Starting a plant hire company

[JAClark96]

Hi there.

Im considering starting a plant hire company in the near future. I owned a mini digger a few years ago now and was contacted by a local contracting company to see if I could hire out. I agreed to this and manage to have a small income coming in on top of my wages (out with the construction industry). Things were going well until contaminated diesel was put in and with my lack of knowledge in the maintenance sector it put me back. Luckily my father owns an award winning car repair vehicle centre so he was able to help me out. I then sold the digger to help me towards buying a house.

I really enjoyed hiring out although I was put back slightly from the fuel contamination but id love to start again.

Obviously I have very little experience in the hiring sector and wondered if I can make a successful business and would it work?

I know I have to create a business plan and do a lot of research eg insurance, maintenance costs, whether I can get a reliable independent plant maintenance business to help me out when things go wrong etc.

Theres a few major hire companies where I live (Scottish Highlands) although I'm around 20 mins away from any hire company. so I need to take into consideration is there to much competition but I do know that there are few major contracts running just now and a good few more to come.

I would be hiring to local business's and the public.

If I do my research right and can see a gap in the market I would need some sort of investment to help me get started buying equipment. My plan would hopefully be a mini digger with a couple of digging attachments, trailer and a form of transport either pickup or tractor. I do have a caddy van but unfortunately not suitable for towing a digger.

I wondered if anyone had any experience starting a self operated plant hire company or could anyone give me tips

Any help is very appreciated.

thanks.

 

[Mr D]

Your best source of investment is friends and family.

 

[JAClark96]

Thank you Mr D

 

[Mark T Jones]

There is another thread on here which identifies that getting finance for plant is relatively easy.

My involvement in this sector is a dim, distant memory - @Gordon - Commercial Finance is involved in financing plant.

Whilst it isn't an easy business (none are), there is certainly money to be made - you do need good contracts and very tight credit control - the construction industry aren't famously good payers!

 

[JAClark96]

Thank you Mark. I know myself the construction industry aren’t famously good payers.

I do have contacts who are businessmen who I have a strong relationship with so I’d hope that they would help me out at first by hiring to them and build my business.

 

[Gordon - Commercial Finance]

Finance for plant is easy as pie. Although that is partly because I do it all day every day Mark!

Finance for plant hire is not quite as easy, as there needs to be permission to sublet written into agreements and there are insurance and liability complexities. It is still possible of course, and even a new start business will get reasonable enough rates secured on individual purchases. Just don't expect 2 and 3% flat rates.

I think the way most people start in plant hire is to lease new diggers direct from manufacturers and then sub hire it. Then once a market is established, credit history is established and the company has some history, then they start buying stuff of their own which is when the real margins can be had.

How far into the Scottish Highlands are you? I am in Perthshire, and I feel like there is space for a new PH company anywhere North of me, but it may be the case that lower standard rental rates on make it less viable up our way.

 

[UKSBD]

with my lack of knowledge in the maintenance sector

I would have thought this was a key aspect in hiring.

When I was working in the building industry the last thing we wanted was hired equipment playing up, if it was, we expected it swapped or an engineer out to repair it ASAP

 

[JAClark96]

Thank you Gordon really appreciate that. Just north of Inverness so there’s the likes of Nixon in Nairn, speedy, Gap and Morris Leslie in Inverness along with a couple others.

 

[Gordon - Commercial Finance]

Thank you Gordon really appreciate that. Just north of Inverness so there’s the likes of Nixon in Nairn, speedy, Gap and Morris Leslie in Inverness along with a couple others.

Very nice. I have family in Alness and I absolutely love that part of the world.

The companies you mention all have one thing in common - they're pretty massive, and so they won't have the same worries as you would when starting up!

Once you've made firmer plans, I would be happy to come and see you or have a chat on the phone to see what your options are.

 

[JAClark96]

Maintenance is key and I know there are a few independent plant maintenance companies but I’d only be starting out so I’d have to build trust and if it was working then I’d like to have my own maintenance team along with other machines I could swap if needing repaired. My family own a successful vehicle repair centre and they’d be more than happy to help if the machine broke down.

 

[JAClark96]

Thank you Gordon I really appreciate the help. Yes I love the area. When I was hiring my old digger out before I was hiring it at a cheaper rate that the rest of the hiring companies but I had bought the machine outright a wee Volvo ec15b so didn’t have to think about paying it off or helping to pay rents of a yard etc as it was kept at my mum and dads house.

 

[bodgitt&scarperLTD]

Maintenence need not be key- it is peanuts to extend the warranty to five years when buying a new machine from many manufacturers. All my diggers have five years warranty. Still helps to be able to do your own oil changes, but servicing packages were surprisingly cheap (around £1k for three years) last time I bought a machine.

Your main problem will be insurance. Standard plant insurance will not cover you for renting them out self drive. With companies, you can ask to see their hired-in plant insurance (and of course perform due dilligence). With homeowners, JCB insurance offer plant insurance for hirers by the day, but it is very expensive (as much as and often more than the hire) and the insurance has to be applied and paid for by the customer directly, which is also a hoop not many are willing to jump through.

Big plant hire companies can charge you insurance as a percent of the hire- there's a legal term for it, something about you taking on an interest in their insurance. But I'd imagine it's a very expensive policy for a couple of machines, and you'd need to find a specialist broker.

There is a lot of theft from hire companies currently. They're brazen about it. False ID and insurance. Or even just turning up in a lorry on a Friday afternoon- "hello mate, I'm here from A-plant, come to collect the three tonner". Most of the time the unaware site operatives help them load it!

Using a tractor is a massive can of worms. Acutally, it's not, it's just plain illegal- no way could you claim agricultural exemption driving around in that delivering diggers to building sites. I'd advise you start with a truck and trailer and micro and mini diggers up to 2.7t.

There's certainly easier semi-passive investments. Look at something more specialist, such as a screed pump. Self drive digger hire is the bottom of the market- £50 a day for a 1.5t doesn't cover costs unless you are buying twenty at a time for rock bottom prices, hiring them out, and then selling them in a year for almost what you paid for them.

That's one positive- lightly used plant residuals are rock solid currently.

And for petes sake get trackers on any machines you get.

 

[JAClark96]

Thank you for the help and advice