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There's more than one way to build a become your own successful boss in the grading and excavating business, especially when you start with skid-steer loaders, mini-excavators and other compact equipment. By Greg Northcutt
Compact construction equipment-whether a skid-steer loader, a miniexcavator, a compact track, or a small wheel loader-is designed to save time and labor when working space is tight. But some enterprising contractors find another compelling reason to invest in these quick and nimble machines: to take charge of their destiny by becoming their own boss and building their own business. As they'll tell you, the route to becoming a grading or excavating entrepreneur can be a frustrating, trying experience. It doesn't always lead to success. But for those who have survived the perils, the journey can lead to a rewarding destination-not just in terms of money but in the ability to call all your own shots.
Those who have achieved success by starting a business with compact equipment have found that small machines combined with drive, determination, and a knack for managing people, projects, and money can be the key to achieving some big dreams. The first step to turn the dream into reality, of course, is just that: the first step. But it can seem like a gigantic one. "I was scared to death when I started," recalls Hector Delacruz. He began Hector's Excavating Services in Kenner, LA, in 1997 after borrowing $5,000 from a friend to make the down payment on a used Bobcat 331 excavator. With a wife, two kids, and a mortgage, the pressure was on. "I didn't have a dime to my name, and I didn't know if I was going to get this business off the ground." Since then, he's added a Bobcat 753 skid-steer loader, replaced his original excavator with a new Bobcat 334 model, fixed up his house, and bought a 3/4-ton pickup and a 1-ton pickup, as well as a gooseneck trailer to transport his equipment. "It all happened within four years," he relates. Making things happen for the better is what drives many wage earners to become wage payers. That includes Jim Carr. He quit his job as an assistant national parts manager with an equipment manufacturer to seek what he saw as an even better deal-one entirely of his own making. He started J&S Grading in Dawsonville, GA, in May 1999 with a Takeuchi TL26 compact track loader. Since then, he's upgraded his equipment twice and now has a Takeuchi TL 130, a 1-ton pickup, and a 24-ft. tag-along trailer. Compact equipment-skid-steer loaders-also helped fuel the growth of a business operated by partners Pete DeVore and Michael Kerten in Grayslake, IL. In 1985 they bought a landscape contracting business from their boss. Annual sales of the company, with a dozen people on the payroll at the time, was about $350,000, DeVore reports. The first piece of equipment the partners bought was a Case Uni-Loader. Over the years, they've bought about 40 skid-steer loaders. Today their business, Landscape Concepts Inc., is one of the largest landscape contractors in the Chicago area, with 325 employees and annual sales of about $30 million, DeVore notes. The company operates two subsidiaries, Landscape Concepts Construction and Landscape Concepts Management. The total machinery fleet numbers about 170 pieces of equipment, ranging from the skid-steer loaders to bigger equipment, including tractor-loader-backhoes, crawler loaders, and excavators as large as 70,000 lb. Two other partners that chose compact equipment to get their business up and growing are Vince Alvaro and Gary Komasara. Friends for two decades, they formed Alvaro and Associates four years ago. Unlike many new business owners, each was a seasoned entrepreneur. Alvaro, for instance, has been pouring concrete and building homes for 40 years, while Komasara owned and operated a chain of auto-collision repair shops for 30 years. Today the two partners own a Gehl 5635 skid-steer loader and a Gehl 502 compact excavator, which are used often for excavating work on residential jobs where operating room is limited. "I don't think we could have built our business without compact equipment," remarks Komasara. The Value of Smaller Machines The ability to slip through narrow spaces, sometimes no wider than 3 ft., and under overhead obstacles as low as about 7 ft. and to maneuver quickly and easily in confined areas are key advantages of compact equipment. In these situations they can do the job much faster, easier, and more profitably than hand crews, while outworking and outearning larger machinery. That's becoming even more important as the size of new residential construction sites decreases and redevelopment activity in crowded urban areas increases. Transporting these machines is a lot less tedious and a lot less expensive than moving bigger pieces around from job to job too. Once on the job, these machines make the most of time and space. Skid-steer loaders, for instance, can turn around completely in their own length to save valuable time, while compact track loaders have the traction to turn mountains into molehills and the flotation to keep on working when the terrain gets soft or muddy. Meanwhile, compact excavators can beat production of bigger digging equipment in tight quarters. Size, however, is just one of the attractions of compact equipment. Many of these machines are surprisingly big when measured by performance, especially the latest generation of loaders and excavators. Features include advanced hydraulic controls and impressive power in terms of rated operating capacities, tractive effort, bucket breakout force, and the like. Ergonomic cab and control designs, sophisticated electronics, and such creature comforts as enclosed, heated, and air-conditioned cabs add to the appeal of these machines. Of course, a smaller package also means a smaller price tag for compact equipment compared to large pieces of machinery-another attractive feature, particularly when starting a business. All of these attributes contribute to the single biggest selling point of compact equipment: their incredible versatility. Backed by an ever-expanding list of different types of attachments, a compact loader or excavator can do more kinds of work than just about any other size or class of construction equipment, including grading and excavating equipment. That can mean a bigger return on investment and a faster track to profitability for a fledgling business. That's why DeVore and Kerten selected a skid-steer loader when adding to Landscape Concepts's original equipment lineup, which consisted of mowing machines and an old tractor. Cashing In on Compacts "We didn't know just how big we'd get, but we wanted to expand the size of the company from the day we bought it," DeVore says. "We felt a skid-steer loader was a good piece of equipment to help us do that. We needed to get the most productivity possible for our money. Skid-steer loaders have allowed us to maximize the return from the dollars we invest in our equipment." Carr chose to base J&S Grading on a compact track loader because that type of machine best fit the opportunities he saw in the Atlanta area. "Atlanta is a big-enough market where one guy with a small track loader can make a decent living, unlike other areas where you need big equipment to do that." Affordability and performance explains why Delacruz, who had 10 years of experience operating tractor-loader-backhoes, began Hector's Excavating Services with a compact excavator and later added a skid-steer loader. A compact excavator and skid-steer loader also best matched the needs and desires of Alvaro & Associates. "We don't want the big jobs," states Komasara. "They usually require large equipment, and that means more employees, which we don't want." Also, transporting the compact equipment is a lot easier and a lot less expensive. "I know what it costs in terms of trucks, trailers, licenses, moving overhead power lines, and chase cars to transport a 105,000-pound excavator," he says. "I don't want that anymore." As Komasara will tell you, the ability of compact equipment to work where bigger machines can't is worth real money. "We can charge as much to dig a hole with our compact equipment as we would to dig a hole six times as large with big equipment because we can get into jobs that guys with bigger equipment can't. In fact, some of the people we work for who have large equipment are beginning to realize the benefits of compact equipment in small work areas after seeing what we can do with our compact machines." Putting the Equipment to Work Compact loaders and excavators are paying off in a wide range of jobs for these grading and excavating contractors. Although J&S Grading does finishing work for small commercial jobs from time to time, most of the work involves residential projects. Carr reports that one of his clients builds more than 1,100 homes year. His bucket-equipped compact track loader makes money backfilling basements, cutting out driveways and sidewalks, and performing final landscape grading. Hector's Excavating Services works on both residential and commercial projects. Delacruz uses his skid-steer loader with a bucket to move and spread dirt and a grapple bucket to load concrete and other construction debris. He equips his compact excavator with 12-, 18- or 24-in.-wide buckets to dig trenches for utility lines and uses a hydraulic breaker to tear out driveways and sidewalks. His specialty, however, is removing in-ground swimming pools, a niche he discovered when a homeowner called for help in taking out an 8-ft.-deep backyard pool. "The customer couldn't find anyone willing to do the job because there was only a narrow access to the site." Delacruz says. Using his compact excavator with the hydraulic breaker to tear up the concrete pool and his skid-steer loader to remove the debris and bring in dirt and backfill the hole, he completed the work in a day and a half. "The customer was shocked with how fast I did the job." Alvaro & Associates also does a lot of work in cramped backyards. That includes digging footings and basements for house additions, moving dirt and other construction materials, and some light grading. "Much of what we do requires compact equipment," Komasara explains. His skid-steer loader attachments include an auger, pallet forks, and a four-in-one bucket, while his excavator tools consist of 12- and 28-in. digging buckets, a 48-in. grading bucket, and a hydraulic thumb. "We need small equipment to work in those areas and to move dirt out to trucks." DeVore says his Landscape Concepts Construction crews use their skid-steer loaders with a variety of attachments for work ranging from spreading topsoil and carrying blocks for building retaining walls to loading and unloading trees and shrubs. "Every crew has a skid-steer loader. We absolutely could not operate without them. These machines enable us to do anything you want to do on a landscaping job." Management Tips In pursuing their different business dreams, these compact-equipment owners have learned a number of lessons in managing such a business. Among them: Finding the Work. Before quitting his full-time salaried job with the equipment manufacturer, Carr lined up several customers who agreed to use his services. One represented a sizable chunk of business. When that opportunity opened up, he made the switch to full-time business owner. "Without that one account, I might have waited longer," he notes. At times, Carr has more work than he can fit in his schedule. In those cases, he refers the jobs to other grading contractors. "There's a group of us," he explains. "We're not family, but we are close enough that we help each other out when needed. But we don't mess in each other's sandbox either. We have a gentleman's agreement that we don't call another contractor's project supervisor looking for work. I get all my business by word of mouth." Delacruz also continues to rely on referrals by satisfied customers to bring in work for Hector's Excavating Services. In addition, he does his part to spread the word. "I get out and talk to anybody and everybody about my services." This year, for the first time, Delacruz will try an ad in the yellow pages of his local phone directory. Hiring Employees. Delacruz is careful about hiring help. At one time he had two employees operating his skid-steer loader. Now he hires an operator only when he needs one. "Even though a skid-steer loader is made of steel, some guys will find the weakest part on a machine and break it," he remarks. "The two people I once had were tearing up the machine almost as fast, it seemed, as I could get it fixed." Past headaches from managing employees is one reason why Komasara and Alvaro try to keep their business a two-person operation. "We're done being babysitters," Komasara says. "We hire people only as we needed them and subcontract out bigger jobs." Pricing Services. Delacruz's rate for his excavating services is $45 an hour. Carr, on the other hand, charges a minimum of $150 for a grading job and $50 for each hour of work. Normally he quotes the least amount a job is likely to cost. If pressed, he'll set a cost ceiling that reflects several more hours than he estimates the job will actually require to complete. Even if the job takes longer, his bill doesn't exceed that top estimate. "I make a little extra or lose a little on a job, that's the way it goes," he comments. "I recently charged one homeowner $400 for a $425 job to regrade a driveway and spread gravel. She was really happy with that price and told her neighbors. Now they want me to do their driveways. That $25 difference could end up bringing in another $600. Right, wrong, or indifferent, that's the way I charge." Legal Considerations. Delacruz has learned to protect himself against the possibility of lawsuits. Once a customer sued him for what Delacruz says was a hairline crack in a driveway. The customer claimed the skid-steer loader caused it as it repeatedly crossed a driveway to carry about 12 yd.3 of dirt from the front of the house to the backyard, he relates. "We won that case by showing that the ground in the neighborhood was settling and causing cracks in other driveways." However, he lost another lawsuit when a marble slab used to make countertops fell over and cracked after he completed work for the day. That incident followed four days of work at a commercial site, where he used a hydraulic breaker on his excavator to break up a driveway. "Now, before starting a job, I take photos of driveways and pavement," Delacruz says. "Also, I ask customers to sign a disclaimer waiving any claims for damages to pavement or unmarked utilities from any vibrations caused by the hydraulic breaker attachment." Selecting Compact Equipment. Providing employees good equipment not only reduces downtime and repair costs, but it also helps attract and keep good employees. "Employees make the business," states DeVore. "We want to retain the best employees we can, so we treat them fairly, give them good equipment to operate, and assign them to machines that allow them to do the type of work they like to do. That way, they're happier, they do a better a job, and they're more productive." That approach applies to the boss as well, notes Komasara. That's why he and Alvaro buy new equipment. "With new equipment you're not wasting time and money fixing junk," Komasara explains. "Also, our compact exactor is equipped with a comfortable seat; a heated, enclosed cab; and a stereo sound system." Delacruz also likes to be comfortable when working. The enclosed cab on his compact excavator features a heater, a stereo, and air conditioning. "The cab isn't quite sound-proof, but I can hear the radio even when I'm running the hydraulic breaker." Selecting an Equipment Dealer. The level of service and support provided by a dealer can be every bit as critical to business success as the brand of compact equipment you buy. "Most of the compact equipment on the market today is good," remarks Komasara. "What makes the difference is the ability of the dealer to provide you equipment and service when you need it. For example, our dealer delivers attachments, like a rented post-hole digger, to our job site. Service like that is important when you're a contractor." Barry Heinrichs, president of Burris Equipment Company in Waukegan, IL, offers these tips for selecting an equipment dealer attuned to the needs of a compact-equipment owner:
"One indication of a dealer's commitment to customers is length of time in business," Heinrichs points out. "Generally, dealers who stay in business for a long time provide good support to their customers." The Payoff Despite hard work, self-discipline, and no guarantee of a regular paycheck-much less a profit-starting and running a compact-equipment business has been worth it, say these owners. "We wanted to grow Landscape Concepts large enough to compete with other large contractors in the Chicago area," maintains DeVore. "We've achieved that. Now our goal is to continue a more modest growth pattern and become the best landscape contractor in northern Illinois." Carr is also satisfied with his decision to build a grading business with compact equipment. "I'm getting a lot of repeat customers, business is growing, I'm making more money, I bought a house, and I can take time for my family," he states. "Plus, I get a lot of self-satisfaction of knowing that J&S Grading is my company. "I own it, I run it, and that's what I enjoy." Had Delacruz not taken a risk when he bought his compact excavator, he figures he'd now be making $10-$12 an hour operating equipment for someone else. "I'm happy I went off on my own," he remarks. "It shows that if you have experience in the excavating business, know how to operate equipment, talk to the right people, treat customers fairly, and hustle, you can have a successful business with compact equipment."Greg Northcutt is an editorial consultant to the International Erosion Control Association and a writer on environmental issues.
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