Taking the next step

[Eric McCarthy]

I'm planning to take the next step with my business and move forward and doing more tractor work, grading and turf installs. I've been running the business again full time for the past two seasons but doing the maintenance side of landscaping. I'm really tired of busting my ass and barely covering the bills each month and breaking even.

In my neck of the woods landscaping is very cut throat. Guys seem to think buying a mower and cutting grass will get them rich quick over night.

What I'd love to do is shift into the earth working side of the business with bigger projects and more money.

My biggest delima right now is not having a tractor with a loader big enough to tackle much and be profitable. The other issue I have is having a pretty stupid and wreckless past and making some mistakes along the way and not have the financial abilities to get a decent tractor or even secure a loan.


I've been thinking what might work, is to borrow money from a large group of people then slowly pay them all back.

For example theres the website Gofundme, where people can ask for money for whatever need and strangers can donate to the cause. Well what I'd like to do is borrow money in the same fashion and pay it all back. What I would do is have people send small amouts for a loan $5 $10 $20 or $50 and send it with a self addressed stamped envelope and after I get a tractor and start working with it Ill pay back the same exact amout that was loaned to me. Guess its an intrest free loan if you will.

Other problem I face is not knowing how much Ill need. Ive been kepeping an eye on the tractor market for a while and it looks like for around $8000-$10,000 I can find a decent used tractor with a loader.

I am open to imput and suggestion. As Im fresh out of ideas on how to make chicken salad out of chicken shit.

 

[Daren Todd]

Pay attention to the fine print if your try to go the internet route. Seen some advertised on tv granting a loan to any one. If you check the fine print at the end of the commercial, they were charging 499% interest did a triple take, paused it, and had the wife verify to make sure i didn't need new glasses. I wouldn't trust most of those sites. You may end up with some Guido showing up on your door step to break some knee caps

 

[Eric McCarthy]

No I definitely don't want to go legalized loan shark route. Ive seen those commercials and yeah theyll give you $10,000 overnight but itll cost you about $80,000 in the end if you can get it paid off.

I was thinking more along the lines of peers or more specifically you guys help. Thats why I was saying loan me a small about, enough of those will add up and I can pay back what Ive borrowed.

I had thought about renting a tractor until I could buy one. But I dont like the idea of pissing away money on a rental and spend $2000 a month on rental charges.

 

[olthumpa]

- - - The other issue I have is having a pretty stupid and wreckless past and making some mistakes along the way and not have the financial abilities to get a decent tractor or even secure a loan.

Do you have a formalized business plan? That can be a critical step in securing loans and other kinds of help starting a business. Even with a "pretty stupid and wreckless past", having a profeshional looking formalized business plan shows how serious you are and how much effort you have put and are willing to put in to make it work. You can get help for free doing this. This is one place you could start:
https://richmond.score.org/

" I've been running the business again full time for the past two seasons"

You have at least a recent two year succesful record, that you can show, to prove that you can do it. That is a good start. Compile all your succeses to show prospective investors/banks/kubota financing/etc.

Above all, DON'T GIVE UP!

"I have not failed. I've just found 10,000 ways that won't work."
Thomas A. Edison


http://www.brainyquote.com/quotes/quotes/t/thomasaed132683.html#47obvkvvqByX7R84.99

 

[Daren Todd]

No I definitely don't want to go legalized loan shark route. Ive seen those commercials and yeah theyll give you $10,000 overnight but itll cost you about $80,000 in the end if you can get it paid off.

I was thinking more along the lines of peers or more specifically you guys help. Thats why I was saying loan me a small about, enough of those will add up and I can pay back what Ive borrowed.

I had thought about renting a tractor until I could buy one. But I dont like the idea of pissing away money on a rental and spend $2000 a month on rental charges.

You can negotiate better rental rates depending on the size of equipment, how long your looking to keep it, ect, ect. Daily rates always the most expensive, followed by weekly and monthly. Most people don't realize when renting a piece of equipment that usually on a monthly rate, you pay for three weeks and the fourth is free. So if the weekly rate is 500$ then it's 1500$ for the month. Rental companys make a killing on people that rent monthly and then send the equipment back at the end of the third week. And then rent the equipment again at then end of the fourth.
Also have to ask about maintenance. Some company's run pm checks monthly, and send a tech to where it's located. If they end up servicing it while it's in your possession, you could be looking at a hefty bill tacked on to the rental depending on the agreement.
Imho, I would definitely looking at purchasing. Especially for what the rentals are. 1500 to 2000$ per month would equal one hell of a tractor

Another question, Do you have the capability of hauling something larger, or are you gonna have to upgrade truck and trailer as well?

 

[BAP]

You might want to explore Lease to Own. That can be a good business tool to obtain a piece of equipment without coming up with all the capital at once. We used to do it when I farmed. It also helps on your business taxes by being able to deduct some of the lease payments depending on your situation.

 

[MXBX]

No I definitely don't want to go legalized loan shark route. Ive seen those commercials and yeah theyll give you $10,000 overnight but itll cost you about $80,000 in the end if you can get it paid off.

I was thinking more along the lines of peers or more specifically you guys help. Thats why I was saying loan me a small about, enough of those will add up and I can pay back what Ive borrowed.

I had thought about renting a tractor until I could buy one. But I dont like the idea of pissing away money on a rental and spend $2000 a month on rental charges.

I've helped people with their "Jumpstart" ideas but never expected to get paid back and never did. But I have to say two out of the three times I contributed, I sort of wish I hadn't. I guess I'm just old fashioned and self reliant.

From Hamlet:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

 

[Daren Todd]

Stay away from rental purchase agreements. It's where your rent something for a period of time then purchase for a reduced price at then end of the term. Only person that makes out on that deal is the seller. Equipment doesn't depreciate enough over the term. You end up spending more in the long run

 

[Eric McCarthy]

I guess I should have been more specific when I meantioned my wreckless past.

My credit is wrecked and shot to shit, so I have no hope in getting a loan of any sort. I cant even finance a pack of gum.

Doubtful any sort of a business plan presented to the bank will make a difference. And I have checked into a lease to own deal and Id have to have decent credit to do that. Or a co-signer which is out of the question too.

I guess its back to the drawing board and figuring out how to make something happen.

 

[Kennyd4110]

A bigger tractor comes with bigger problems, is your trailer big enough? Your truck to tow with? Higher insurance (if you have any)? What about bigger implements?

How about need some working capital to work these bigger jobs? You'll need cash or credit to buy materials for any job you get.

Not trying to be a downer, but giving you more to think about than the obvious.

 

[Benhameen]

Just my two cents here of coarse but a friend of mine would love to do something similar. He bought a used "dig it" a small backhoe and does work on the side while maintaining a full time job in a factory. Yes, he is about to work himself to death but he wants out of the factory and would love to go to work on his own. He has been saving as much money as possible so he can buy a larger machine, he loves my L3800 and wants something similar with a backhoe attachment. Having a full time job and not a lot of debt has made it where he could buy a trailer capable of hauling his machine and something slightly larger. He has rented larger machines if needed for a few jobs he has done in the past, pretty sure he just passes the rental cost to the person he is working for and adds in his time to make a profit. In fact I have done some work for him with my machine when he has needed the assistance.

Anyway, I guess my point would be, keep a full time job doing whatever and work as much as you can on the side, at the same time save as much money as you can and start working your way up from there.

Again just my two cents...good luck!

 

[OldeEnglish]

Without any capital or credit, renting is your only option. Price your jobs accordingly, rent only for the job, and eventually you can save enough to purchase your own machine. Securing work that will make a good profit is always the toughest thing to do. In my opinion, if there isnt much work out there to obtain, it may not be worth the effort. That is one plus side to renting per job, Your not married to a loan.

 

[Eric McCarthy]

The game plan was to find an affordable solution to getting a tractor in the 25-30hp range with a loader and a box blade to start. It doesnt have to be brand new and flashy. An older L series will suit my needs, like a L247/L275. And from there I need to set up a website online with decent SEO rankings and basically let the work come to me.

I want to target the small acerage owners. Here in my neck of the woods hobby farms and small horse stables are booming. And those folks dont have tractors or knowledge of working dirt.

I have a crew cab one ton truck and a 6x16 tandem axle trailer and I can haul up to a 30hp tractor. Ive hauled my dads L275 with it without and problems.

I wish my dad would quit being such an ass and a bit more charitable. Ive offered several times to rent his tractor, putting coin in his pocket at an affordable rate to me and not have to worry about hours of operation on a clock.

I suppose renting will be the way to go, I just hate the thought of pissing away $2,000 a month in rental fees when I could own two new tractors for that.

 

[Tooljunkie]

I met a gentleman this past summer, until last year dug burial plots by hand. Maybe in his early 50's. Aparrently doing very well for himself.
Bought a skidsteer and mini excavator with cash. Now he can work in winter.

I just quit my job, and now working at home as a full time certified auto mechanic. Was a big change and sometimes i regret my choice. Think about getting a job, i sit down and the feeling goes away.

Im busy without even trying. Just some days can be a bit trying.

 

[OldeEnglish]

The game plan was to find an affordable solution to getting a tractor in the 25-30hp range with a loader and a box blade to start. It doesnt have to be brand new and flashy. An older L series will suit my needs, like a L247/L275. And from there I need to set up a website online with decent SEO rankings and basically let the work come to me.

I want to target the small acerage owners. Here in my neck of the woods hobby farms and small horse stables are booming. And those folks dont have tractors or knowledge of working dirt.

I have a crew cab one ton truck and a 6x16 tandem axle trailer and I can haul up to a 30hp tractor. Ive hauled my dads L275 with it without and problems.

I wish my dad would quit being such an ass and a bit more charitable. Ive offered several times to rent his tractor, putting coin in his pocket at an affordable rate to me and not have to worry about hours of operation on a clock.

I suppose renting will be the way to go, I just hate the thought of pissing away $2,000 a month in rental fees when I could own two new tractors for that.

I believe you may be thinking all wrong on the rental perspective, everyone does it in all different trades every day. I use snorkel and sizzor lifts quite often, but it's not worth buying them. Like I stated before, it's all about renting per job. It would be a huge gamble to take on a $2000 monthly rental unless that machine is making you money all month long. To do that you would either have to predict the future or have contracted work with a deposit lined up for the entire month. If you had a months work for the rental, that $2000 should be making you $10,000 gross profit. If your just starting out, work will not come running to you and it will be a struggle. It takes a lot of capital to get a business of the ground and to keep it afloat.

This all comes down to how many labor hours it takes to complete the job, rental cost for that job, insurance costs, permit fees if there is any, and travel expenses. You have to know how much your expenses and taxes will be to come up with a standard pricing formula. Don't forget Uncle Sam likes his 33% cut of your money, a lot of business fold their cards because they can't pay their taxes. Your math needs to calculate into a NET profit that will be worth the hassle of owning your own business, money to expand (buying your own equipment), and have money to save if work is slow to live on. I've seen many different trade business fold their cards due to underbidding and biting off more than they could chew.

I'm not in the tractor operating business but I've been in construction business all of my life. I do remember a thread on how much to charge, some folks were running their equipment for $30hr and they think they are making money. One thing I do know is they are not paying taxes and they don't have insurance. If they were legit, they wouldn't have enough scratch to put fuel in the tractor at $30/hr, I don't care where you live. The world goes around in a circle, if you cut corners and fly by night, it will come back around and bite ya in the ass.

If your serious about starting your own business do as much reading on it as you can. There is a lot to know and understand about business including marketing, profit margins, and managment. Anyone can start a business, not everyone knows how to turn a consistent profit. Hopefully I could be of some help to you by pointing you in the right direction with some honest opinions.

 

[Eric McCarthy]

Ive got the business aspect under control. I know what my numbers are and my profit margins. As I said in the first post this is my second season back fulltime in the landscape industry.

The past two years Ive been running my ass ragged mowing lawns and doing maintenance work. And profit margins are tight as hell. Turning a decent profit cutting grass for a living is tough when you have jackwagons charging $20 when Im $35 minimum.

The saying goes, if you think hireing a professional is expensive wait until you hire an ammature. Something I cant express to customers enough.

Right now the next step is for me to get out of maintenance and transition into tractor work and start charging $65 an hour for labor and make better money instead of killing myself and barely break even.

Even if I gross 10k and spend 2k on rental fees, Im the kinda guy who hates loosing money and Id much rather have that extra 2k im MY bank account at the end of the month and not the rental company.


Ive read up alot on renting equipment and it has its pros and cons. Rentals are great for something you need occasionally to do a job that you might be at for a week or two. But its not a smart business move to rent long term when you can own something free and clear and make better profit off it.

 

[Wildfire]

Eric I have to ask. What do you do in the off season? In other words, in your down time?

 

[North Idaho Wolfman]

Even if I gross 10k and spend 2k on rental fees, Im the kinda guy who hates loosing money and Id much rather have that extra 2k im MY bank account at the end of the month and not the rental company.

It won't be in the bank, it will be in payments to someone for the equipment.

 

[OldeEnglish]

Eric and Wolfman your absolutely right. It is better to own other than to make someone else money, if you have the financial stability to be able to do that. I'm just trying to simply point out to you that an excellent profit can be made off of renting equipment to complete a project if you play your numbers right. I know many people of all different trades that do it every day, including myself, that have made a good living by doing it.

Please understand that I don't mean any disrespect to Eric or anyone, I'm just trying to point the guy in the right direction. I see that you said you know something about profit margins and that you would rather make more money by owning your equipment. With what your telling us, your credit is shot and you have no capital. That throws owning/leasing right out the window and tells me you have a problem with money management. Managing finances is the most important part of developing and adjusting profit margins in the bid process. If you did know everything about it, I don't believe you would be asking this question in the first place.

What ever the situation may be that got you in that predicament, your not the only person out there that has had that happen to them. There is always a way out of a battle if you have some fight in ya. You need to educate yourself more focussing on your type of business, there are tons of books out there to help you understand and grow your business. In my opinion, we live in a cut throat world where there is always someone who will try to undercut your prices, but that's business and it will never change. Don't sit around and cry about it, educate yourself, and go out and attack it. You'll get that new perdy tractor and some money in you pocket at the end of the day.

Remember I don't mean any disrespect, I just don't sugar coat things .

 

[cerlawson]

I may be throwing cold water on this, but, under the circumstances of your credit situation, there is no shame in saying "I goofed" and go on as an employee of a competitor. That's assuming such a thing is possible. You certainly would qualify as a foreman. Is you reputation such that it would prevent even a trial there?

While there are many friends here, I suspect that the gratus loans would not develop much.

Have you inquired of county and city highway departments for work as an employee? Perhaps they need part time help this winter as a foot in the door. What is the union situation like there? Is that pretty much a closed situation?

good luck