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when to add equipment?

Discussion in 'Commercial Snow Removal' started by turbo5560, Aug 19, 2011.

  1. turbo5560

    turbo5560 Senior Member
    Messages: 285

    So i have a tough decision... i have enough work to justify buying a third truck in my head, but it would basically only be used in the winter for plowing, i already have two trucks and only drive one for work and the other as a personal truck. If i add a third truck it will pretty much just sit in the summer, but after insurance and paying a guy to plow in it I think i can pay it off in a season and a half of plowing. Any advice? The other side of it is if i don't take the work for this third truck it could hurt the relationship with the property managers that i do the lawn care for....
  2. Neige

    Neige Sponsor
    Messages: 2,215

    I think you just answered your own question. Enough work to justify a third truck Great, paying of a truck in a season and a half fantastic, good relationship with property owner Priceless. So what kind of truck are you buying?

    Messages: 60

    The same thing happened to me last winter. I got a larger last minute contract when my other two trucks already had full routes. It was either turn away the contract and loose the year round work or bite the bullet and buy a third truck and hire another driver. With the winter we had here in CT, I was able to pay off the truck and plow with the profits from January. The truck hasn't earned me a dime since the first week of March but that is ok because it is paid off.

    The flip side is, do you want to continue to grow your business or are you happy with where you are right now. From what I have experienced, the more employees you have, the more headaches you will get. I am just waiting to find the right employees to continue to grow my business around.

  4. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,194

    Not sure if a skid would fit better but thought I would mention it.
  5. cet

    cet PlowSite Fanatic
    Messages: 7,257

    I have my personal truck, 1 truck that goes for 4 days a week to cut grass and 1 truck that goes 4 days every other week to cut grass. I own 5 more trucks that pretty much only get used in the winter. If they can pay for them self and leave a profit I don't see a problem.

    I'm selling 2 of my trucks and replacing them with a tractor. This old guy keeps telling me trucks are for getting coffee and tractors are for plowing. I'll let you know if he's right.
    Last edited: Aug 19, 2011
  6. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,194

    Stop listening to my father. ;)
  7. cet

    cet PlowSite Fanatic
    Messages: 7,257

    He taught you well. I'm sure I can learn a thing or two, but no more monsters for me. :laughing:
  8. turbo5560

    turbo5560 Senior Member
    Messages: 285

    i'd love to add a tractor but the problem is that the snow accounts are a little too spread out and to have a tractor big enough to push some snow, but small enough to use in landscaping jobs is tough. Plus i can buy 2 decent used plow trucks for the prices of a decent cab tractor.
    I just have a tough time buying a nice plow truck and letting it just sit... but then again if i can make it pay for itself why not!

    SNOWLORD Senior Member
    from MN
    Messages: 610

    Maybe look for something you can make money in the summer with as well.
  10. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    On a side note, talk with your cpa... the depreciation factor alone will make another truck purchase even more profitable
  11. Neige

    Neige Sponsor
    Messages: 2,215

    If you can make something work year round bonus. I have 34 pieces of equipment just waiting for the next snow season. If you can pay it off in 1.5 years, look at how much money you will make over the years with that one piece. Also if it only works winters, you tend to get more years out of it.
  12. turbo5560

    turbo5560 Senior Member
    Messages: 285

    When do you justify buying a piece of equipment? How long do you think is reasonable to pay a piece of equipment off? How much profit do you need to make to make it worth running a piece of equipment?
  13. BossPlow2010

    BossPlow2010 PlowSite.com Addict
    Messages: 1,069

    You mentioned you Plan to have it payed off in 1.5 years?
    what if something happened to it? Would you still be able to pay that off?
    Plus do you really need that extra truck? If you do add it is it going to only be working five hours a storm instead of like 20-30?
  14. xtreem3d

    xtreem3d PlowSite.com Addict
    Messages: 1,548

    you mentioned a tractor but not a skid..you could use that for your business in the summer. No insurance costs (unless your worried about theft) you can find cheaper skids all over for probably 7-9000.00. not anywhere near the maintenance and troubles a truck could have/has...............guess i agree with dave's father
    anyway good luck with the additional work
  15. leon

    leon Senior Member
    Messages: 872

    Equipment etc.

    When do you justify buying a piece of equipment?

    1. when "Actual" added business requires you to do so
    becase the number of work animals in your
    stable are not enough to do the job and do it
    adequately. You are a retailer with value added
    service dont forget that part.
    If you think you have it bad you need to try to
    sell grocerys, hardware and dry goods.

    2. How long do you think is reasonable to pay of
    a piece of equipment off?

    a. If possible at time of purchase to gain immediate
    tax advantages, but you lose useable working capital.

    b. It depends entirely on your annual revenue stream
    expenses and emergency repair and replacement
    expenses period.

    c. "Asset Value" at time of purchase is going to determine
    your depreciation schedule as straight line depreciation
    is the normal expense regimen for assets of lower value
    YES THAT MEANS PLOW TRUCKS!!!!!!!!!!!!!!!!!!!!!
    At most you have a 7 year life span for new trucks
    depreciation so dont argue.

    d. case in point being the walk behind snow caster;
    buying short on these is a fools errand when you
    should be buying BCS two wheel tractors which
    can be used the year round or The new Yamaha
    tracked snowblowers with which there is no
    comparison for power and weight to create tractive
    effort to do work.

    e. can you really cope with a walk behind snow caster that
    will not stop riding up on snow piles or deep snows
    instead of getting rid of them?

    How much profit do you have to have to make it work having
    a piece of equipment.

    You answered your own question: you need a profit margin to
    make money and increase or maintain your working capital
    which is "Cash On Hand And In Bank" which is your liquidity period.

    You have to have enough gross income to cover expenses
    otherwise its a fools errand/sinking ship/mud hole etc., Paul will tell you that.

    Buying a tractor with a rear mounted snow blower and loader is the
    best of both worlds as you will have travel speed and power and a
    machine with a lower cost to operate and a lower depreciation expense rate.
    And NO you can not afford to skimp on Kubota insurance for the tractor as it covers EVERYTHING!!!!!!!!!!!!!!!!!!!!!!!!

    The M8540 Utility Narrow Orchard Tractor is perfect for snow removal as it is a low profile
    unit with power and a lot of glass area and a pressurised cabin to provide
    clean air with the filtration system.

    You can mount a loader and a snow blower and have a machine that travels at 13 miles per hour on tracks if you decide on tracks but rubber and ring chains will be what you will want normally with ballasted tires to add traction/adhesion.

    An farm tractor with a cab and full coverage insurance will cost you less money to own as you can not buy the same breakdown insurance for a PLOW TRUCK!!!!!!!!!!!!!!!!!!!!!!

    The other issue is liability as a tractor like the M8540 Narrow Utility Orchard Tractor is not going to slam into something at 50 miles an hour and the operator will be more comfortable
    and under less stress as the viewing area/glass and lights are very large on coverage.
  16. m_falafel

    m_falafel Member
    Messages: 77

    I really don't get how lots of people on this forum plow with skids?! Over here in qc, of all the snow plowing business I know of, only one use a skid steer. I guess each region have their habits... I don't even think that skid steer are street legal over here.
  17. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    Definetly a regional dynamic, here, people are all about using skidsteers. For every truck with a blade, there are 5 skidsteers. I would say that even loaders are more used then trucks, and I have never seen a ag tractor used unless a farmer brings his in, however I am seriously thinking I am going to try the ag tractor and snowblower this year, and see how it works.