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Thinking of Starting a small Skid Steer Business

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Thinking of Starting a small Skid Steer Business

Old 11-06-2018, 01:51 PM
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I have had several - two ASV's and a Cat, the ASV's used to be partly owned by CAT and were almost identical, even had CAT keys. All were tracked units, not tracks over tires.

I bought the first one, right after Hurricane Rita, bought it off E-bay, in GA, had it trucked to Louisiana for $600. It came from a rental fleet, was a 65 HP ASV, RC 60. Had little less than 400 hours on it, the price of the unit was the same as I was quoted for demo on my house, plus cleanup of yard. I cleaned up the house, salvaged part of it, cleaned up neighbors yards, scraped mud and debris off 1.5 miles of asphalt road, helped clear off a hunting lodge, removed pilings and structures, concrete etc. Left the keys in it, in the front yard, for anyone that wanted to borrow it for six months. Once a week, a local heavy equipment mechanic went over it, lubed it, changed fluids, checked hoses etc. Maybe 400 more hours on it, ZERO breakdowns.

After that, use was more casual, loaned it out to various friends and family, used it at the ranch some, bought lots of attachments. After it got to 1000 hours, break downs more common, so got a bigger (299 CAT) unit. Another rental fleet purchase. Very reliable, friend now has it, using it to clear and groom his approximately 80 acre farm/ranch/ home.

Latest is another ASV, this one with forestry package, am also buying a mulcher/mower type head for it. Can't wait to get started on a couple projects I have planned.

Lessons learned:
1. Pay someone to do the maintenance if you aren't able to. This includes daily lubrication, and cleaning out of the engine compartment. The smaller unit wasn't so bad, the two bigger units, WILL have issues, up to and including burning down, literally, if you neglect to clean them.
2. Lubrication is essential. Especially with tracked machines, but any of the linkages are also critical. Even more so if salt is involved, whether it is road salt or salty mud.
3. Buy a good pressure washer and use it daily. Much easier to get wet mud off than dried mud.
4. Don't let people borrow it, that you wouldn't trust with your naked spouse. Seriously, this is a very powerful piece of equipment, and will hurt the inexperienced operator or bystanders. All, repeat, ALL, of my breakdowns, happen when someone else was using them. Simple solution, no one else uses them.
5. When the machine is idle, store it out of the weather, hoses and tracks last longer that way. Better yet, send it to the shop for routine maintenance check, a little PM is usually cheaper than a forced outage. The cost to replace a hose is a lot less, if you catch it before it pumps 20 gallons of fluid out on the ground. Plus, some of the broken hoses, immobilize the unit, so now you have to fix it in place, where it breaks. It never breaks on dry level ground, close to your truck either.
6. Hoses are something you can catch before they fail, ask your mechanic to show you what to look for.
7. Attachments for these things are like addictive, there is something for every need. Plows, sweepers, augers, drills, splitters, fellow bunchers, saws, forklifts, you cannot imagine everything that they sell.
8. I like CAT stuff, ASV has lots of CAT stuff on it. CAT stuff is expensive, but mostly worth it. " Construction work with heavy equipment, is iron versus rocks, eventually the rocks win. Make sure you have more iron available." CAT stores are everywhere, and you can rent one easy, if yours is broken.

Post edit - one more thing - trailers. I bought a 25' gooseneck to haul the first one on, with an F350 already own. Pulls it great, but loading it is always an adventure. Borrowed SIL's dump trailer, 10k capacity, with ramps, bumper pull. MUCH easier to load, plus have the convenience of using the trailer to haul material. Get trailer that you can add higher sides too, with extra heavy axles. The gooseneck is fine, but it is limited in usages, and takes twice as long to hook/unhook from truck. Only 4 tires on dump trailer too, versus eight on the gooseneck.

Good Luck OP, let us know what you did!

Last edited by MikeeBooshay; 11-06-2018 at 02:10 PM.
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Old 11-06-2018, 02:28 PM
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That 299 is a beast. I surely hope you arenít dragging it around in a 10k dump trailer. That thing is every bit of 12k with a bucket on it.

Last edited by autobaun70; 11-06-2018 at 02:47 PM.
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Old 11-06-2018, 03:36 PM
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... you'll want a Brush Hog/Mulcher and a Brush Grapple in addition to your bucket. Probably want a bucket with Teeth and one without as well. And a 350/3500 level truck. Might as well get all that in Diesel too.
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Old 11-06-2018, 04:01 PM
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Originally Posted by cphilip View Post
... you'll want a Brush Hog/Mulcher and a Brush Grapple in addition to your bucket. Probably want a bucket with Teeth and one without as well. And a 350/3500 level truck. Might as well get all that in Diesel too.
Yes it's easy to spend someone else's money, but a solid used machine makes sense. Yes the attachments are addictive. RSV Cat and Taceuchi are good, Just don't forget the operating cost is fixed every month. Even if the equipment never moves.
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Old 11-06-2018, 04:04 PM
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I'll tell you one thing that is very nice to have - a 65 gallon in bed diesel tank in your pick up truck bed. Means extra range for the truck, and you can fuel your bobcat from the truck, without hauling cans of fuel.
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Old 11-06-2018, 04:53 PM
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Originally Posted by autobaun70 View Post
That 299 is a beast. I surely hope you arenít dragging it around in a 10k dump trailer. That thing is every bit of 12k with a bucket on it.
thats what i was thinking
also they make goosenecks rated for 14k, got to stay under 26 if your not dot
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Old 11-06-2018, 05:16 PM
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Here is what you donít want to happen with a 4 month old 299D. A primary and backup diversion pump failed, and the trench filled up in 10 min due to an unforcasted flash flood. This was a trench that had to have the skid steer dropped in via s crane or large excavator. Was in there leveling gravel base for storm drain. Operator barely got out.
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Old 11-06-2018, 05:25 PM
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Mskin- my last post wasn’t meant to scare you away from a used machine just to point out things will most likely not go to plan most of the time.

Unless you have a to of cash to burn burn you will never make money if you buy a new machine. The depreciation will far exceed any repairs needed on a used unit. Right now you have an idea but unless you start spending a ton on marketing plan on having a random job here and there the first 6 months. You currently are not in this business and it takes a while to develope contacts.

Most people who need one on a regular basis already own a machine. Estimating 1500 billable hours your first year is a little aggressive I think. If you buy a use machine priced right and a year later you find it isn’t working you most likely will be out insurance and 10% of equipment cost. New machine and your looking at a lot more.

You will also need a T590 minimum. The T430 is just to small a unit to be multi functional. Looking at used ones a three year old unit is selling for $20k off list price so they do depreciate substantially from new.

As for attachments.
Get a removable toothed bucket. Yes it’s a pain to remove the teeth but you are looking at saving a grand and can always add a smooth bucket once things get rolling.

forks are also valuable

Planetsry drive auger will be good with tree planting and fence post.

Just rent any crazy attachment like brush hog that cost $6k+++ unless you start to get a ton of request for them.
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Old 11-06-2018, 07:42 PM
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Forks..yup,,,,duh, forgot to add that in my first post. For sure a must and they aren't that expensive.
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Old 11-07-2018, 07:35 AM
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Originally Posted by bjm9818 View Post
Mskin- my last post wasn’t meant to scare you away from a used machine just to point out things will most likely not go to plan most of the time.

Unless you have a to of cash to burn burn you will never make money if you buy a new machine. The depreciation will far exceed any repairs needed on a used unit. Right now you have an idea but unless you start spending a ton on marketing plan on having a random job here and there the first 6 months. You currently are not in this business and it takes a while to develope contacts.

Most people who need one on a regular basis already own a machine. Estimating 1500 billable hours your first year is a little aggressive I think. If you buy a use machine priced right and a year later you find it isn’t working you most likely will be out insurance and 10% of equipment cost. New machine and your looking at a lot more.

You will also need a T590 minimum. The T430 is just to small a unit to be multi functional. Looking at used ones a three year old unit is selling for $20k off list price so they do depreciate substantially from new.

As for attachments.
Get a removable toothed bucket. Yes it’s a pain to remove the teeth but you are looking at saving a grand and can always add a smooth bucket once things get rolling.

forks are also valuable

Planetsry drive auger will be good with tree planting and fence post.

Just rent any crazy attachment like brush hog that cost $6k+++ unless you start to get a ton of request for them.
I appreciate all your insight on this - you did not scare me away from a used machine but I've been looking at the price of new machines and IMO given you can finance them @ 0% for 4 years, a new one doesn't sound that crazy. I know you mentioned depreciation, but in reality, I'm seeing these machines hold their value fairly well, not to mention IMO in the repair cost you need to factor in a down time cost. IE a missed job and a $300 repair effectively is $1K lost

A T590 has a rebate going on now, and after taxes I can get (before shopping around, just going off a single quote from a dealer) for $55K or $1151 / month

If I go used, it seems decent machines are around the $35K+, more like $40K mark with around 1K hours. Assuming you can finance for $35K 4 years @ 0% (impossible but just for comparison) = $729 / month.

Variance of $422 / month or $5K / year , now if you factor in potential downtime costs and repair costs, and also reputation while establishing your business...all that adds up

Also, lets say I do purchase the 55K machine, at the end of 2 years, and lets say 1500 hours total (750 / year) I can sell for $35K - my true cost to own was cheaper. 55K is paid down to 27.5K over 2 years, sell for $35 K - that makes my effective payments $833 / month, barely above the used machine, and with the added warranty and reduced risk of downtime. I know some wear and tear item will need to be replaced, so lets figure $200 / month variance between used and brand new machine.

Maybe I've got it all wrong?
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Old 11-07-2018, 08:25 AM
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Going back to your original post, the first thing I would do is go rent a machine and do the work you want at your house completed. Might give you an idea if you like it, if you have the skills needed to operate, and possible pitfalls of operating one.
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Old 11-07-2018, 02:07 PM
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I own several skid steers and over 100 pieces of heavy equipment. I started with a POS bobcat 743, a POS Truck and a POS Trailer that I paid $9000 for the whole POS package. I have owned just about every brand. My skid steers right now are Cats and a couple of Kubotas. About 30% of my total fleet is Cat. Everyone of our Cat skid steers has had major problems . Half of them have had new motors installed under warranty and half have had complete hydraulic systems. They are very sensitive to any contamination in the fuel, more so than any other piece of equipment I have ever owned. The kubotas are new and have been working out well. You can buy a Kubota SVL 95 with bucket, high flow and forestry door for about $65k and 0% financing. It is their largest machine. I think your Insurance will be significantly less than $10k. I would bet you will pay whatever your statutory minimums are for GL and WC. These are generally a function of your payroll which will be minimal.

It is not a good business for an absentee owner. One item you need to consider in your budget is marketing. It can be a significant expense if you are doing homeowner work. The other issue is looking at and pricing jobs. You may look at 10 jobs to get one. When I started, I spent every evening and weekend looking at projects and doing estimates. We have not done any residential work in years but it is an incredible time suck. If you charge by the hour I would charge $95 an hour with a 5 hour minimum. I would do my first jobs by the hour and until I figured out how quickly I could work and then price by the job and would shoot for $1200 per day in revenue.
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Old 11-08-2018, 05:54 AM
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I personally think its a bad idea and not a good way to get some work done around the house. I have some limited time college summers, winters and a few years after college running a machine and never became very proficient. Also some of the advice seems sketchy at best like a $10k diesel truck that is going to be hauling a load several times a week.

One thought if you are serious. Find an operator from a local crew and see if he would be interested in weekend and off days work. Having experience in the cab is going to be key to making money. I can come down there get the job done, take 12 hours, burn up all the fuel you had in the machine, tear up a few plants maybe a nice tree in the side yard. Where an experienced operator can do the job in half the time and possibly keep the damage to a minimum. IMO the operator is the most important piece of the puzzle.
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Old 11-08-2018, 08:11 AM
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Scattered thru several of the posts here you've received some good input & advice. As an owner of an excavating company, I'll throw in my $.02.

Your financial evaluation IMO is pretty far off base for the following reasons:

- Nowhere have I seen you factor in neither the true cost of having an employee nor the value of your own time.

- You are undervaluing the cost of depreciation of the machine. I quickly ran a market valuation of a <1000 hr T590, the same way an equipment dealer would if you were looking to trade that machine in for new and you are way off. Point of reference: of all Ritchey Bros auctions in the US, in the last 6 months, 67 T590's were sold and not one brought more than $26,000. Trust me, what you see a local dealer asking for a used machine off their lot has no bearing on what you will get selling the same machine yourself or trading it if you decide your experiment didn't turn out as hoped.

- You didn't mention if you included in your evaluation a capital rate of return on the purchase price. What return would you expect on that same $$ put elsewhere? That should be included in your daily/annual cost of owning this machine. Otherwise, what is the point.

- If you truly want to look at this like a financial analyst, don't guess at the very important items like fuel and maintenance costs. Get machine specs and look at hourly fuel consumption. Get a quote from the dealer on 500, 1000, 1500. and 2000 hour services. Each service has different requirements and therefore much different costs.

- Did you include an inflation rate in your evaluation and adjust the residual value accordingly?

I don't own a T590, but do have a Cat skid steer and on occasion rent & operate others, including the T590 predecessor. I quickly threw some numbers in the spreadsheets I use to evaluate and job cost all of my equipment, and I come up with somewhere around $220 - $250/day as the true cost of owning & operating that machine. $120/day in ownership cost alone. That's every damn day, whether you use it or not.

I don't want to piss in your Cheerios, but in general terms I'll offer this: Can your idea possibly work? - Yes. Do I think you're starting out with a good, feasible, financially sound plan - No.

Getting close to retirement age and looking back on a career in excavating these are the 2 primary thoughts I keep returning to: 1. It was not a very bright financial decision, I should have done something else. and 2. The love of seat time, running equipment and working in the dirt was pretty much the only thing that made it all worthwhile.

Best piece of advice you got here was pick one of your home projects, go rent that machine, have yourself and said family member do that project, do the maintenance on the rental like it was your own and then start thinking thru your plan some more.
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Old 11-08-2018, 08:21 AM
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Originally Posted by autobaun70 View Post
That 299 is a beast. I surely hope you arenít dragging it around in a 10k dump trailer. That thing is every bit of 12k with a bucket on it.
ditto that; my current skidsteer weighs 12K and the excavator 18K. But you can get smaller units but it takes longer to get stuff done. And like I mentioned earlier it's best to tow the skidsteer in a hydraulic dump trailer because you're going to need one too.
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Old 11-08-2018, 09:52 AM
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Originally Posted by MSChE View Post
If you want to be legit, Step 1, Get a contracting license, or at least find out what it costs to get one. There will be minimum required insurance, experience, etc., for this kind of work. This might be where I'd start. I'd also consult with an attorney and an accountant to get an idea of risks, cash flow, etc...

Things I'd be worried about: Being legal. Getting customers. Successfully doing work. Getting paid.
Good advice

IF you going to start out with an employee you need to understand payroll tax liabilities, unemployment , General liability insurance and Workers Comp. Now a lot of this varies from state to state BUT when start having an employee a lot of things change

Also keep in mind wear and tear on a unit, this is main reason folks charge so much. LOT of maintenance to any equipment

I would do the opposite, start out doing what YOU can do and IF it progresses then is the time to look at hiring someone
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Old 11-08-2018, 10:05 AM
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Originally Posted by tprice View Post

IF you going to start out with an employee you need to understand payroll tax liabilities, unemployment , General liability insurance and Workers Comp. Now a lot of this varies from state to state BUT when start having an employee a lot of things change
Amen!

Anyone can go buy a piece of equipment. Anyone.
I have found the true challenge of being in this business in finding, keeping and maintaining good employees.

They are my real asset that makes me money. (or breaks me). The equipment.... meh... a distant second consideration.
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Old 11-08-2018, 10:47 AM
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Originally Posted by duckfish View Post
Scattered thru several of the posts here you've received some good input & advice. As an owner of an excavating company, I'll throw in my $.02.

Your financial evaluation IMO is pretty far off base for the following reasons:

- Nowhere have I seen you factor in neither the true cost of having an employee nor the value of your own time.

- You are undervaluing the cost of depreciation of the machine. I quickly ran a market valuation of a <1000 hr T590, the same way an equipment dealer would if you were looking to trade that machine in for new and you are way off. Point of reference: of all Ritchey Bros auctions in the US, in the last 6 months, 67 T590's were sold and not one brought more than $26,000. Trust me, what you see a local dealer asking for a used machine off their lot has no bearing on what you will get selling the same machine yourself or trading it if you decide your experiment didn't turn out as hoped.

- You didn't mention if you included in your evaluation a capital rate of return on the purchase price. What return would you expect on that same $$ put elsewhere? That should be included in your daily/annual cost of owning this machine. Otherwise, what is the point.

- If you truly want to look at this like a financial analyst, don't guess at the very important items like fuel and maintenance costs. Get machine specs and look at hourly fuel consumption. Get a quote from the dealer on 500, 1000, 1500. and 2000 hour services. Each service has different requirements and therefore much different costs.

- Did you include an inflation rate in your evaluation and adjust the residual value accordingly?

I don't own a T590, but do have a Cat skid steer and on occasion rent & operate others, including the T590 predecessor. I quickly threw some numbers in the spreadsheets I use to evaluate and job cost all of my equipment, and I come up with somewhere around $220 - $250/day as the true cost of owning & operating that machine. $120/day in ownership cost alone. That's every damn day, whether you use it or not.

I don't want to piss in your Cheerios, but in general terms I'll offer this: Can your idea possibly work? - Yes. Do I think you're starting out with a good, feasible, financially sound plan - No.

Getting close to retirement age and looking back on a career in excavating these are the 2 primary thoughts I keep returning to: 1. It was not a very bright financial decision, I should have done something else. and 2. The love of seat time, running equipment and working in the dirt was pretty much the only thing that made it all worthwhile.

Best piece of advice you got here was pick one of your home projects, go rent that machine, have yourself and said family member do that project, do the maintenance on the rental like it was your own and then start thinking thru your plan some more.

Great post - thank you very much for the time. and wisdom, and hey, sometimes people need some piss in their cheerios.

I am going to rent the machine as suggested for a few weeks and get some seat time and see how it all pans out. I might love it, I might hate it, who knows.

This in reality is more of an idea (dream?) I have for a future career change - I'm in my early thirties and have been in the corporate accounting / financial analyst fields since graduating college and I'm realizing that I don't really envision my future in an office setting. I'm an outdoors guy so I feel trapped in an office setting, but I appreciate the job security it provides. In a perfect world I'd like to start a side business, that after a while, would get big enough to justify leaving my current job. I'm realizing now as I get older, especially down here in south Florida where the demand is non stop, that guys who became plumbers, HVAC guys, contractors etc now have their own business, and if they have some common sense and good business instincts, can make a damn good living.

Once again I appreciate all the great content everyone has provided - I've been a member here a long time and knew this would be the perfect place to ask
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Old 11-08-2018, 06:03 PM
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Im here in Alabama putting in a slab for a rv metal building and working on the 45 acres fences. Had a concrete guy do the slab and had his own wheeled skid ster, at $ 65.00 hour. Did good work moving dirt,gravel and could not level soil or fill trenches for electic or water line.He torn up more ground than he leveled. Not the best grader but got ground somewhat leveled . I m sure there are better operators around ,but he was the best concrete guy. So with that said , be careful of what you do as using a skid in someones back yard will be a mess and without time on the machine you will be in a mess.I had a tree company come in with their tracked slid with a forest-mulcher head did a great job of clearing fence lines and access thru the woods. Now that guy was a operator and in 10 hours at $125.00 hour did more than several chainsaws and several guys could do in a month. Right guy and the right machine . I do plan on renting a tracked skid with brushcutting head this spring to clear more areas ,so I hope I can get the hang of operation by the time I turn it back in a week or so. As said earlier so many attacments for the heads. Have seen many used ones in machine trader..
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Old 11-08-2018, 07:16 PM
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I think some people have a knack for operating equipment. In a month's time I could put a driveway on sub grade in no time flat. There was a guy I worked with who after 6 months could shape a beautiful water feature....dead center of where a slab was to be poured.
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