I am convinced this company and its owner finds success in part due to his outward approach to helping others. To find Blessings in life - Be a Blessing to others and you are Sir, we thank you!
Thank You. I just purchased a Kubota SVL 95-2 High Flow Skid Steer with a Bradco MM60 Mulcher head. Today was the first day I received the Machine and 22K Gooseneck Trailer. While at a gas station today; I was approached and asked thin out 96 acres of 6 to 7 inch pine wood. I went and looked at the job site. He just wants certain pine trees taken and Mulched up. I was shocked and didn't even know where to began with pricing a job this big. Your sheet is helping me a lot. Thank You
Nick you're going to regret that machine. I've been using it. My friends have had 2 catch on fire. Keep the engine bay clean. Make sure you have it warrantied. The def system has went out 3 times in 10 months. In 10 months the machine has been in the shop 5. I'll never in my life own a Kubota.
Brother you are doing a hell of a good job explaining this and helping others (that are trying to get started in this) so go ahead and feel that good karma. This is solid advice folks, we use excel for calculating (bidding calculator) just like what you have here, although we do commercial HVAC controls we have several sheets and pages to ours. Your sheet is clean and easy to read. Ours gets complicated because we work with a bunch of different types of equipment(valves, dampers, relays, contactors, VFDs, VAVs, etc). Solid work!
the witness Really good to hear that my videos and information are useful to you in some way. People like you are why I take the time to make them. It's good to help others.
Awesome vid. I do the same with my farm equipment. Makes the price of the equipment a little easier to swallow when you break it down, but it also irritates when someone wants to complain about the price of hay or work they want you to do. I'm sure you have the guys in your industry too that undercut you and put themselves out of business quickly. Enjoy the videos.
Five Oaks Farm of Georgia Thanks. It's just prudent business to understand your costs. There are the same types in the forestry mulching business too, they pull their pricing out of a hat. So you can always find used equipment at fire sale prices. Good luck with your business!
I love your channel. Bern watching you from the beginning. And I can say your videos are educational, not like "v belt and son" those videos are of him showing off all the time. Showing us viewers his trailer and how to chop wood. Ridiculous.. But your videos I'm learning from you. So keep up the great work. London England. Rufus howe .. out..
Thanks, Rufus. I really appreciate your comment. I'm glad you find my videos helpful and informational. That's why I make them. Sharing knowledge and experiences makes us all better off. There is a lot of good information in the comment sections of each of my videos, too. People have asked great questions over the years, and I always try to give good, detailed answers. Living in London, is watching these videos of being out in nature an escape for you, or are you thinking of a new business opportunity? I visited London a few years ago, and enjoyed all of the historical sites there very much.
Thank you for taking the time to make this video. The content of this video is very helpful to me. I would also like to see one where you address “Break Even Point “ when you get the chance. Harlan
Hey Harlan- Good to hear you found my video helpful. Knowing your Owning-Operating Cost is really important to any business like this. Figuring out the Break-even-point is important, too. There are lots of videos explaining this formula, which is easy to understand and adapt to a specific business, so I don’t think I’ll be making that one.
Another great instructional video. I appreciate your time, effort and understandable presentation. Big help to me making a decision and being more informed. Thank you very much.
Great videos. Very informative. I have one comment on your Operator's hourly wage (Line 15). Unless you pay your operator for billable hours only, and you could, the operator has other duties that must be compensated for, such as driving to and from the job site, operator maintenance, etc. If your billable hours are 500 hours per year, and an operator works full time, 2000 hours per year of wages needs to be earned within the 500 hours of billable time. Therefore, $20/hr full time wage would need to be added four times for the billable hours (500 hours) to equal the annual wage hours (2000 hours), which means you need to enter $80/hr on Line 15.
You are right about the math on this, and I understand what you're saying. But this Owner-Operator Worksheet is typically just used for figuring out the bottom line per hour owner and operating cost of a single piece of equipment. These are considered productive costs. There are other business costs that would take into account non-productive costs, such as administrative costs when an operator is not operating the equipment, unemployment comp, FICA taxes, overhead costs for your office/shop/utilities, insurance, property taxes, business taxes, etc, etc, etc. These non-productive costs are also called "burden" or "wrap" or other terms. So in the case of a small business, say a one machine, one operator size business, after you figure out what the Owner-Operator Cost of that machine is, then you would ADD in a profit margin to that number. This profit margin includes all of the burden costs AND economic profit. But the bottom line with any kind of business, is to make sure all of your costs are being covered in the price you are charging for your service or product. So, its good you are thinking about how to cover that time when your machine is not operating. When I started in this business, my strategy was to set my pricing at a point above my Owning & Operating Cost + a small profit margin added on, just to get into the market and make sure that I was going to get enough customers to know that I could sustain my business operation. Since then, each year I gradually increase my prices to see what effect it has on the number of customers I am getting. I will continue to raise my price each year until I see a noticeable decrease in customers at that price point. That's been my pricing strategy.
Great info. I plan on doing this when I get out the Air Force in about a year. One thing that I think that would need to be added in is cost of delivery and setup to get to the job. I'm not taking the equipment out there for free since that's wear and tear on the vehicle hauling it out there. Very informative video sir.
Yes, most operators of heavy equipment have an additional charge for equipment transportation to the job-site. This Owning-Operating Cost worksheet is specifically for determining that Cost-Per-Hour. As a business, you would add on to that cost your administrative/overhead cost and profit margin. Added all together, the total cost is what you should charge per hour to customers. And knowing this total cost is an important piece of data so you can compare it to your competitors pricing to determine if your price structure is competitive and viable as a business.
Thanks for putting together such a detailed video of how to figure out costs. We have a towing company in Smithfield, Va and I just started working on doing the same thing for out tow trucks. I’d like to talk to you about using your spreadsheet to help us put our numbers together. I’ll reach out to you on your company website also. Thanks!
I made a second video describing how to calculate Owner Cost, too. Both are needed to figure out the Owner-Operating Cost per hour for that equipment. This can be used for a tow truck or any piece of equipment. It’s a good tool. Shoot me a text (757.871.5026) if you have any questions about it. I also sell copies of my Excel spreadsheet for $25, if you’re interested. But you can also re-create a spreadsheet from the info on the videos.
I developed this Excel spreadsheet from information I gathered from a business Fleet Management technical manual. I sell copies of my spreadsheet for $25, if you’re interested. Or you can re-create it by watching the videos and using the format of essential information.
Question about your interest and insurance formula. In your part 1 video you define the interest paid calculation as "Total Interest Paid" / "Time of Finance (3yrs)" = "Interest per Year" / "Hours Operated Per Year" = "$ / hr". In the Part II Video, what does N and S represent? I am struggling to get the math to work to $4.40 / hr
Dennis- I added the formulas in from the fleet management manual just to be super thorough. The formulas tak into regression costs over a longer period of time. You DON'T have to get that detailed to have accurate numbers. I just use what I know my one year cost of insurance or interest is, and divide that by the number of hours I expect to operate that year.
My Dec 2023 Owning-Operating Cost per hour was $111 (excluding the operator wage, since I was the operator) I would update my O&O Cost spreadsheet at the end of every year in January when I was prepping for taxes and had all of the actual costs compiled.
Glad my video helped, John. I made this Excel spreadsheet from information I found in a fleet management technical manual. Either you can re-create the spreadsheet from my video, or I sell blank copies of my O&O Cost spreadsheet for $25. I use Venmo for payment. If you’re interested email me at dclevinger@cfsmulching.com
@@clevingerforestservicesllc1164 I've watched a lot of your videos but not all. Do you have one that can break down more of what's tax deductible and how I find out how or where I would go to find what I need before I start my business. Thanks
@@johnproctor2924 When you own a business, everything you spend money on for the business is tax deductible. I didn’t make a video showing everything you will need to operate a forestry mulching business. Everyone’s business plan is different. I just though things through to figure out what I would need. Start with the big stuff first (machine, trailer, truck, daily use support tools, insurance, etc). I didn’t buy every single tool and shop consumables I could think of up-front. I bought things as I went along when the situation called for a specific item.
These skid-steer sized forestry mulchers are designed to clear trees up to 8”-diameters. They clear the under-story of forests, not the whole forest. So yes, there is always a demand for this type of under-brush clearing for many different reasons.
Man thank you so much for sharing this. I want to do the same thing. But what I don’t want to do is go in and under bid all of the competition and hurt the actual business of clearing land. Because by doing that, you will not be able to maintain your machine and eventually be out of business. Do you ever get contacted to help out other companies to do a job or push work your way by others in the same forestry business for any reason? Would you be willing to share the actual excel spreadsheet for people to use and modify?
Hey, Laby- Yes, knowing you cost of doing business is critically important. This Owning-Operating Cost worksheet is really necessary for almost any kind of business, with slight differences. But what one forestry mulching business "charges" is only one aspect. Production rate is also a factor. So is customer relations. Lots of nuances that can distinguish competitors. Yes, I do get calls from other forestry mulcher operators time to time, to pick up their customers that are more in my neck of the woods. I also pass some of my customers to other operators, too, based on proximity, capabilities, or time constraints. I sell copies of this Microsoft Excel spreadsheet I made to calculate Owning-Operating Cost, for $25. Shoot me an email, if you're interested, at dclevinger@cfsmulching.com
Yes, I sell a blank copy of the spreadsheet I created that is shown in this video. I sell it for $25. If you're interested, shoot me an email at dclevinger@cfsmulching.com But if you know how to use Microsoft Excel, you can create your own spreadsheet from watching this video and pausing it to copy the information and general format.
Bill Mitchell Thanks again, Bill. Knowing how to figure out your Owner-Operator Cost is THE KEY. Useful for many different types of businesses, too. Financial analysis is part of the business decision making process, so it's essential if you want to be successful.
I'm recently retired military and am strongly considering starting a land clearing business. I am curious as to how you got started building a customer base and generate work to cover the cost. I imagine that most of your work is generated from spring to fall. Is there a drastic fall off in the winter? How many months would you recommend someone be able to carry the cost themselves when starting out?
Jason8 Arthur Congratulations on your military retirement. That's a game changer financial safety net, and you deserve it after doing 20+ in the military. Customers are going to search for this land clearing service on the Internet, so you have to be found on the Internet. Called internet presence. You must have a website as you hub of main information. As spokes, or feeder routes back to you website, you build a presence on Facebook, UA-cam, Craigslist, Intagram, etc. when you create these sites, there are sections to input key words that describe your content. This is called SEO, Search Engine Optimization. So when someone Googles one of your key words it will hit on one of your sites. Have your contact information and links to your other sites on these. This is how you will get your custmers. I started with a good website and an ad on Craigslist. When I went hot with these two sites, I started getting customer calls two days later. Several months later I added a business Facebook page. After two years in business I started posting videos of my work on a UA-cam channel I started. The majority of my customers today, after 4-1/2 years in business, are repeat customers, word-of-mouth customers, or they find my on UA-cam, then check out my website. And every customer I meet with, I give them 2-3 business cards. This is all of the marketing/advertising that I do. But of course, there are many other ways to advertise your business. I'm located in Clarksville, Tennessee, just north-west of Nashville, so I do forestry mulching all year round here. Forestry mulching is not seasonal work. Customers want it done anytime of year. I actually prefer working over the winter months. Customer demand is constant here in TN both over the winter months and summer months. As far as what level of financial reserve to carry to ensure your monthly bills are getting paid (assuming you are in a location you can work year round), I can only tell you how I did it. I made sure I had 6-9 months of money in the bank to cover my payments and unplanned maintenance. But I did very thorough financial planning and risk management planning BEFORE I committed myself financially so I would not have any major surprises. When I saw the strong response I was getting in the first 1-3 months, then I started using some of my finances to purchase things for my shop and support tools to carry to job sites, that would make my operation more efficient. This was how I did things getting started.
@@clevingerforestservicesllc1164 thank you so much for the response. I have watched every one of your videos more than once over the last week. I am not to far from you, I am located in WV. The thing that concerns me the most is the steep terrain that I have in my area but I believe that the efficiency of this machines is incredible and once more people become familiar with what this type of service is able to provide the customer market will grow. I am surrounded by family farms and I know the benefit that this service could be very useful in my area. The thing that worries me is the operation cost ÷ disposal income in my area. On a side note could you do more videos from inside the cab where you are discussing what and why you are approaching a job the way you are. Also if you could talk about how you approach a potential job from the time you get the phone call to completion. ie. How you bid the job and how you let the customer know what you are able to do for them. Thank you for posting these videos, they have been an invaluable source of information.
Jason8 Arthur The price you have to charge, compared to what people are willing to pay in your area, is a very important Go/NoGo business decision point BEFORE you commit yourself financially. Your business area is most likely be everything out to 60 miles from your location. You have to feel reasonably sure that you will have customers who will pay that $1000-$1500 to clear an acre of forest. Talk to farmers, and people that own land to see what they would pay to clear 1-acre of trees & brush. Talk to builders, dozer and excavator operators to see how much they charge to clear land. FYI- Base your numbers on the total cost-per-acre, not what you charge per hour. So you'll have to figure how many hours it takes you to clear different jobs based on the terrain, density of material, and type of material, in order to figure out the total cost. Most people will not want to clear slopes that are too steep for them to keep maintained by bush hogging, so don't worry about that. I limit myself to 25-30 degree slopes because of that reason. I imagine that customers in that area would want to maximize any useable land that they have, and would be prime for clearing. You can also talk with your local county forester who might have some ideas for you and how much people pay for clearing. Also, talk to any municipal maintenance offices, state and local park maintenance offices, utility companies, etc, to get an idea of what the pay to keep their wooded areas clear. Thanks for the ideas for videos you'd like to see. That is helpful for me.
Artsee d I'm located in Tennessee. This state doesn't require mandatory insurance minimums like some other states. Forestry mulching is classified under the landscaping category for business license in TN. I pay about $1000/year for liability and loss through AllState commercial land & marine. We don't need permits to cut down trees on private land. I don't do work in any type of protected areas though, where they may require permits.
If you run your own truck, you can definitely handle running a forestry mulching business. Lot's of transferable skills there, the most important being a self-starter and motivated to work.
Thanks, Butch. Glad you found it helpful. I purchase my machines because that's the most economical way to do it for my business model. I like the tax benefits of purchasing over leasing.
james dickson I don't factor travel into what I charge per hour. I charge a separate Equipment Transport Fee of $125 for each job. This covers two round trips to the customers' property- one trip for the initial visit to evaluate the work to be done and give a cost estimate, and the second trip to do the work. My average customer is 32 miles from my shop, so some are 10-minutes away and some are 60-minutes away so it all averages out. I advertise that my work area is within this distance. If a customer is farther out than this and the job is large enough, then I add an extra travel cost into the estimate. I know other operators factor in travel costs by charging by the mile. Whatever works best for that business.
Thanks, Willie. Glad the videos are helpful and informative to you. I don't think I will be doing a video on figuring out break even points. This is just basically one formula that is common for all businesses. It can be searched under business Break Even Analysis, or Break Even Point analysis (BEP). Its pretty straight forward to fill in the formula. And you don't have to be a math whiz to make it work. A good website will explain the BEP and walk you through it.
Hi Bobby- P= Delivered Price of Machine S= Estimated Residual Value of Machine at Trade-In N= Number of years you plan to keep this equipment in service. But the easiest way to calculate this is if the specific annual cost is known, this figure should be divided by the estimated usage (hours/years) and used. For a simple example, if you pay $1400 per year for insurance, and you operate 700 hours per year, then 1400/700= $2 per hour. This will be the cost you input for insurance in the O&O Cost spreadsheet. This also applies to Line Items for Interest, Insurance, and Property Tax.
Thanks, Ryan. I sell blank copies of my Owning-Operating Cost spreadsheet for $25. If you’re interested in that, shoot me an email dclevinger@cfsmulching.com
Fire danger and hoot owl operation. My dad was a logger I am a retired real estate developer. I showed this to a rural real estate developer. My family own property in fire zones. We have used d r power mower. Now use a bobcat for snow removal. Marketing to small land owners 1-5 acre parcels. Our timber cycle is approx 40 years. At 20-25 year mark observatory blocks out undersTory. A feller buncher at 40 years
A forestry mulcher would be a good solution for you. I do lots of repeat business with real estate developers. And this machine is great for removing the dangerous ladder fuels in a forest which significantly reduces fire hazard risk.
Thanks for your comment, Dave. Hope you found this video useful. I found a spreadsheet to calculate O&O Costs for dozers several years ago on a heavy equipment forum. I downloaded it, and then modified it to fit my needs. I know my way around developing Excel spreadsheets, unfortunately. lol. You can easily re-create it from the video if you want.
Clevinger Forest Services, LLC sounds great. I find your videos greatly informational. Im doing a cost analysis to start my side business. I have a great career now but looking for a fall back in the future. Thank you again for these videos
I made this spreadsheet in Excel from information I found in a Fleet Management technical manual. I sell this spreadsheet for $25, or you can re-create it from my videos.
Summary: Breakdown of how to view costs and how to understand what your hourly costs are, to then be capable of setting your rates properly, so you can compare your customer demographics with costs and see if you think you can make the business work, or find places to cut costs. You need to research figures you will use, this is just an explanation of how to crunch your numbers.
That would be an interesting topic to cover, but I don't use a customer contract. Just a hand shake. That's the way we roll in Tennessee. Never had a problem.
I had to come back and review this one after Operator Tips Part 2. As a new operator, I found myself spending 4 hours cleaning my rented CTL after about 3 days of hard work. Needless to say, but had I cleaned it thoroughly at the end of each day, it would have not amounted to 4 hours. Since I was working for myself, my labor was irrelevant, but if I take this on as a business, then it does come into play. My point is that in your operations costs, I don't see you factor in daily setup, loading, delivery, pickup, and cleanup into your expenses. Those seem to me to be fixed costs any day upon which you work (ok, delivery and pickup vary from job to job, but the loading, cleanup, preventative maintenance have to be done every day you work). Thus, if you work a 2 hour job at $150/hr, you barely cover costs when you consider 30 minutes to load up, 30 minutes to drive to site, 30 minutes to drive home, and another 30 minutes to clean up, grease, sharpen, and inspect. More importantly, if I were in instant success and had to buy a second machine and hire an operator, how would I find a guy or gal willing to drive an hour round trip for a two hour job at $20/hr? Would you then consider paying an operator mileage? In the cases of these smaller jobs, do you tend to try to develop several jobs in the same area so that you are mulching a full day away?
All very good questions. Now you're getting down to the nitty gritty and thinking like a business person. Yes, all time has to be accounted for, and paid for. It does take time to clean up the machine and prepare it to go out again. And travel time is important to recoup. So I account for this time and cost in a few ways. I charge an Equipment Transport cost to bring my equipment to the jobsite. I keep metrics on the distance to all of my customers jobsites. The aggregated average distance (one-way) to a jobsite is 27 miles. Roughly 30 minute drive. So the Equipment Transport charge I charge covers two hours of time. My pricing includes an hourly charge, an Equip Transport charge, and I have a minimum 4-hour charge for small jobs. As far as clean-up/prep time, you can either add that into Line 9. Planned Maintenance: Lube Oils, Filters, Grease, and Labor of the Owning-Operator Cost spreadsheet, OR you can tack it onto your basic O&O Cost as overhead cost. Remember your TOTAL cost per hour that you charge should be O&O Cost + Overhead + Profit Margin.
Spradlin Excavation I use a website: cfsmulching.com , UA-cam channel, Facebook, Craigslist, and word of mouth to get all of my customers. I haven't had to use any paid advertising yet in 4-years, but that's an option too.
Spradlin Excavation Yes, you have to have a thorough web-presence so when people Google any key words about forestry mulching, then they will have a better chance of hitting one of your online sites.
Jon Harrington I compiled this data into a Microsoft Excel spreadsheet, from information I found in a heavy equipment fleet management business manual I found several years ago. I sell copies of this spreadsheet, as seen in my video, for $25. If you're interested, email me at dclevinger@cfsmulching.com
Shoot me an email and I’ll email you back with an invoice for $25. You can pay online through the invoice, and when I get notification of payment then I’ll email you a copy of the Owning-Operating Cost spreadsheet. dclevinger@cfsmulching.com
You can pull all of the information off of these two videos I made explaining the Owning Costs, and Operating Costs, and put them on an Excel spreadsheet, or whatever you want to use, to re-create this Owning-Operating Cost spreadsheet for yourself. Or, if you want to save time, I sell blank copies of my O&O Cost Excel spreadsheet for $25. If you’re interested in buying a copy, email me at dclevinger@cfsmulching.com.
Is there a way we can get in contact I am starting a land clearing company and would like some advice and if there is anything I can do to help you I would love to
Hi Michus- I sell copies of my spreadsheet for $25. If you’re interested, email me at dclevinger@cfsmulching.com and I’ll send you an invoice for $25 that can be paid online, then I email you the spreadsheet.
Jason, just seeing this comment. Missed it somehow. Did I send you the spreadsheet 8 months ago??? If not, and you still want it, email me at dave.clevinger@yahoo.com
I called and left you a message today on your spreadsheet. Willing to pay to get a copy of it. Let me know your thoughts.? You should be compensated for it - great work and information. Thanks
Steve Tutt Hi Steve- I just charge $25 for my Owner-Operator Cost worksheet, as seen in the video.. It's an Excel file. If you're interested in a copy of it, email me at dclevinger@cfsmulching so I have your email address. I'll email you an electronic invoice for $25 for the O&O Cost worksheet that you can pay directly from the invoice View/Pay Invoice button. When I see the transaction started, I will email you the file.
Richard Andrews Its a safety feature of this Bobcat/Fecon mulcher head. The drum will go from full speed RPM's to stopped in 7-10 seconds when either the trigger is pulled to stop it, or the door of the cab is opened.
I don’t know why your at $145.00 per hour your going broke with that. It took 20 minutes to try to figure this out and it’s not even accurate I can tell you in a couple minutes if that get up around $3-4000 per hour to avoid being broke
As I said at the beginning of the video, I was using generic numbers to make the math easier. They were not actual costs for my business. But you’re right, if you charge $3000 per hour, you probably don’t need to waste time on doing all of this silly math.
Dave, if a forestry mulching service could charge $3000 an hour I’m sure the market would be flooded with lawyers and physicians changing careers! 😂 Tim in Oneida
I’ve been doing forestry mulching exclusively, full time, since 2014. Running and sustaining any type of business depends largely on the knowledge, skills, and abilities of the owner. Some succeed. Some fail.
![Owner-Operator Costs of Forestry Mulching: Cutter Tools [EN Sub-Titles]](http://i.ytimg.com/vi/GOkd3bwzgq8/mqdefault.jpg)
I am convinced this company and its owner finds success in part due to his outward approach to helping others. To find Blessings in life - Be a Blessing to others and you are Sir, we thank you!
Bill Mitchell Those are wise words to live by, Bill. And I do.
Thank You. I just purchased a Kubota SVL 95-2 High Flow Skid Steer with a Bradco MM60 Mulcher head. Today was the first day I received the Machine and 22K Gooseneck Trailer. While at a gas station today; I was approached and asked thin out 96 acres of 6 to 7 inch pine wood. I went and looked at the job site. He just wants certain pine trees taken and Mulched up. I was shocked and didn't even know where to began with pricing a job this big. Your sheet is helping me a lot. Thank You
Nick Thomas This is a great start to your business. Let me know if you have any questions about figuring your Owner-Operator Costs.
Nick you're going to regret that machine. I've been using it. My friends have had 2 catch on fire. Keep the engine bay clean. Make sure you have it warrantied. The def system has went out 3 times in 10 months. In 10 months the machine has been in the shop 5. I'll never in my life own a Kubota.
Brother you are doing a hell of a good job explaining this and helping others (that are trying to get started in this) so go ahead and feel that good karma. This is solid advice folks, we use excel for calculating (bidding calculator) just like what you have here, although we do commercial HVAC controls we have several sheets and pages to ours. Your sheet is clean and easy to read. Ours gets complicated because we work with a bunch of different types of equipment(valves, dampers, relays, contactors, VFDs, VAVs, etc). Solid work!
the witness Really good to hear that my videos and information are useful to you in some way. People like you are why I take the time to make them. It's good to help others.
Awesome vid. I do the same with my farm equipment. Makes the price of the equipment a little easier to swallow when you break it down, but it also irritates when someone wants to complain about the price of hay or work they want you to do. I'm sure you have the guys in your industry too that undercut you and put themselves out of business quickly. Enjoy the videos.
Five Oaks Farm of Georgia Thanks. It's just prudent business to understand your costs.
There are the same types in the forestry mulching business too, they pull their pricing out of a hat. So you can always find used equipment at fire sale prices.
Good luck with your business!
Great Video … so many more costs . Does it really burn 39 gallons a minute ? How do you keep it filled ?
I love your channel. Bern watching you from the beginning. And I can say your videos are educational, not like "v belt and son" those videos are of him showing off all the time. Showing us viewers his trailer and how to chop wood. Ridiculous..
But your videos I'm learning from you. So keep up the great work. London England. Rufus howe .. out..
Thanks, Rufus. I really appreciate your comment. I'm glad you find my videos helpful and informational. That's why I make them. Sharing knowledge and experiences makes us all better off. There is a lot of good information in the comment sections of each of my videos, too. People have asked great questions over the years, and I always try to give good, detailed answers. Living in London, is watching these videos of being out in nature an escape for you, or are you thinking of a new business opportunity?
I visited London a few years ago, and enjoyed all of the historical sites there very much.
Thank you for taking the time to make this video. The content of this video is very helpful to me. I would also like to see one where you address “Break Even Point “ when you get the chance. Harlan
Hey Harlan- Good to hear you found my video helpful. Knowing your Owning-Operating Cost is really important to any business like this. Figuring out the Break-even-point is important, too. There are lots of videos explaining this formula, which is easy to understand and adapt to a specific business, so I don’t think I’ll be making that one.
Ok, thank you for your reply, I will go looking for it.
Another great instructional video. I appreciate your time, effort and understandable presentation. Big help to me making a decision and being more informed. Thank you very much.
Great! Thanks Tom.
Great videos. Very informative. I have one comment on your Operator's hourly wage (Line 15).
Unless you pay your operator for billable hours only, and you could, the operator has other duties that must be compensated for, such as driving to and from the job site, operator maintenance, etc.
If your billable hours are 500 hours per year, and an operator works full time, 2000 hours per year of wages needs to be earned within the 500 hours of billable time. Therefore, $20/hr full time wage would need to be added four times for the billable hours (500 hours) to equal the annual wage hours (2000 hours), which means you need to enter $80/hr on Line 15.
You are right about the math on this, and I understand what you're saying. But this Owner-Operator Worksheet is typically just used for figuring out the bottom line per hour owner and operating cost of a single piece of equipment. These are considered productive costs.
There are other business costs that would take into account non-productive costs, such as administrative costs when an operator is not operating the equipment, unemployment comp, FICA taxes, overhead costs for your office/shop/utilities, insurance, property taxes, business taxes, etc, etc, etc.
These non-productive costs are also called "burden" or "wrap" or other terms. So in the case of a small business, say a one machine, one operator size business, after you figure out what the Owner-Operator Cost of that machine is, then you would ADD in a profit margin to that number. This profit margin includes all of the burden costs AND economic profit.
But the bottom line with any kind of business, is to make sure all of your costs are being covered in the price you are charging for your service or product. So, its good you are thinking about how to cover that time when your machine is not operating. When I started in this business, my strategy was to set my pricing at a point above my Owning & Operating Cost + a small profit margin added on, just to get into the market and make sure that I was going to get enough customers to know that I could sustain my business operation. Since then, each year I gradually increase my prices to see what effect it has on the number of customers I am getting. I will continue to raise my price each year until I see a noticeable decrease in customers at that price point. That's been my pricing strategy.
Great info. I plan on doing this when I get out the Air Force in about a year. One thing that I think that would need to be added in is cost of delivery and setup to get to the job. I'm not taking the equipment out there for free since that's wear and tear on the vehicle hauling it out there. Very informative video sir.
Yes, most operators of heavy equipment have an additional charge for equipment transportation to the job-site. This Owning-Operating Cost worksheet is specifically for determining that Cost-Per-Hour. As a business, you would add on to that cost your administrative/overhead cost and profit margin. Added all together, the total cost is what you should charge per hour to customers. And knowing this total cost is an important piece of data so you can compare it to your competitors pricing to determine if your price structure is competitive and viable as a business.
@@clevingerforestservicesllc1164 yes sir.
Thanks for putting together such a detailed video of how to figure out costs. We have a towing company in Smithfield, Va and I just started working on doing the same thing for out tow trucks. I’d like to talk to you about using your spreadsheet to help us put our numbers together. I’ll reach out to you on your company website also. Thanks!
I made a second video describing how to calculate Owner Cost, too. Both are needed to figure out the Owner-Operating Cost per hour for that equipment. This can be used for a tow truck or any piece of equipment. It’s a good tool. Shoot me a text (757.871.5026) if you have any questions about it. I also sell copies of my Excel spreadsheet for $25, if you’re interested. But you can also re-create a spreadsheet from the info on the videos.
Great information! Thanks for putting this together!
Glad it was helpful!
thank you for the info but where you get that spreadsheet
I developed this Excel spreadsheet from information I gathered from a business Fleet Management technical manual. I sell copies of my spreadsheet for $25, if you’re interested. Or you can re-create it by watching the videos and using the format of essential information.
Great video! Thank you for taking the time to make this! It was very informative!
Triple G Land Services, LLC Glad you found it useful. Thanks for watching.
Outstanding Dave! Thank you
Keith Bales I appreciate that, Kieth.👍
Question about your interest and insurance formula. In your part 1 video you define the interest paid calculation as "Total Interest Paid" / "Time of Finance (3yrs)" = "Interest per Year" / "Hours Operated Per Year" = "$ / hr". In the Part II Video, what does N and S represent? I am struggling to get the math to work to $4.40 / hr
Dennis- I added the formulas in from the fleet management manual just to be super thorough. The formulas tak into regression costs over a longer period of time. You DON'T have to get that detailed to have accurate numbers.
I just use what I know my one year cost of insurance or interest is, and divide that by the number of hours I expect to operate that year.
Thank you!
You bet! That’s for watching.
With the obscene rise and fuel cost, Insurance, equipment , etc. what’s the latest numbers on your excel spreadsheet?
My Dec 2023 Owning-Operating Cost per hour was $111 (excluding the operator wage, since I was the operator) I would update my O&O Cost spreadsheet at the end of every year in January when I was prepping for taxes and had all of the actual costs compiled.
You helped me out a lot. What's the name of this speard sheet so I can download it. Thanks
Glad my video helped, John. I made this Excel spreadsheet from information I found in a fleet management technical manual. Either you can re-create the spreadsheet from my video, or I sell blank copies of my O&O Cost spreadsheet for $25. I use Venmo for payment. If you’re interested email me at dclevinger@cfsmulching.com
@@clevingerforestservicesllc1164 I've watched a lot of your videos but not all. Do you have one that can break down more of what's tax deductible and how I find out how or where I would go to find what I need before I start my business. Thanks
@@johnproctor2924 When you own a business, everything you spend money on for the business is tax deductible. I didn’t make a video showing everything you will need to operate a forestry mulching business. Everyone’s business plan is different. I just though things through to figure out what I would need. Start with the big stuff first (machine, trailer, truck, daily use support tools, insurance, etc). I didn’t buy every single tool and shop consumables I could think of up-front. I bought things as I went along when the situation called for a specific item.
Tennessee has smaller timber than north idaho do you think the market is there for an area with larger trees?
These skid-steer sized forestry mulchers are designed to clear trees up to 8”-diameters. They clear the under-story of forests, not the whole forest. So yes, there is always a demand for this type of under-brush clearing for many different reasons.
@@clevingerforestservicesllc1164 thank you and appreciate your video’s
Man thank you so much for sharing this. I want to do the same thing. But what I don’t want to do is go in and under bid all of the competition and hurt the actual business of clearing land. Because by doing that, you will not be able to maintain your machine and eventually be out of business. Do you ever get contacted to help out other companies to do a job or push work your way by others in the same forestry business for any reason?
Would you be willing to share the actual excel spreadsheet for people to use and modify?
Hey, Laby- Yes, knowing you cost of doing business is critically important. This Owning-Operating Cost worksheet is really necessary for almost any kind of business, with slight differences. But what one forestry mulching business "charges" is only one aspect. Production rate is also a factor. So is customer relations. Lots of nuances that can distinguish competitors.
Yes, I do get calls from other forestry mulcher operators time to time, to pick up their customers that are more in my neck of the woods. I also pass some of my customers to other operators, too, based on proximity, capabilities, or time constraints.
I sell copies of this Microsoft Excel spreadsheet I made to calculate Owning-Operating Cost, for $25.
Shoot me an email, if you're interested, at dclevinger@cfsmulching.com
do you have this spreadsheet available? i see case has an online version but good to play with the numbers
Yes, I sell a blank copy of the spreadsheet I created that is shown in this video. I sell it for $25. If you're interested, shoot me an email at dclevinger@cfsmulching.com
But if you know how to use Microsoft Excel, you can create your own spreadsheet from watching this video and pausing it to copy the information and general format.
Excellent information
Bill Mitchell Thanks again, Bill. Knowing how to figure out your Owner-Operator Cost is THE KEY. Useful for many different types of businesses, too. Financial analysis is part of the business decision making process, so it's essential if you want to be successful.
I'm recently retired military and am strongly considering starting a land clearing business. I am curious as to how you got started building a customer base and generate work to cover the cost. I imagine that most of your work is generated from spring to fall. Is there a drastic fall off in the winter? How many months would you recommend someone be able to carry the cost themselves when starting out?
Jason8 Arthur Congratulations on your military retirement. That's a game changer financial safety net, and you deserve it after doing 20+ in the military.
Customers are going to search for this land clearing service on the Internet, so you have to be found on the Internet. Called internet presence. You must have a website as you hub of main information. As spokes, or feeder routes back to you website, you build a presence on Facebook, UA-cam, Craigslist, Intagram, etc. when you create these sites, there are sections to input key words that describe your content. This is called SEO, Search Engine Optimization. So when someone Googles one of your key words it will hit on one of your sites. Have your contact information and links to your other sites on these. This is how you will get your custmers.
I started with a good website and an ad on Craigslist. When I went hot with these two sites, I started getting customer calls two days later. Several months later I added a business Facebook page. After two years in business I started posting videos of my work on a UA-cam channel I started. The majority of my customers today, after 4-1/2 years in business, are repeat customers, word-of-mouth customers, or they find my on UA-cam, then check out my website. And every customer I meet with, I give them 2-3 business cards. This is all of the marketing/advertising that I do. But of course, there are many other ways to advertise your business.
I'm located in Clarksville, Tennessee, just north-west of Nashville, so I do forestry mulching all year round here. Forestry mulching is not seasonal work. Customers want it done anytime of year. I actually prefer working over the winter months. Customer demand is constant here in TN both over the winter months and summer months.
As far as what level of financial reserve to carry to ensure your monthly bills are getting paid (assuming you are in a location you can work year round), I can only tell you how I did it. I made sure I had 6-9 months of money in the bank to cover my payments and unplanned maintenance. But I did very thorough financial planning and risk management planning BEFORE I committed myself financially so I would not have any major surprises. When I saw the strong response I was getting in the first 1-3 months, then I started using some of my finances to purchase things for my shop and support tools to carry to job sites, that would make my operation more efficient. This was how I did things getting started.
@@clevingerforestservicesllc1164 thank you so much for the response. I have watched every one of your videos more than once over the last week. I am not to far from you, I am located in WV. The thing that concerns me the most is the steep terrain that I have in my area but I believe that the efficiency of this machines is incredible and once more people become familiar with what this type of service is able to provide the customer market will grow. I am surrounded by family farms and I know the benefit that this service could be very useful in my area. The thing that worries me is the operation cost ÷ disposal income in my area.
On a side note could you do more videos from inside the cab where you are discussing what and why you are approaching a job the way you are. Also if you could talk about how you approach a potential job from the time you get the phone call to completion. ie. How you bid the job and how you let the customer know what you are able to do for them.
Thank you for posting these videos, they have been an invaluable source of information.
Jason8 Arthur The price you have to charge, compared to what people are willing to pay in your area, is a very important Go/NoGo business decision point BEFORE you commit yourself financially. Your business area is most likely be everything out to 60 miles from your location. You have to feel reasonably sure that you will have customers who will pay that $1000-$1500 to clear an acre of forest. Talk to farmers, and people that own land to see what they would pay to clear 1-acre of trees & brush. Talk to builders, dozer and excavator operators to see how much they charge to clear land. FYI- Base your numbers on the total cost-per-acre, not what you charge per hour. So you'll have to figure how many hours it takes you to clear different jobs based on the terrain, density of material, and type of material, in order to figure out the total cost.
Most people will not want to clear slopes that are too steep for them to keep maintained by bush hogging, so don't worry about that. I limit myself to 25-30 degree slopes because of that reason. I imagine that customers in that area would want to maximize any useable land that they have, and would be prime for clearing. You can also talk with your local county forester who might have some ideas for you and how much people pay for clearing. Also, talk to any municipal maintenance offices, state and local park maintenance offices, utility companies, etc, to get an idea of what the pay to keep their wooded areas clear.
Thanks for the ideas for videos you'd like to see. That is helpful for me.
Is there any way that I could get a copy of that spreadsheet?
I sell blank copies of my Owning-Operating Cost spreadsheet for $25. Venmo, PayPal. If interested, email me at dave.clevinger@yahoo.com
Thanks. Great information
Thanks, Mike. It's a little dry to watch, but it is very important information to understand for anyone in this type of business.
great video brother. lots of good info.
Appreciate it, Pickle. Glad it helps.
what kind of insurance do you have to have and about cost per year and do you need permits to cut down trees
Artsee d I'm located in Tennessee. This state doesn't require mandatory insurance minimums like some other states. Forestry mulching is classified under the landscaping category for business license in TN. I pay about $1000/year for liability and loss through AllState commercial land & marine. We don't need permits to cut down trees on private land. I don't do work in any type of protected areas though, where they may require permits.
@@clevingerforestservicesllc1164 ok thanks im an owner op now thinking about selling my semi and getting into this getting tired of otr
If you run your own truck, you can definitely handle running a forestry mulching business. Lot's of transferable skills there, the most important being a self-starter and motivated to work.
Great information!! do you lease your machines, or purchase out right?
Thanks, Butch. Glad you found it helpful.
I purchase my machines because that's the most economical way to do it for my business model. I like the tax benefits of purchasing over leasing.
Do you factor in travel costs to the job for the tow vehicle
james dickson I don't factor travel into what I charge per hour. I charge a separate Equipment Transport Fee of $125 for each job. This covers two round trips to the customers' property- one trip for the initial visit to evaluate the work to be done and give a cost estimate, and the second trip to do the work. My average customer is 32 miles from my shop, so some are 10-minutes away and some are 60-minutes away so it all averages out. I advertise that my work area is within this distance. If a customer is farther out than this and the job is large enough, then I add an extra travel cost into the estimate. I know other operators factor in travel costs by charging by the mile. Whatever works best for that business.
Clevinger Forest Services, LLC thanks for the reply.
Great video series. Thank you very much. Are you going to do another on break-even costs?
Thanks, Willie. Glad the videos are helpful and informative to you.
I don't think I will be doing a video on figuring out break even points. This is just basically one formula that is common for all businesses. It can be searched under business Break Even Analysis, or Break Even Point analysis (BEP). Its pretty straight forward to fill in the formula. And you don't have to be a math whiz to make it work. A good website will explain the BEP and walk you through it.
What does P,S, and N stand for in the interest cost section?
Hi Bobby-
P= Delivered Price of Machine
S= Estimated Residual Value of Machine at Trade-In
N= Number of years you plan to keep this equipment in service.
But the easiest way to calculate this is if the specific annual cost is known,
this figure should be divided by the estimated usage
(hours/years) and used.
For a simple example, if you pay $1400 per year for insurance, and you operate 700 hours per year, then 1400/700= $2 per hour. This will be the cost you input for insurance in the O&O Cost spreadsheet.
This also applies to Line Items for Interest, Insurance, and Property Tax.
Thank you for the useful tips and break down. I appreciate you taking the time. Can you send me the excel file?
Thanks, Ryan.
I sell blank copies of my Owning-Operating Cost spreadsheet for $25. If you’re interested in that, shoot me an email dclevinger@cfsmulching.com
Fire danger and hoot owl operation. My dad was a logger I am a retired real estate developer. I showed this to a rural real estate developer. My family own property in fire zones. We have used d r power mower. Now use a bobcat for snow removal. Marketing to small land owners 1-5 acre parcels. Our timber cycle is approx 40 years. At 20-25 year mark observatory blocks out undersTory. A feller buncher at 40 years
A forestry mulcher would be a good solution for you. I do lots of repeat business with real estate developers. And this machine is great for removing the dangerous ladder fuels in a forest which significantly reduces fire hazard risk.
Where did you find this excel doc? And thank you for these great info videos!
Thanks for your comment, Dave. Hope you found this video useful.
I found a spreadsheet to calculate O&O Costs for dozers several years ago on a heavy equipment forum. I downloaded it, and then modified it to fit my needs. I know my way around developing Excel spreadsheets, unfortunately. lol. You can easily re-create it from the video if you want.
Clevinger Forest Services, LLC sounds great. I find your videos greatly informational. Im doing a cost analysis to start my side business. I have a great career now but looking for a fall back in the future. Thank you again for these videos
You bet, Dave. Good planning is important. Good luck with it.
How did you get access to this spreadsheet? Is it something that can be downloaded?
I made this spreadsheet in Excel from information I found in a Fleet Management technical manual. I sell this spreadsheet for $25, or you can re-create it from my videos.
@@clevingerforestservicesllc1164
I would like to purchase a copy from you. Let me know the next step. Thank you
@@clevingerforestservicesllc1164 how can I get a copy of this spread sheet
Summary: Breakdown of how to view costs and how to understand what your hourly costs are, to then be capable of setting your rates properly, so you can compare your customer demographics with costs and see if you think you can make the business work, or find places to cut costs. You need to research figures you will use, this is just an explanation of how to crunch your numbers.
Gale Hess Excellent summary of the video contents, Gale! Thanks👍
Please make this a public document! Thank you!
Logan- Hope you found the video helpful.
The spreadsheet took me time to make it, so I don't think I'll be giving it away. I am a business guy.
Clevinger Forest Services, LLC Regardless, thank you for showing this piece of info! Im sure many would find this helpful. Good luck.
You could sell the blank document for $5 or something and email that to customers
It’s worth a lot more than just a please.
can you cover areas like contract with customer or agreement.
That would be an interesting topic to cover, but I don't use a customer contract. Just a hand shake. That's the way we roll in Tennessee. Never had a problem.
I had to come back and review this one after Operator Tips Part 2.
As a new operator, I found myself spending 4 hours cleaning my rented CTL after about 3 days of hard work. Needless to say, but had I cleaned it thoroughly at the end of each day, it would have not amounted to 4 hours.
Since I was working for myself, my labor was irrelevant, but if I take this on as a business, then it does come into play.
My point is that in your operations costs, I don't see you factor in daily setup, loading, delivery, pickup, and cleanup into your expenses. Those seem to me to be fixed costs any day upon which you work (ok, delivery and pickup vary from job to job, but the loading, cleanup, preventative maintenance have to be done every day you work). Thus, if you work a 2 hour job at $150/hr, you barely cover costs when you consider 30 minutes to load up, 30 minutes to drive to site, 30 minutes to drive home, and another 30 minutes to clean up, grease, sharpen, and inspect.
More importantly, if I were in instant success and had to buy a second machine and hire an operator, how would I find a guy or gal willing to drive an hour round trip for a two hour job at $20/hr? Would you then consider paying an operator mileage?
In the cases of these smaller jobs, do you tend to try to develop several jobs in the same area so that you are mulching a full day away?
All very good questions. Now you're getting down to the nitty gritty and thinking like a business person. Yes, all time has to be accounted for, and paid for. It does take time to clean up the machine and prepare it to go out again. And travel time is important to recoup.
So I account for this time and cost in a few ways.
I charge an Equipment Transport cost to bring my equipment to the jobsite. I keep metrics on the distance to all of my customers jobsites. The aggregated average distance (one-way) to a jobsite is 27 miles. Roughly 30 minute drive. So the Equipment Transport charge I charge covers two hours of time.
My pricing includes an hourly charge, an Equip Transport charge, and I have a minimum 4-hour charge for small jobs.
As far as clean-up/prep time, you can either add that into Line 9. Planned Maintenance: Lube Oils, Filters, Grease, and Labor of the Owning-Operator Cost spreadsheet, OR you can tack it onto your basic O&O Cost as overhead cost.
Remember your TOTAL cost per hour that you charge should be O&O Cost + Overhead + Profit Margin.
Could I get a copy of this?
Yes, I sell copies of my Owning-Operating Cost spreadsheet for $25. If you’re interested, send me an email- dclevinger@cfsmulching.com
What app did you use ?
This wasn’t an app. I created this excel spreadsheet from the information I found in an equipment fleet management technical manual.
What do you use for advertising
Spradlin Excavation I use a website: cfsmulching.com , UA-cam channel, Facebook, Craigslist, and word of mouth to get all of my customers. I haven't had to use any paid advertising yet in 4-years, but that's an option too.
Ok I haven’t thought about a website thanks hopefully going to buy my first mulching head next week thanks for all the info
Spradlin Excavation Yes, you have to have a thorough web-presence so when people Google any key words about forestry mulching, then they will have a better chance of hitting one of your online sites.
What’s the program your using is it downloadable????? Please
Jon Harrington I compiled this data into a Microsoft Excel spreadsheet, from information I found in a heavy equipment fleet management business manual I found several years ago. I sell copies of this spreadsheet, as seen in my video, for $25. If you're interested, email me at dclevinger@cfsmulching.com
Clevinger Forest Services, LLC I’m very interested in this I’ll be emailing you tomorrow
Jon Harrington 👍
HACEN ESTE TIPO DE TRABAJOS EN MEXICO?
Ernesto Villa No, trabajo en Tennessee.
Thank you
Where can I get this spreadsheet?
Shoot me an email and I’ll email you back with an invoice for $25. You can pay online through the invoice, and when I get notification of payment then I’ll email you a copy of the Owning-Operating Cost spreadsheet. dclevinger@cfsmulching.com
How do i make the spreed sheet?
You can pull all of the information off of these two videos I made explaining the Owning Costs, and Operating Costs, and put them on an Excel spreadsheet, or whatever you want to use, to re-create this Owning-Operating Cost spreadsheet for yourself.
Or, if you want to save time, I sell blank copies of my O&O Cost Excel spreadsheet for $25. If you’re interested in buying a copy, email me at dclevinger@cfsmulching.com.
Is there a way we can get in contact I am starting a land clearing company and would like some advice and if there is anything I can do to help you I would love to
Sure. Call, text or email anytime.
W: (931) 802-5910
C: (757) 871-5026
dclevinger@cfsmulcing.com
Correction on the email:
dclevinger@cfsmulching.com
Is there anyway you could email me this spreadsheet?
Hi Michus- I sell copies of my spreadsheet for $25. If you’re interested, email me at dclevinger@cfsmulching.com and I’ll send you an invoice for $25 that can be paid online, then I email you the spreadsheet.
@@clevingerforestservicesllc1164 I sent you an email.
I sent a email for this pread sheet if you can help me Thank you
Jason, just seeing this comment. Missed it somehow. Did I send you the spreadsheet 8 months ago??? If not, and you still want it, email me at dave.clevinger@yahoo.com
I called and left you a message today on your spreadsheet. Willing to pay to get a copy of it. Let me know your thoughts.? You should be compensated for it - great work and information. Thanks
Steve Tutt Hi Steve- I just charge $25 for my Owner-Operator Cost worksheet, as seen in the video.. It's an Excel file. If you're interested in a copy of it, email me at dclevinger@cfsmulching so I have your email address. I'll email you an electronic invoice for $25 for the O&O Cost worksheet that you can pay directly from the invoice View/Pay Invoice button. When I see the transaction started, I will email you the file.
@@clevingerforestservicesllc1164 You are too nice and too cheap!!! That being said, I thank you for all the info and advice I have learned from you!!!
Harold Amick I support fellow hard working entrepreneurs 💯👍👍
WORK IN MEXICO?
Your head stops spinning very quickly. Why is that?
Richard Andrews Its a safety feature of this Bobcat/Fecon mulcher head. The drum will go from full speed RPM's to stopped in 7-10 seconds when either the trigger is pulled to stop it, or the door of the cab is opened.
owner cost per hour is too granular
All direct costs have to be accounted for to be accurate.
I don’t know why your at $145.00 per hour your going broke with that. It took 20 minutes to try to figure this out and it’s not even accurate I can tell you in a couple minutes if that get up around $3-4000 per hour to avoid being broke
As I said at the beginning of the video, I was using generic numbers to make the math easier. They were not actual costs for my business. But you’re right, if you charge $3000 per hour, you probably don’t need to waste time on doing all of this silly math.
Dave, if a forestry mulching service could charge $3000 an hour I’m sure the market would be flooded with lawyers and physicians changing careers! 😂 Tim in Oneida
@@CliffsideStables that’s not true people want the office jobs
@@Grggeorge 😎😇😜
The big question is this. Can a man make a living doing this?
I’ve been doing forestry mulching exclusively, full time, since 2014. Running and sustaining any type of business depends largely on the knowledge, skills, and abilities of the owner. Some succeed. Some fail.