The earthmoving industry is on the up and up in Australia, with a vast array of building and upgrade projects in the pipeline. And while the industry at large has experienced many challenges in the face of COVID-19, opportunities are emerging, and the role that infrastructure can play in Australia’s economic recovery is significant. In other words, now might be a great time to consider either starting up your own earthmoving business or branching out in your existing one.
Where to begin, though? We spoke to five experts about how to set up or grow your own earthmoving enterprise. Here’s what they had to say.
1. Show me the money
When it comes to setting up a business, earthmoving or otherwise, the primary factor will almost undoubtedly be finances. According to Total Capital Management Manager Brett Inglis, financial planning is key.
“We have a number of earthmoving businesses on our accounts at the moment. We have got sole traders through to businesses that own 15 to 20 large excavators. A key part of our advice for somebody coming in, or those looking to grow, from a financial perspective is to make sure they have capital behind them,” he said.
Within the earthmoving sector, no doubt a large chunk of early funds will need to be put towards equipment. However, Mr Inglis believes that acknowledging there will be an initial outlay will help you plan ahead.
“The first thing to do is get in touch with a bank manager who specialises in asset finance,” he said.
“Bring with you a good business plan and a strategy about how you’re going to move through the various stages. And depending on available capital, we’d suggest easing into it with a few machines, and then scaling up as you start to get some footing.”
Once a level of cashflow starts coming in, there can be additional investment into more people and more machines. According to Mr Inglis, one of the most valuable and limited resources earthmoving owner-operators have is time.
“As the business grows, time is one of the main resources which starts to get stretched,” Mr Inglis said.
He recommended sole operators start to let go of certain responsibilities in the business, identifying where their key strengths were and to find people to fill the gaps that they are struggling to fill themselves.
“They could hire someone to look after the back-office roles such as invoicing and creditor management. These are essential functions which need to be maintained. Most operators have a lot of key in-depth industry knowledge, they can create significantly more value for the business by using their time and applying this knowledge, as opposed to performing the administrative office roles,” he says.
Another area to consider once the business is up and running is setting aside some savings to protect owner-operators against downtime.
“We always recommend people have a separate savings account running alongside the main business account,” Mr Inglis said.
“Then extra money can be put aside to help with areas such as tax payments, or as a working capital reserve if you have a couple of weeks or months which are slower due to bad weather or other factors. You want to have a reserve to avoid running into a cash flow problem.”
2. Putting it out there
Marketing has come a long way over the past few years. Gone are the days when people sat around a boardroom table working on mission statements and poring over marketing plans, or when an ad in the Yellow Pages was all you needed to be noticed.
These days, an active digital presence is vital if you want to get ahead of the competition.
According to Redback Solutions Managing Director Dave Eddy, ascertaining your target audience should be on top of the priority list. Next, it’s important to build your website, as well as setting up social platforms such as Facebook or Instagram.
“For example, if you had an earthmoving business which wanted to target the residential sector, try figuring out where to reach the people who need those services,” Mr Eddy said.
“Is it Google? Is it Facebook? Are they people in your local community? What are your competitors doing, and how are they reaching their customers?”
“You can also try something called ghost shopping,” he said.
“Call up the businesses that are already doing what you’re doing and serving the customers that you’re serving. Listen to how they answer the phone, what their sales process is, what kind of added benefits they offer and get an idea of what seems to work. That’s quite an effective tactic and should be done on a regular basis.”
Once your earthmoving business is flourishing, Mr Eddy recommends asking for reviews.
“Getting a camera in front of a happy customer’s face, telling a story about the problem they had and how it was solved is a great way to get new customers,” he said.
“Many businesses put a heap of effort into getting happy customers so they can put reviews on different channels, such as Google, Trust Pilot and those sorts of platforms.”
3. Getting down to business
If you want to know how successful an earthmoving business can be, just talk to Marty Mielcarz, owner of ProCoat Group in Sydney. A spray painter by trade, Mr Mielcarz always had an interest in machinery.
“One day I decided to buy a mini digger and started hiring it out,” he said.
“Then we got robbed one Christmas and everything was taken. So, I then bought another small machine and it went from there.”
That was four years ago, and he has never looked back. Today, Mr Mielcarz hires out and operates a fleet of five machines, including three Cat® machines, and is extremely busy. But he warns it’s not for the faint-hearted.
“One thing I would say to anybody looking to start their own earthmoving business, or those looking to expand, is that you need to have a lot of drive. I do everything – the bookings, the quoting, the operating. I have very high expectations and I don’t like to jeopardise that standard. Here in Sydney, I’m flat-out, even when other operators aren’t.”
Mr Mielcarz said his customers ranged from private residential individuals to commercial builders who construct large industrial complexes, and that, despite who the customer is, communication is key.
“Communication is critical, and I always work hard to keep my customers happy. I like to get to know my customers and for them to get to know me,” he said.
“All my reviews are five stars. I’ve never had a bad review.”
But according to Mr Mielcarz, the industry’s reputation could be better.
“The industry’s reputation isn’t great. Many of these contractors don’t show up. Then they whinge they don’t get work. I pride myself on never being late. I try to keep things simple. I do tend to bite off more than I can chew, but I go hard. I always do my best to deliver what I say I’ll deliver.”
4. Risky business
When you’re setting up any business, legal experts say the rule of thumb is to protect yourself. Agreements, contracts, warranties and invoices all need to be in place and properly checked before jumping in the cab.
Turnbull Hill Lawyers Managing Partner Gavin Hanrahan said asset protection was a huge priority and could be achieved by minimising what you owned as much as possible. This could include hiring instead of purchasing earthmoving equipment, as well as leasing a commercial premise rather than buying the building.
“Like any business, you need to be prepared,” Mr Hanrahan said.
“You need an agreement which has a get-out clause, as well as a get-out approach. So, when you first set up your business, make sure you have the best structure, with a balance of asset retention and tax minimisation.”
Having a reputable insurance broker is also vital in order to ensure your insurance is giving you adequate protection. Procedures and documents need to be scrutinised to ascertain how risk can be minimised as much as possible to avoid any claims made against you, such as warranty issues.
To make sure you’re completely covered, it’s recommended you talk to a reputable accountant, insurance broker and legal professional while you’re still in the planning stages of your earthmoving business. And if you’re already passed that stage? Make sure you check your existing agreements and insurances will pass scrutiny by getting them assessed by an expert.
5. Go where the quality is
When it comes to what kind of equipment to use, many successful industry operators
advocate going for quality, reliability and accessibly. Brian Lee is the managing director of North West Mining & Civil (NVMC), a leading provider of building services in Western Australia’s Tom Price area. A large proportion of his fleet is made up of machinery supplied by WesTrac.
“Up where we are in the Pilbara, it’s pretty remote. But WesTrac has great dedication to having parts and materials in this remote area. We get all our equipment serviced up here in Tom Price,” Mr Lee said.
“Without that, it would mean machinery and parts would have to be delivered from Perth. So, it’s a great timesaver that they have a branch so close to where we are. That’s part of the reason why we went with Cat gear – they’re right here. A lot of the other machinery providers don’t have after-sale machinery services.”
NVMC first started operations in 2014 with four employees and has since grown to have more than 60 staff on their books.
“Our first piece of machinery when we opened six years ago was a Cat Skid Steer Loader from WesTrac, and now the bulk of our fleet is yellow. They make up a large proportion of our fleet because Caterpillar® is a trustworthy and reliable brand, and WesTrac provide good service and after-sales care. WesTrac is pretty committed to those kinds of things,” Mr Lee said.
NVMC do preventative maintenance and servicing on all their machinery as per manufacturing specs. Mr Lee said this was incredibly important to prevent breakdowns and lost time on jobs.
“Each piece of machinery is different, but we hope to get around eight to 10 years out of each machine. We currently have three skid steer loaders, one track loader, four excavators, two front-end loaders, two graders and one roller in our fleet, and we get preventative maintenance on all of them.”
According to Mr Lee, now is a great time to set up or expand your own excavation business.
“It’s a great time to join the industry or grow your earthmoving business. My advice would be to not get too carried away with the volume of work. Just cater for what you can do. You’re definitely not going to be able to do everything, so don’t bite off more than you can chew. It’s hard to say no, but you have to in order to maintain your quality. And we are all about quality.”
For more than 30 years, WesTrac has set the benchmark in equipment management solutions, providing customers across Western Australia, New South Wales and the Australian Capital Territory with unrivalled support in the mining and construction sectors.