Hello everyone! I'm new to the forums so this is my first post. I'm wanting to start an excavating/demolition/forestry business from scratch. If I'm successful in getting this business to run, then I'll be a first generation excavator. I have a general idea of what it takes to get in this line of work but also, a lot of questions. Here are a few I have to start with: 1. Is renting equipment the way to go starting out? (I don't want to take a loan) 2. How much liability insurance coverage would I need for commercial and residential contracts? 3. If I hire employees would they need workers comp? 4. What kind of jobs require digging permits and where are these obtained? 5. What's the best way to quote a job... hourly or flat rate? 6. What's the best way to advertise an excavating business (Yellow Pages...website)? 7. What kind of trucks can safely pull a mid size backhoe, dozer or excavator (My dad has a 1 ton Dodge dually flatbed...would this work?) 8. Do I need a CDL to haul backhoes? 9. What is normally done with dirt from a job-site? Those are the questions I have for now. I'll post later if I have any more. Thank you!
Rule number one "Cash Flow is King" Biggest thing is to locate your opportunities and figure out what you can get into and whats going to make you money. For the most part the type of work your talking about comes from the private sector where everything is a "who you know" busniness, and municipalties, where you really need to know how to bid the work your going to pursue, for the most part if your experience is limited this is a tough area to start out because your competion has the experience and probably the equipment and efficiency to bid the work and your at the beginning to the learning curve. Not sure what your background is or where your sarting but working for a contractor thats doing the type of work you wish to pursue is your best bet to start getting a handle on the business. While doing that a little moonlighting on the side doing small jobs and renting your equipment till you see an opportunity that allows your to start purchasing equipment is probably the way to go. Permits are issued by whatever local unit of government has jursdiction, be it city, township, state, county, etc. You have to figure out who it is for every area. If you have employees you'll need comp. For starting out I'd guess most small contractors are carrying atleast 2 million in liabilty coverage, but this should be proportionate to your risk and volume of work. The best way to quote a job is the way you can be competitive but still profitable, every job is different. know yours costs and where your moneys going to come from, how much are you going to put in your pocket and the end of the day if everything goes right, or whats the worst case scenario if it doesnt? Have an idea what the competition charges, but know your own costs because those are what will dictate your profitability. You'll have to check your state regulations to see what weight you'll need a CDL for, most likely you'll need one just because your commercial. Also you'll probably need a CDL number. In some cases starting out its probably cheaper to have your equipment moved if it requires anything larger than a pickup your already own. As far as spoils thats all reltive to the job, sometimes you can sell it, sometimes you may have to pay to get rid of it, sometimes its needed on site. Figureing out the most cost effective way to deal with it is part of the job. Based on your questions I'd really look at small jobs on the side till you can identify your market and profitabilty, and work for another contractor to gain some experience. Its a process to get into this business, especially the way it is now with all of the Iron sitting on the sidelines. One big thing to keep in mind is figuring out how to pay your bills while your getting going, For myself I've gotten to the point where I have a fulltime job and do what I can on the side, I could probably squeak by on the income from my side business, but thats all I'd be doing. My main job has health insurance, pension, retirement, vacation, sick leave, all kinds of things I couldnt begin to give myself with where my business is and what the opportunities are at the moment. By doing both I have a steady income and a really nice sideline thats self supporting.
First of all, Good Luck. 1.0 There is no money in renting equipment. When it is all over the rental company has all the money and you have the experience. In my opinion go buy the equipment. I have only ever rented when it was a piece I needed for a short amount of time and was not going to need in the future. 2.0 I carry two million here. Some places are starting to require 5.0 million around here now. 3.0 Your damn right you will need workers comp insurance. Don't forget about paying unemployment to your state on them too. If you decide to use all independent contractors research your state's laws regarding that arrangement very carefully and have a signed contract with them for everything they do. 4.0 You will have to check to see what is required in your area for permits. Better check to see if you need a contractor's license too. 5.0 You are going to have to be able to do it both ways. 6.0 Advertising never did a damn bit of good around here. Yellow page ads are expensive. Website will be your cheapest out here. 7.0 Not sure what you mean by a mid size backhoe but I wouldn't count on moving it with a 1.0 ton truck of any kind. 8.0 You might as well get a CDL, you will need it sooner or later. 9.0 If you are lucky you will have a job going at a different location where you can dispose of it because that one will need fill. Then you can charge one to haul it away, the other to bring it in. I don't know what the economy is like where you are at but here it sucks as far as construction goes. That is why I have decided to sell out. I refuse to take work at below my cost which is what several around here are doing.
Greg why would people be taking work at below cost? just to keep busy?
Ignorance, it does happen though, they're the guys who ussually cant keep their bills and employees paid, and will do whatever they can to hang on year after year, not make a profit, and undercut the other guy so everybody has to starve.
I don't know what Greg will tell you, but here's my answer to that question--Sometimes you need the cash flow to make your fixed monthly payments, and your plan is to make up the difference on the next job. Maybe Greg is bidding against people who don't even know their true costs, like every revolution of that excavator engine has a price tag on it, so they bid stuff cheaper than they should and 10 years down the road they're going to get a really rude awakening when their machine's broke, and so are they. Maybe it's to get their foot in the door with a new customer. And sometimes, if they have the experience to know what they can afford, it is just to keep busy, or more to the point, to keep their people busy, so they don't lose them. The latter two have their share of risk, if things don't work out quite as expected. The former two are suicide.
Let me start with a question for you. Do you have your contractors license?
No, I don't have my contractor's license. Will I need one for excavating? I've heard that not all construction related fields require this but excavating may be one of the exceptions. Then again, it may be a good thing to have even if I don't need it.
It depends on your local laws. PA, where I am, didn't have any sort of "contractor" licensing until just last year. Now you have to pay for a registration number, but there's no qualification process for it or anything.
I've been on my own since 97 and worked for my Dad before that. I'm 39 years old , put in my first septic system lateral field when I was fifteen. I'm in too far to turn around now or I feel that way. When its good , it is a great business to be in. We had an upstart about 3 years ago but seems to have an alternative income helping out. A new guy with no experience in bidding , operating any procedure , unless you have excess cash you need to think long and hard about this. Actually borrowed 10k today to carry me until things break , hopefully they might break. If there is no one in your area doing the work you may be ok. It's a tough call. If you where here in my county I would recommend getting a bottle of Jack Daniels and two tobacco sticks and get hammered on the couch and act like your operating. Either way good luck .
Welcome to the Forums diesel-power!:drinkup Please don't take this the wrong way but by the questions you are asking it seems you might be in over your head. What is your practical operating and business experience? The two are not the same and very different in nature. One of my father's favorite sayings is - "Anyone can build a house but not everyone can build one and make a profit". That holds true in the excavating business as well.:cool2 One might be the best operator out there but if you don't understand and comprehend the business management side of it then you are doomed to failure. Tell us a little more about yourself and your background and we will be able to give better advice.
Well, to start, I'm a full time college student majoring in Business Management. I have about two years of experience running a small business but was forced to liquidate because other businesses kept undercutting us. Also, my dad owns his own manufacturing company and I work part time with him. To be honest, I have zero experience in the contracting/construction field. I'm looking at excavating as a side business and not so much as a full time income. I would like to get into this line of work with the least amount of overhead possible. I know how to start a business, but I'm wanting to know how a successful excavating business runs.
MY advice to you is at this stage is when you leave college go and get a job with a contractor. This way you will get paid to learn the business. You are lucky in that you will have to option of going in as junior management or junior labour you will have to decide. Best of luck.
It is simple JGS. They need the cash flow and don't know their costs. All things being equal I have had it and am liquidating and getting out. My stuff is, and was all paid for so I have not had to worry about payments on anything for sometime. It ain't fun anymore when you can't make money at it.
Where it really bites is when equipment needs to be replaced and what they have is only making a poor trade. For the last four year it been common practice here. I rang a company here for rates on a 13 ton excavator €30 +tax per hour including diesel, operator and delivery....................
My advice would be start out micro small, get a mini hoe and a trailer, you can move it with the 1-ton. Test the water with that equipment only, see if you can make ends meet on a part time basis only. Keep working another job for additional income. Do not saddle yourself with any other debts until you see how it works, and if it does begin to work out, make sure it is something you truly want to do. After some time you will be able to answer many of the questions that are in your mind by your own experiences. If it does not work out, just sell the mini and go about your own way with no strings still attached to yourself. Good luck.
The reason I ask, is in this state, first you must document that you have 5yrs experience to get a license. And any work preformed at a value over 500 dollers requires a valid contractors license. I was just making sure you were not putting the cart before the horse. As I see it now, your biggest issue is lack of experience.
Thanks for everyone giving me good advice. I appreciate it.:salute Now I'm starting to get a feel for what this line of work entails. From what I've gathered, the market for excavating isn't real hot right now. If only this were the 1980's or '90's.
Diesel if you look here there are a large number of similar threads. Keep contact with the forum most folks here will help and it would be nice for us to follow your career..... Stock
I would not recomend starting a business in a field you dont know anything about. That would be like me hiring myself out as a water polo instructor! Go get hired for a company for a few years as a labourer and work your way up.May as well learn on there dime. Good luck!
Dont forget to put in for a markout before you move any dirt. Hitting a FOC or pipeline can add up to millions real quick or even injure/ kill people. You need quite a bit of capital in this business and it can take quite a while to get paid so you might be footing the bill for quite some time. Like other have said get into a company as a laborer and learn the work. Move up from there. ** nevermind this post is a year old
It might be a year old but that's good advice.
i agree with everyone else. if you do decide to do this start out small maybe part time. you will need to have a dump truck and trailer at least a ford 700 or equivilent. you will for sure need to be an experienced operator never know what you will run into while digging, and liability insurance. everyone on this forum has a good understanding of what it takes to run this type of business. its not easy, lots of competition. good luck.
Lots of good reading on here. Ill tell you something, im in the same boat as you are. Im almost 30 and have been running equipment since I was 14. I have ran pretty much everything on the farm and a fair bit of construction stuff. I recently bought my mini excavator this paat year. I mainly bought it for my personal use but word of mouth has gotten around that im a good operator and not affraid to take on anything. I mainly do this as a hobby, and hobbies cost money. Like I was told young, lessons cost money, good lessons cost a lot of money. Since I have bought my machine, I have had to put money into it to make it work. But im hoping this year ill be able to pick up a couple new contracts for deprment of highways and our rural municipality for culvert installs and clean culverts and dig ip beaver dams and huts. Now these are by no means are these full time, thats why I have a full time job to fill the middle. I will say this, i wpuld like to do this full time, but by the time you buy a truck, trailer, mini ex, insurance, fuel, wage, etc. Your lucky to break even when starting out. Im only taking this on cause the other back hoe in my area, the operator is 80 and is maybe retiring this year. But like I said its not full time.
I agree, understanding the market, the trade and your competitors and your strong points is to get started. A stable customer base/ project will be next.