John K

From what I have read here. There are some excavating contrators that have been in the business many years with lots of experience and equipment. My question to you is. If you had to write a business plan for a small start-up excavation company, what area of the trade would you focus on?

Example. Would you be owner operator of a specialized demo company with compact equipment? Or would you own a skidsteer and hook up with different contractors, or do landscape?

This questioning is based on the current market. We are in obviously a deep recession. So with that being said, how would you write the plan and market?

Thanks
John K

MACEXCAVATING

Hey John,

I am in the same boat as you. Through my research, a good business plan is very important step. In this economy, a "jack of all trades and master of none", is not the way to go. You need to pick the niche of the market that you like the most and know the most about. Then, learn all you can about that niche. IE; main line, residential, commercial, foundation ex and backfill, etc. Specialize in that area, become the best. Then explain to the customer that you are the best and that you can save them money by doing the job right the first time for a FAIR price, not the cheapest in most cases. Also, all of us will have to be patient as the market comes back. I think, most of the footwork we do now wont pay off until later, so we will have to exhibit tenacity through the hard times.

A local pipeline guy has the rep of being the cheapest around. Well, that bit him in the arse the other day. They slammed together a section of pipe, then made a connection to the existing line and then did not bed the pipe at the connection. Well the next day it settled and pulled apart and as imagined, the mess it made. They were required to re-do all of their work. Now look at the expense of all that. It would have been cheaper to go with a contractor that performed excellent work the first time for a higher price than go with a cheaper guy for sub standard work.

I guess in a nutshell, do what you enjoy the most and be the best at it. Charge what is fair for you and the customer. Be the best at it. IMHO

__________________
"The land of familiarity belongs to the dead."
"We're playing in the dirt BROTHER!"

www.macexcavating.com

Vinny

I would agree about focusing on a niche if this were a more stable economy but IMHO, this is no time to limit yourself or your business.

We are big proponents of business planing but dont forget, a major portion of your business plan is the financial aspect. If you dont hit the needed revenue and margin, its a total blow out.

In the past we were very focused on 1 segment of the asphalt paving industry. Namely, the residential driveway market. It is (or should be) the retail part of the industry. Sell it right, build it great, get paid right away, difrayed financial exposure, repeatable process. Bottom line, a focus on any 1 business, while being considered the best in that business, can be very profitable.

The problem with that model, as with any model that is too tied up in 1 market segment, is you dont have multiple revenue segments.

Anyway, what I'm saying is going forward we (when I say we I mean all contractors) need to more flexable and diverse. I'm not advocating take anything and everything, but dont have all the eggs in 1 basket and be quick to move with the changing times.

__________________
Roccies Asphalt Paving
The Right Way Driveway Company
If you say you cant, your a loser. If you say you wont, your a quiter. Which one do you want to be?

cexcavation

Diddo!!! One day I might be installing a high end rock wall, next day I'll be pushing horse munure out of some stalls. They all pay the same and people get used to calling me simply because they figure I'll be able to do it or know someone who can. Flexibility is key in all times, but it seems especially so in these times.

tgeb

Could not say it any better.

You must be ready to diversify. Make changes on the fly, handle what ever work comes your way.

There are some things we won't do, there are some builders we won't work for, but I am prepared to do anything from demolition to putting down sod.

As said above do what you enjoy and find a way to market that.

__________________
Tom

www.gebcon.com

John K

Great info guys,

Little background. I grew up around heavy equipment, but not to the extent some you have. My uncle was in the water truck business in southern california. Every chance I got as a kid I would jump on a skiploader, or backhoe etc. When I was old enough to work I went to work for a small grading contractor. Primarily operated Cat 950 and 966 rubber tire loaders. Skip ahead. I got married and then got my grading and paving license. Shortly after that the recession hit in the late 80's. Put the license on inactive and moved here to Alabama. After a while working with my father in the food service business, and realizing it sucks. I end up in the tile business, but always wanting to be in excavation, because thats where the passion lies. Just could never figure what kind of money can be made in the business, with the wacky weather we have here. So, do to the money and staying inside, I stayed in the tile business for that last 15 yrs.

Now all business is slow, and this actually seems like a good time to make a change. Every fireman and his brother bought a Bobcat in the last ten years, and I am sure alot of those guys will be shaken loose in this economy. So basically I am trying to formulate a plan to enter the field, but at the same time wanting to go where the money is. That is why i was asking about specialized areas that not everybody was involved in. You can get a Bobcat with operator for 30 per hour here in some places. That won't work for me.

I remember a company in California that would send out a small dump with a bobcat and several attachments for around 80 per hour, but this is in Cali, where stuff is expensive. The thing about it, is they were kind of specialized. They did alot of demo with breakers in hard to reach places. The company seemed to have a good business model. Well that's my story and I am sticking to it!

rino1494

I agree with everyone, diversity is the key in these times. You gotta be willing to do some stuff that really don't want to. A local power company has a nuclear power plant near me. They recently purchase alot of property and houses to expand and add 2 more nuclear reactors. There are 2 houses that are scheduled to come down as of now. We got the contract for both of them. One of the houses was stripped ppl took the windows too. Well, the guy in charge of razing called us. There was insulation and garbage blowing all around and he wanted to know if we could clean it up right away. We were in the middle of a rock job and had a excavator with a hammer rented. We dropped everything and drove 1 hr to clean up the mess and board up the windows. It cost us money, but in the end we will hopefully reap from the benefits since there will be major work there in the future.

If I were you, I would stick with what you know best. Do you know landscaping, utilities, foundations, concrete ??? Start out small, keep your costs down. Start expanding when you get your name out there, build a solid contact and customer list and you have a decent nest egg. Too many guys jump in deep waters with alot of equipment and even more payments and too many of them lose their shirt.

One thing that seems to get work is the fact that you appear professional. Nice truck, dress nice, have nice business cards. Talk and listen to potential customers. Don't oversell yourself and treat them fair, exactly as you want to be treated. One major turnoff for me is cockiness.

__________________
Life is hard. It is harder when you are stupid

Uncle Sam wants YOU....to speak ENGLISH

ruskent

Haha rino is going to glow in the dark!

Williams Ex Co

Niche? No way! In this economy you better be able to do whatever people call you for. You need to be able to do it well though. Dont do a half ass job on anything, if you cant do it right pass it on to someone that can. That favor will be returned someday. Start with something you know and build on that.... Watch your debt and dont be afraid to take the small jobs, just charge accordingly.

Alan Mesmer

Before entering any market you must know your competition and their capabilities. Most markets are currently saturated with lots of people doing anything to just make their payments right now.

I hope that you are able to self fund your new business because most lending institutions will not touch loans to existing businesses right now let alone a startup business.

That being said: if this is your dream then by all means follow it, but if it sounds good because you need a change from what you are doing then please review your thinking as this is not the time to break into this game without giving it all of your heart and resources.

Good Luck.
Alan

tnmtn

i will agree with alan on this one. right now there are many established excavation companies in trouble. while trying to stay optimistic no one really knows when things will pick up economically. now is the time to buy equipment. the problem is also that it isn't the time to pay for equipment. if you are in a position to pay for your equipment and wait out things then maybe go ahead and buy. but if that is the case it sounds like things are going good already. with established contractors having troubles now you have to ask what makes you diffrent and better able to be in bussiness now.
good luck,

John K

Too everone that responded, thank you!

Alan. I agree about knowing your competition and their capabilities. I think right now entering the market would be ignorant on my part. And one does have to wonder is it just burn out from another trade. This is why I posted under the heading of " Business Plan".

Knowing what all of you know from being in this business a number of years, and maybe weathering economic storms before. If you sat down and wrote a business plan for entry into a stable economy,. What would you write? Basically what would you do different?

Thanks

John