind if your buying the parts and things your fronting that money until the customer pays that can get ugly really fast if not kept on top of above all take time to maintain your trucks always seems the only truck that always kept running enough to get by and never fixed is the mechanics truck your job is to come to the rescue not be rescued believe me you dont want to be that guy. good luck and strap in your in for a ride
I did some work for a man that had been a shop manager for the family dealership. They were selling G's, WC's, WD's, D17's and such. He told me " A good man with a good helper can do the work of three men. When you need more done than they can accomplice you will hire more people. Then you will find yourself paying five men to do the work of three." Somewhere around the bottom of that number of employees requires workmans comp. Straight hourly employees can require a straw boss like the Henry Ford model. Straight commission mechanics, come backs are free, tend to be untidy. Hourly plus commission can be a good blend. If you extend credit to most anyone that comes along you will have the busiest shop around. It only takes one default to cost you all of your profit for a whole month. Unless you are specializing do not get into major component overhauls. Exchange them and let someone else warranty them. A good CPA is a must and set aside money for your payments. Just some start up opinions. Good Luck!
I think any industry is known for slow/non payers. Get yourself a Square credit card setup immediately and take credit cards. That way you can get your money immediately and the card companies can fight it out with the debtor if there is a problem. If I was you I would work C.O.D. exclusively and only venture into extending credit very slowly after a couple years, and with well referenced clients. Even municipalities and the federal government have credit cards these days, just ask for them.
I don't think there's anything wrong with expecting to be paid promptly at the completion of the job. Sometimes there are exceptions but the customer needs to tell you in advance. Payment comes from head office in another city so takes a few days might be an example of why a payment wasn't immediate. Having customers pay for parts on a large job is OK too. If you want partial payment up front for labor and possibly progress payments, you need to be bonded. Not that honest businesses would be a problem but you can't just take money up front because then there isn't much incentive to return to the job. This is an all too common scam with people doing home renovations. Being bonded also gives you credibility. One thing my dad told me was to never feel guilty about asking to be paid for work you did. Some customers aren't happy no matter what you charged and try to weasel out of paying the full amount. Be leery of a customer who wants a huge amount of work done and acts like money is no object. I had a couple of these and then they tried to haggle on the amount at the end.
Speaking of "slow" payments.. I did a couple of pumps for a guy who owns & runs another fuel shop.. The pumps were alittle above his knowledge.. I did the pumps, sent them back on my dime & NEVER got paid.. this was in OCTOBER!!! I'd call him once a month to "check-in",, I just KNEW I'd get my money one way or another seeing we both did the same thing.. I could just recoup it from parts or tools or something..?? I found out yesterday> HE DIED..!!! & I have no recourse.. The only # I had for him was his business phone. I had met his wife a time or 2 & she knows who I am but that's it.. I DID leave a condolence msg on the business phone voice mail & offered my services to help close-out the business, cuz I KNOW there were customer jobs in there.. Just sayin> don't let the money get TO FAR behind.. cuz you never know whats gonna happen. & I'm out $1000.00..
That reminds me of the Tom T Hall song ballad of forty dollars......I hope he rests in peace but the trouble is the fella owes me forty bucks. As to the OP, strap in it's going to be interesting. Having had several business and/or being a part of others I'll say this. NO EXTENSION OF CREDIT TO ANYONE for quite a while. I wouldn't buy more than a couple hundred in parts with my own $ for anybody. They've most likely got charge accounts etc so let them buy parts for their machines. If they don't have a way to pay for their own parts or make excuses about getting them for you guess what....you'll hear the same ones when you ask for your $! Avoid debt and anything with monthly fees. That crap adds up fast. Run lean and bare bones as long as you can. When getting a call from a new client ask them questions to determine how big they are. Such as, who do I contact for accounts payable? Their answer will tell you a lot. If they say uhh what's that? Not good. If they say it's Jane Doe and she's at the corporate office in NY that's not good either. Ask about their payment terms. There's a lot you learn to ask up front that tell you who's going to be a good customer and who you should avoid. Credit cards are great, just pad your bills to pay the processing fees. I would get in the habit of saying, all payments are due at the time services are rendered unless other arrangements have been made. If somebody won't pay at the time you're done, odds are they won't in 30 days and you don't need to work for free. There's always a guy looking for a new company that'll give him some rope so he can get something done for nothing.....
Common theam here? The cash is the life blood of the biz. Dont let it get out of hand. Most all the other stuff will sort it self out.
I used to have a pile of rubber checks from my attempt at home office mechanic work. Lost/wrote off just at $6k over the course of a year in the early 80's. Was really bad times then with tight money. Adjusted my mechanisms where the customer would pay labor to me but buy their own parts I deemed necessity and I would install. Ended up with a few customer machines apart they could not afford to fix at THEIR locations, ate some lost labor but in the end was not so bad as the first three years. I got old, mechanic work is pretty tough on the physique, labor is a really tight market right now but may expand IF the millennial turds open their eyes and opportunity avenues.
That's what I'v been doing lately.. no credit.. didn't used to be like that.. FOR YEARS, I would do a pump AND send it back WITHOUT A DIME PAID.. not anymore. I'll bet 80% of the people on this site that got their pumps done by me did so w/ no money paid upfront.. The "funny thing is".. the only people that screwed me, were the people in my home State.. doesn't speak highly for the people of South Carolina.. or I need to pick my customers better.. Lol
Payment before the work starts for 100 Percent of estimated parts is not uncommon. Typically when i do that i give a invoice as a estimate of parts. And list them all. And make it claer it is a estimate. Some times you dont change all the parts in the estimate. U give that money back. No one complains when the bill is lower then was estimated. Most of my customers are in construction or logging. If you extend credit u will get bit.
A couple more questions! I'm hope it's ok to be asking about all this on the same post... Do y'all independent guys charge a % above retail when you furnish parts? What's typical? Do y'all charge mileage, drive time, both, or neither for field work? What's typical? Any recommendations as far as billable hourly rates? Thanks again y'all!
WHEN I supplied parts the counterman would charge me one price and the invoice would show two to three options prices, those were potential markups. Not sure they still do that. When I stopped buying parts the customers never saw the wholesale price. As a rule to cover potential warranty lost money 6-10% markup was not uncommon dependent on regional sales by others and their pricing. If I had a reasonably close service call, time started when I left the yard until back on it, for distance was mileage and a fuel surcharge.
Out here, it's port to port hourly plus $3/mile. But Im in union territory where prices are traditionally high compared to the rest of the country.
Doing injection pump work is "alittle different" as to parts, to say the least.. The part #'s aren't available to anyone off the street, so you cant "look-up" a part on the ol'interweb & compare prices. Before I left, the shop rate was 115.00/hr.. 2.75/mile from door to door & time started when you left the shop until you got back, unloaded the tools & did the paperwork. MY RATE is 65.00/hr & 1.00/mile if its outside of 50 miles.. Now if I'm out & about, I'll "swing by" & wont charge for a service call. But if its a Saturday & its raining & its cold & you just GOTTA HAVE IT> dam right I'm chargin you.. Lol
We did have a dollar a mile surcharge back when fuel was 4.50 4..75 a gallon
Your rate should be relative to your experience level. If you charge too much and can't repair or troubleshoot a lot your in trouble, and most of these companies you do work for all know each other, so word, good or bad will travel fast.if you establish a good reputation, charge a reasonable rate, and can be Johnny on the spot when they need you......word of mouth will bury you with work and you will never need to advertise. Be prepared to do things others won't, especially starting off. I think a reasonable rate starting now days is around $ 55-60. You also need a mileage charge , say $1.25 per mile. Also include a supply cost (nuts , bolts, tape, connectors, hand cleaner, rags, etc.....).........mine is usually 10% of labor costs on average. Don't get into any jobs that are too big or over your head too soon. Customers respect honesty and would rather you tell the, your limited than to dive in and cost them a fortune later.
My advice would not be to set the advertised rate too low. Set it on the low end of the established guys rate. And get it up where it should be in the future. But charge the hours according to what an old hand would have taken. If you forgot something and had to take something back apart and rework something then don't charge for that time. If you break something then replace it for free. (Of course if it would have broken for the old hand then charge for it.) This way the customer is not paying for your lack of experience but as you start to improve your speed and skill you will get jobs that go just as fast for you as the experienced guy and then you will be able to make the same money and start to get ahead. I am not sure if this has been posted already but ALWAYS ANSWER YOUR PHONE. Even if you are in an inconvenient position if you pick up the phone and talk to the customer you will make everybody happy and get more jobs that way.
When you say your experience is in "logistics" that doesn't tell me much, but by you're own admission you are "new" to any heavy repair. Sounds like your partner is the mechanic, and you are hoping to ad a lube service with it? I'm guessing from what you've said that you are partners in this deal? You're the $ and he's the labor/ experience? I'm not asking to try to get personal, but to give much for advice, I'd need to know a little more about what you're trying to do. Are you just answering the phone, and dealing with the paperwork/schedule, while he's out turning wrenches? Or are you hoping to turn wrenches too, or help? I will say this much, its really hard to be the man in charge, if you have no idea what you're doing. If you're the guy answering the phone, its going to be hard, because the guys on the other end, want to feel like you know what you're talking about. Its going to be hard to estimate how long jobs will take, because you have no idea. It's going to be hard to tell the guys that are working for you what they need to do (if you add employees), when you don't know what they need to do. Or if they're really milking the clock on a job. I could see it working one office man, one wrench turner, but I think you're going to have a hard time generating enough $ off of that to keep both of you fed full time, by the time you take out the insurance, taxes, workman's comp, and fuel and all the other stuff. Its kind of like a buddy says about dump trucks, you need to either have just one truck, that you drive yourself, or you just as well have 10 trucks, as only having 2, because the paperwork is the same, but the money coming in goes up. But I wouldn't wish 10 dump trucks on anyone. Good luck, its the american dream to own your own business, a lot of guys on here do. There's a ton of great advice here that you couldn't pay for, and you won't find very many situations, that someone on here hasn't seen before.
Parts under $100 something like cost plus 30%. Parts over $100 cost plus 15%. To remain in business you need to make money off your parts and your labor. Customer supplied parts are great but it should not be your responsibility to warranty them. Tell them that up front. I did an inboard brake job for Mr My Own Parts once. He came back about a week later with a leaking wheel seal and asked if we can repair that today. Sure and while he watched. Checked wheel bearing play, none. Pulled the hub and visually inspected seal and all mating surfaces, good. Replaced the seal and handed him the bill. Oh no I just paid you to replace that seal. Yes you did but the bearings were not loose. The seal was not damaged and was installed properly with the correct tools. It was not my seal that is leaking it is yours and here is your bill. When the wheels roll two hour minimum or service call plus time type charge. Yes mileage plus hours from the time you leave the shop until you get back. There are all kinds of deals with good customers on parts, cost plus, on sight work etc. but you can't work for free. Do not BS and don't take any either. Do good work and stand behind it. Good Luck.
CraneOp hit the nail on the head . I just thought, what are you gonna offer for "lube service" For example, oil requirements for pre -emmisions engines vs modern engines, Gear lube for open diff vs lockers, hydraulic oil, wet brake oil, synthetic blends , ATF... Are you gonna rely on the customer to tell you what lubricants go in what cavity? We all know that they can't cuz they never check themselves, let alone read the ops and maint manual. Do you or your tech know where lithium grease is preferred over moly and vice versa. Do either of you have a clue on some of these volumes? A good size excavator with a 2k hour service, you could be handling 120-175 gallons combined. How 'bout coolants. There's a lot of choices there as well. Are you gonna offer oil sampling and analysis? Again, food for thought. If you were to top spec , some customers may not appreciate it. Like mobil 424 is a good oil that serves as hydro and wetbrake but not for all models. Limited slip gear oil can be used in a lot of gear boxes but at 75w90 wont protect 85w140 applications. Engine oil is everywhere, 10w30 SF/CK 10w40 , 15w40 and most engine mfrs are now spec'ing their own oil. Wrong oil in the wrong cavity could open you up to liability.
Not to burst your bubble here BUT> I've seen 2 businesses fail with this same scenario.. 1 money man & 1 experienced man.. the experienced man goes out day after day, bustin his hump & starts to feel like he should be getting more of the profits.. That normally doesn't sit well with the money man because HE bankrolled the whole thing & if it wasn't for HIM, "we" wouldn't have any of this.. So the experienced man starts to take projects on the side, "off the books".. then the business suffers & friendships end & courts & lawyers get involved to dissolve the partnership.. I sure hope this doesn't happen to you guys.. MY opinion is> partnerships are like room mates.. & room mates suck..
And try not to show too much profit by years end. The IRS just loves taking your money and supporting 12 other people that refuse to work for a living.
......and a few more things now that ive had some coffee this morning 1. Make a good impression, but leave a good impression also. Keep your field truck clean and organized (that makes a huge impression when dealing with first time customers especially). Clean the area where you were working when you leave ( do not leave ANY trash, cable tie clippings , used rags, wiring tails, spent connectors, etc... I carry trash bags on my truck just for this. Leave the area you worked in as clean or cleaner than it was when you left.) Clean the machine in the area you worked ( don't leave greasy handprints all over the machine. If you replaced a fuel pump or hydraulic pump they leak everywhere.......clean it up nice. I keep a case of brake cleaner and a bucket of solvent on my truck to accomplish this.) 2. Have a set minimum charge. There IS such a thing as being too good a value. I cant count how many thousands of dollars ive lost being the NICE GUY. It happens a lot, someone will call that has been working on something for days and is stumped, I pull up and have it fixed in 30 minutes. If you charge by the hour and only charge for an hour, your devaluing your experience. I added up the numbers a few years ago and was shocked at how many times this happens in a year. Its not your fault that they cant fix the machine, so don't YOU pay for it. My minimum is $400.00 here, providing I fix the problem. 3. Some customers will require that you have insurance on your truck and your work (general liability and products coverage.) While having this is great protection and worthy of the expense, it is expensive. If you have a lot of customers and only 1 requires it, make sure you do enough work for that 1 customer to justify the cost. I had this scenario come up a few years ago. It wasnt worth the costs of the insurance they required ($2 Mil.) so I ended up having to stop the relationship with said customer because I didn't do enough work for them to justify the cost of the insurance. In my business here $500 K is plenty. \ I'm gonna have another cup of coffee then I'm off to the next job this morning. I'm sure I will think of 100 more things after ive left.
Parts under $100 something like cost plus 30%. Parts over $100 cost plus 15%. To remain in business you need to make money off your parts and your labor. Customer supplied parts are great but it should not be your responsibility to warranty them. Tell them that up front. May be the times as to % markups but seems a taste high for what I see in our region. As to the parts supplied my Mr. I will get the cheap crap, I made note no parts warranty on every ticket, had a stamp made JUST for that, had the customer sign it before would start the work. Only had two try to take me to small claims, neither found a attorney to do it so represented themselves. One had to pay receipt PLUS court costs and a fee for my attorney, the other dropped the case before made court and hauled ass. I actually lost to the second as never paid bill(stopped check) and had attorney fees.
With the extreme cost of health insurance and some other things in business today the % is a requirement. That is still normally well below list. If you don't make it there you have to make it some where. We do some exceptions on tires, high dollar parts and big jobs. Some people tell me I am way to cheap.
What we will be offering: PM#1 (250hr): Engine oil, oil filter, fuel filters, cleaning of primary fuel screen, outer air filter, sample of engine oil, check all fluid levels & greasing of all points. PM#2 (500hr): All of PM#1 services plus Transmission filter & oil, Hydraulic filters, and sampling of transmission and hydraulic systems. PM#3 (1000hr): Includes PM#2 plus inner air filter and sampling & oil change on gear boxes We are going to base our lube recommendations based on the serial# of the machine, but this isn't my area of expertise
If this is what you are going to do, heed this word of advice. On EVERY invoice, Include a statement that dictates that your PM service does NOT prevent breakdowns. A lot of company officials seem to think that PM service prevents breakdowns. I don't know how many times Ive heard that, and when a major component fails ( which it will) they believe it shouldn't have. I even had a company try to sue me once over this. Another word of advise........Operate on your own money. Do everything you can to NOT borrow money from a bank. Those bankers are your friend when your making money and will beat your door down trying to get you to borrow......when you really need to borrow, its almost impossible, a catch 22. When you borrow money, they tend to think they know your business which they know nothing. When things are good and you can make the payments, things are great. As soon as there is an economic dip and you struggle to make payments, they will tell you that's YOUR problem. There is only so much you yourself can control, but that banker wants his money every month, on time......or he OWNS you. Another word of advise LOL......be diversified. Don't have all your eggs in one basket ( 1 major customer). Get customers in different areas of operations ( have some in earth moving, highway contracting, paving, oil field, general construction.......just all over). The economy goes up and down and will carry companies with it, but usually there is always one sector that seems untouched to help carry you through. OK.......1 more and I'm done LOL. Take good care of your small customers and they will take care of you. Over my experience of 30+ years, the big companies don't have near the loyalty. Numerous times over the years my smallest companies I work for have kept me alive and kicking through some of the most difficult economic times.