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New equipment break even pt.

Discussion in 'Business Fundamentals' started by DeereGuy, Dec 17, 2003.

  1. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    I'm new to this site and have a couple of questions concerning purchasing new equipment. I'm wondering If anyone has purchased a new truck and plow with a thought as to when a break even point would or should occur. My current truck is on its last legs. I do have a 40HP JD1070 tractor/loader I would like to trailer for odd jobs, I could also stack snow with it. I am a self employed woodworker/cabinetmaker but don't make enough to afford a new vehicle without the equipment paying for a good chunk of the monthly payment. This is where the plowing comes in. Is it reasonable to risk purchasing new equipment that I really can't afford (ie.3/4 ton Ford or Chevy w/ 8' fisher,maybe a trailer read $32k+-), additional insurance, software etc to run a residential plow business this winter in a NH seacoast town full of high income bracket folks. I currently have 0 accounts but am a fast study. I would have to make a least 10k this winter for this plan to work. I know that this is what business plans are for but...hoping to get some input from you business minded folks short of driving up here to NH and slapping me upside the head and asking "what were you thinking!" Thanks
  2. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    OK don't everyone post at once. I see a lot of new trucks plowing snow around here. There must be money to be made but I am in the dark as to how much is a reasonable estimate just doing driveways.It's late in the year and most shop owners must have contracted services already. How many drives is a reasonable number given my inexperience. Currently I only plow myself out with my tractor and 430 loader. I have a long drive with turn around. I also plow around my sawmill as well. Currently, I'm building a timberframe home by myself and therefore the cash is not exactly rolling in. Guys around here usually charge per storm. Seems like a vague way of doing business with no absolutes. I'm waiting for a copy of The Snowplowing Handbook from SIMA. I hope it can clear up a few things. Anyways, great site with lots of useful info.
  3. BWinkel

    BWinkel Senior Member
    Messages: 103

    It may be a little late in the season to expect to pick up enough business to make $10,000 this year. You would be able to get a good start on next year if you bought it now. You may want to consider the impact of the purchase on your tax situation. You could expense the truck all in one year.
  4. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    BWinkle, thanks for your reply. I had not considered tax implications. To busy thinking about payments I guess. I have another question since your from the area. I currently am located in Hampton, NH and am building in S. Berwick, ME. on the York side. If I do obtain a full roster of clients this winter but move to S. Berwick this summer, would I be better off serving the NH seacoast next year even though it is an hour south of where I'd be living. I would think that they charge more down here than over the ME line where businesses and residences are more spread out and those that can afford plowing services many times have their own truck. I don't know this for a fact but I would bet an average driveway down here would be smaller and would get maybe 20% more. Any thoughts you'd care to share?
  5. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    There is no break even point. The truck ages every year , it will need repairs , the transmission will blow 100 miles out of warranty. You will be sick with the flue when the big one hits. Your biggest customer will stick you for the bill. someone will steal your pump while you are in home depot. Yes you will make money , but dont expect to pay for the truck just by plowing . I still enjoy plowing , I make great money after 20 years and building a loyal client base. I have killed some trucks over the years too , mostly from salt damage .

    I would utilize your loader , pick up a blade and have someone fabricate a mount in the bucket , now you can windrow snow and stack it, make some money this wy before you drop a large chunk of change on a new truck with a plow.
  6. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    Ah Matt, finally a voice of reason. Murphy does have a way of mucking things up. But, I still like pushing the white stuff or just about anything with my compact. I would hope to try and alleviate the hassles as much as possible by buying new or recent equipment. Right now I don't have a way to trailer my tractor since I drive an 87' Toyota P/U on it's last legs. I also have to store the tractor on a woodlot 1 hr north. The toyota doesn't owe me a dime though at 250+ miles of hard use. I'm just waiting for it to break in half some day soon as I drive down the road. I need a truck reguardless and had been looking at used tundras. I don't believe they would be enough to safely pull 7000lbs so that's where the new plow truck idea came from. Incentives are pretty good right now on new, 7k to 8k off a new 3/4 ton extra cab. Interest rates are still decent as well. If I buy its going to be in the next two weeks. Yesterday I drove an f250SD extended cab 5.4 gas xlt with a bunch of extras including leather, plow and tow pkgs, heated mirrors, cd changer, carbon panels, (I'd be embarrassed to drive it after having owned the ratyest truck in town for so long). MSRP was $36,700 I left with a price of $32,895 with 8' fisher. thats roughly $29K for the truck and a free 100k mile warranty as long as I change my oil at the dealership every 3k mi. Is this still crazy?
  7. Sidebuz

    Sidebuz Member
    Messages: 41

    My honest, no BS two cents: don't buy it. I started with a '92 Chevy 3/4HD 4X4 with a Meyer 8.5 straight. It was my dad's old pick-up. I have plowed a few years, saved up some money, now I use '01 Chevy w/ 8-2 Boss Poly-V. The only reason I could afford it was the bank interest rate is %4.75 and I only owe 11K on it (including the plow). And no, I didn't save up all the money from pushing snow. Actually, my summer work did it.

    If I was you, look at the used truck lots. You can find 2-4 yr. old Fords or Chevys for are 30-40% off what you just drove (usually they just came off a lease). Use that tractor if you find a way to store it closer. Stay within 15-20 min. of your home base. After that, you are wasting your time driving (no pay). Save your money and then get what you can afford.

    Best advice I got: "Never finance a snowplow/truck based on what YOU think you are going to make pushing snow. Buy what you can afford without pushing a single time." You can never count on Mother Nature.
  8. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    I have a toyota I plow with its my third my second did break in half , right in front of the rear spring perches. Sidebuz is right if ou can look for a late model used in good shape. My recent purchaces were a 95 f 350 crew cab diesel140,000 miles for 5100.00 , a 93 international diesel low profile with automatic
    5000.00 with 160,000 ( thats 16000 per year , nothing for a diesel) At a government auction 2 years ago I bought a 1988 f350 gas with 23,000 original miles for 700.00 (sold the sewer attachment on back and made money. I hang plows on every truck I own. There are deals to be had if you look. Here in Maryland when we had a few years of littl or no snow I pick up complete plow assemblies cheap from guys trying to make their truck payments . Look or a truck that can handle a trailer 4 your machine , the loader can make money all year, plowing is seasonal , its Icying on the cake for me , In a good year how sweet it is , in a season with no snow I dont care everything has been paid for when I bought it.
  9. BWinkel

    BWinkel Senior Member
    Messages: 103

    The last thing I would want to do is commute an hour in a snowstorm to get to my plow route. The best thing to do is try to build up a clientele near your new house in S.Berwick. The only way to make money on residential is to consolidate and eliminate travel time.
    Sidebuz makes a good point in that you shouldn't have to count on your plowing income to make your truck payments. For my situation, the tax write off of a new truck is too good to pass up. We run two trucks and plan to add or replace a truck every two years. If it doesn't snow, I can still afford to make the payments.
  10. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    I appreciate the logic all of you. I can see that I have more than one predicament. Not the least of which is, if I get a plow truck this year and am successful at building a client base, the move in location to ME next year is going to really screw things up. Almost wasted effort. I hate waste. I think I'll just stay home and sleep on those snowy days... NOT.
    I don't mind working on equipment. I even like the idea of having a truck that I can really use, without worrying about depreciation. After all, I had the same truck for 16 years, even when it stopped fitting the bill. ( A funny sight, me driving down the street with my 87' toy, home welded steel flatbed and a 1500lb sawmill, tractor implement or woodworking machine strapped to the back; all with a 90 hp four banger 250k mi. engine that's never been cracked open except for a timing chain once. (Now, I'm rambling)) What I don't like is the thought that this used domestic truck I am going to pay good money for and which doesn't have a warranty or has a fairly short one, is someone else's problem turned over to me. I like the idea of having a 100k drive train warranty on a plow truck. After all, somethings gotta go wrong: remember Murphy. I know, there are no guarantees in life but...
    I'm still thinking(I can justify almost any mechanical device purchase, just ask my wife)

    I do believe your good advice that snowfall should not dictate whether truck payments are made or not.
  11. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    You still have the toyota , find a plow for it , let it make some money this winter . The one on mine is a 6 ft meyers off a cj 7 it took about 4 hours of welding to make the brackets. Your toy sounds like mine it too is a steel flatbed I welded up , It is a bd little truck , its a bit waek on a heavy snow but it still gets the job done. Its a great sidewalk truck .

    A good place to find a low mileage truck is from the federal government. Find a GSA (government service administrtion) auction in your area. I bought a 1990 dodge work van in 1996 it had 15,000 miles for 6000.00 I have bought several others over the years all low mileage and low wear .

    As far as the move I would try for a client base where you are , serve them well this season and then If you move sell them to another contractor.
  12. Sidebuz

    Sidebuz Member
    Messages: 41

    Deereguy- for this year, I would start small. If that Toyota is still running half way good, go buy a Toro snow blower. So you are out $500-1000. Better than 32K. Get a couple of clients in your current area. Your breakeven should be hit this winter yet if you knock on some doors, do the fliers thing, ads in newpaper, etc. Then after that, the money can start piling up.

    Next year, make the move. Use the snowblower again, save money until you can buy what you want. There is homeowners that like the snowblower look and is willing to pay a little extra $$. Use that niche this year. It is more work, but you don't get everything in life when you first start out :) Just my two cents though...

    Good luck on whatever your decision may be!!

    PS It is snowing in northern IN (first good snow of the year!)
  13. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    Boy, you guys are really scaling me down in a hurry. The next person to post will probably suggest I skip the Snowblower and hand shovel everything and I hate to think what the person after that is going to have me use... I started out with a new 3/4 ton truck, new 8' plow(albeit unaffordable), trailer w/ tractor/loader for stacking if we get snow like last year and a game plan that obviously did not set to well with you guys. But that's ok, I appreciate your comments. You have got me squirming, though. I have been looking through the want ads etc. for used vehicles. My 87' Toyota is nearly dead(accept it, I have). It has had a good but hard life and if I put another dollar into it, I might as well flush the $ down the toilet. The next truck will be my primary vehicle too. It will have to fit my two kids and me in it every morning to go to school. It will transport me to my building lot and back daily 100 miles. It will house hand tools for building my own timberframe and for outside work on home interiors etc. It will be the first thing people see when I meet them in their driveway to bid on a new built-in cabinet, kitchen or library. This has been a lacking part of my marketing in the woodworking end of my business. And unfortunately in my neck of the woods maybe the difference between getting a job and not. In other words, The vehicle has to look descent. Believe me I don't like playing the game but that's the reality. So I really am not looking only for just a plow truck. If that were the case I would be looking for a $4000. beater. I do have one other question, plowing with my 1/2 yd bucket is slow. I could come up with a plow to attach to the front of the bucket like one of you suggested or purchase a quick connect version from Curtis but what about the big PTO powered snowblowers for the back of the tractor. Any insights into how well they work. Who would be a likely customer in the northeast.
  14. dmontgomery

    dmontgomery PlowSite.com Addict
    Messages: 1,238

    My father in law has a neighbor with a rear mounted tractor blower.....very slow......and a hassle to use...........at least from what I have seen.....

  15. avalancheplow

    avalancheplow Senior Member
    Messages: 265

    Hey I am in the seacoast of NH too.
    With the snow we get around here it is very reasonable to make 10k in a winter. A Winter like 2002/2003 winter my friend had 27 driveways by the end of the winter and made $12,500. He didn't have a plow on his truck till after the first 2 storms. You could start in Febuary and still end up getting 20 resident. customers by the end of the season. I do a mix of commerical and driveways and so far this winter have made $3000.
  16. Hamptonplow

    Hamptonplow Member
    Messages: 42

    My humble opinion: If you can't afford the new rig on your own without using plow money to help make the payments, you should hold off. The cost of the rig is only the cost of admission. Take into account the extra insurance, extra "preventive" maintenance (you definitely don't want to skimp here), etc, things breaking (they do) and you could really be hurting. Remember the winter of 2001-2002?

    I would suggest finding a good used truck that's never had a plow on it. Make sure it meets all of your other needs first, then get the plow. You could also try to find a used plow truck that's been maintained by a maniac and handled properly.

    I agree with the earlier comments that you do not want to travel 35-40 miles to go handle your customer base. I rarely take jobs on the other side of town.

    Good luck!
  17. DeereGuy

    DeereGuy Senior Member
    Messages: 346

    HamptonPlow I assume that you live in town so I have a question for you. Do most of the residentials get charged by the storm around here?. Whats an average fee for a small drive? How cut throat is the atmosphere in this neck of the woods. (Hampton has a ton of small driveways and small businesses.) I ask because a lot of the posters with these questions on this site are down south or midwest. This is New England(Metro Boston) and everything's expensive. I don't think some folks can fathom just how much services run here. If I had a way last year to trailer my JD1070/430loader how much were contractor's paying to stack and move snow around. I saw a lot of activity using compacts w/ loaders as the season progressed last year with no melt in sight. Could this boost my potential earnings alot or not enough to invest in a used trailer. And yes, I'm back looking for an F250/350 3-5 years old trying to see how much truck I can get for around $18k.

    Thanks for your input and everyone else as well,


    Avalancheplow, these are the numbers I'm talking about; except
    last year wasn't exactly a typical year.
  18. Rappa

    Rappa Member
    Messages: 84

    Sounds like you need a new truck for your business anyways. Buy your truck and plow and go to town. If you can pay for it without the snowplowing income, than you will be all set. All snowplowing income will be a bonus. That is how I look at it. We have had two storms already this year and I have already made your goal $$. I am just mainly doing driveways.
  19. Hamptonplow

    Hamptonplow Member
    Messages: 42


    I don't think that it's been very cut throat around here at all. In the last five years I've only lost one customer to a low baller. When that customer wanted back in, I had already given away their spot on my list. It does seem that there are more folks offerring plowing this year than there has been in a while, but this can fluctuate from season to season. Seems that after a big season there's more folks plowing the following year. After a mild season, the ranks definitely thin.

    I usually have a base of around 35 customers. I balance my list to include working folks who need to be out, retirees and folks working out of there homes who don't have to be out right away and then snow birds who leave town for the rest of winter after Christmas. I can plow these last.

    My fees are set up to provide continuity from year to year. Some of my customers pay by the push, some pay a flat rate for the season, and some pay a combination that includes so many pushes for the fee, than a lesser "by the push" fee after that. I always have two or three family's going through a hard time that I take care of for free. Except for the customers paying by the push, I include in my contracts that I won't raise their fee for at least two or three seasons.

    I'm sorry, but I don't really know what people with tractors charge on a regular basis. I know one guy with a big front end loader that I've had to hire for one of my big driveways if there's no melting. He usually charges me $50, I always give him $75.

    Last year toward the end of the season when we still had gotten no melting, I rented a bobcat for the day and moved some piles at some of my customers's houses. I did not pass this cost onto them. Some would say that's nuts, but the truth is if your regualr customers see that you're not out to nickel and dime them, and you treat them with respect and every home as if it's your own, you will end up with a very loyal and understanding group of customers.
    Last edited: Dec 22, 2003
  20. rainair

    rainair Senior Member
    Messages: 153

    new or used?

    look on e bay there are nice trucks that would work and not be that expensive... thats where i bought all 4 of mine jm2c