Starting an Excavating Business

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Backhoe in Action
Backhoe in Action (Image: Wiki Commons)

Many people that are fascinated by construction are most interested in the early phases of the project. During this phase, the earth is excavated and prepared for building. Structural improvements are made, if necessary, and steps are taken to protect the environment from soil erosion and impact to habitats. This phase of construction involves the use of heavy equipment, such as backhoes, pile drivers and excavators. Because it requires a substantial investment in equipment, the excavating business is less competitive than other trades, but is still risky and requires a great deal of hard work and preparation to be successful.

Things You'll Need

  • Business Plan
  • Source of Financing

Decide what kind of work you'd like to do. Commercial excavation is a much different field than residential. It requires a much greater investment up front, high insurance premiums and enough financial strength to be able to get a performance bond. If this sounds like too much at first, start with residential work to get started, then work your way towards larger projects.

Invest in some equipment. The main tool of the excavator is a backhoe. You can purchase a new or used model depending on how much you want to invest. Of course, the size of the backhoe you purchase will depend on what size work you want to do.

Outline your services. Determine if you will simply perform excavating work, or if you'd like to offer related services, such as environmental remediation, soils testing and directional boring. Many large projects will only hire an excavator who can cover all of these services, so if you don't plan to do them yourself, start building relationships with firms that do. You can partner with them later when bidding for work.

Learn as much as you can about underground digging laws in your area. Every city and town has different requirements as to how utility lines are to be marked, what kind of permits are required for digging and what methods are required. Learn about all of these before you start digging so you can avoid costly fines or errors.

Get licensed. You will need the traditional business license, but you also will need to get licensed to handle heavy equipment like your backhoe. Any staff you hire should also be properly trained and licensed. In addition, if you plan to do residential work, you may need a residential contractors license, which in some areas requires extensive background and financial checks.

Tips & Warnings

  • If you plan to do commercial work, plan for a 90 day lag between when you bill for your work and when you are paid. Residential work often offers the chance to bill one-third up front, with the balance due upon completion of the job.

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