# Starting Custom Harvesting



## CircleM98 (Jan 2, 2017)

Hey guys I'm new here and somewhat new to baling hay. Ive spent the past couple summers cutting raking and baling hay for local farmer and have decided to get my own equipment as the past several years we've had to rely on others and its always WAY late in the season when they get to us. Well some people have heard I'm throwing my hat in the ring and are wanting me to put hay up on there properties as theyve had similar issues. We've got a JD 5100e and JD 467 round baler and am looking at a few mowers and rakes. Long story short I was wondering what to charge per bale or how to do shares with people and just any advice at all would be greatly appriciated. I'm graduating high school and wanting to learn as much as I can so anything helps. Thanks!

-Caleb


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## Lostin55 (Sep 21, 2013)

I will offer some free advice that is probably worth what you pay for it. 
With you being young, people are going to want to take advantage of you, or at least try. 
Don't give discounts below your set rate. 
Incorporate your business.
Maintain your equipment, following the maintenance schedule. 
Decide early if you want to work a lot for a little or a little for a lot. 
Don't be afraid to hire someone if you get enough work. They will make you money. 
Pay yourself a wage and the company a profit. 
Get the work first, then upgrade equipment.
Schedule a little wiggle room for the unexpected. 
Charge a minimum for everything that you do. You don't want to travel 10 miles to put up 3 acres for little to no money. You will go broke. They might not want to pay the minimum, but you and your equipment don't need the practice. 
If you offer quality service at a fair price, the work will be there. 
Don't offer credit. Cash in hand at the completion of the work, or at least a good check. 
Listen to your gut. Physically look at every job before you take it. Walk the feild. Trust me when I say that it is cheap insurance. 
There will be more I am sure, but that is what came to mind.
Edit. You said we. ... that means someone else is helping you or owns the equipment. Definitely incorporate the business. If you don't you put all assets at risk in the event that something bad happens. 
50/50 and 60/40 are common, here, on shares. That is 60 for you, 40 for them. 
Remember that you are creating work, and expense, for yourself doing shares. You will have to pay someone to transport it, even if that someone is you. You will have fuel and overhead for that transportation. You will have to pay someone to market and sell it, even if it is you. Someone had to be available to load it. You will have to deal with more people to sell it.


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## 506 (Mar 22, 2016)

Caleb - A number of states across the country collect custom ag rate info and publish the numbers on an annual or bi -annual frequency. Search for "Custom Ag Surveys" or "Custom Ag Rates". The info will give you an idea what others in your region are *reporting*. I can tell you that I followed the rate for custom square baling in my region and got no push back. However, I got a lot of push back when I tried to apply the reported rate for custom shredding. I was too high. The point being, the info will at least give you a starting point. Also, go on line and search for tools to calculate your operating expenses. The ones I use allow me to input the costs of my equipment, the acreage I plan to work on an annual basis, fuel, etc.... They then turn out a cost per acre number that I can use to help assess billable rates. Knowing your costs and what you might be able to charge will help you chart your course. Finally, SAVE, PRINT, and COMMIT TO MEMORY what Lostin55 posted. He's spot on in the advice he's giving you.


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## r82230 (Mar 1, 2016)

Lost and 506, have given you some of the best advice IMHO. The only things that comes to my mind, is I have had two people stop and ask if I would do some custom work in the last month. I told them sorry I respectfully decline, I wouldn't have the time to do a fair and DEPENDABLE job for them.

With both people their problem was their current custom operator was not dependable as they would like. I defended the current operators, saying even I have breakdowns and hay gets rained on. Their answer was the operator did not keep them in the loop pre se. To me it sounded like a lack of commiication.

My two cents is, be dependable and communicate quickly / well.

Larry


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## Lostin55 (Sep 21, 2013)

Thanks for the kind words guys. I have thought of a few more things. 
Continue your education, not necessarily in the classroom. Learn how to fix all but the largest repairs. Shop rates will kill your profit. Learn which corporate entity will serve you best. LLC, S corp, C Corp. LP. Just a hint, S corp should be the best choice for custom haying. LLC 's are usually better for real estate. Learn about the Corporate veil and how to prevent it from being pierced. 
Invest in a program to track expenses and profit by job or customer. It is sometimes surprising to look at the year end reports. We use Quickbooks.
As it regards dependability, if you can have back up equipment in case of a major breakdown, so much the better. It doesn't have to be new or even shiny as long as it functions properly. Older equipment in good condition will make you more money than new stuff will. There is a limit to how old of equipment though. It needs to be productive. 
Another point on dependability. Consider whether or not you want to be a one man show. If you choose to be a one man show and something goes wrong and you get behind, you will be behind all season. It is very difficult to get caught up by yourself. It can be easier if you have employees to help. Notice that I said easier, not easy. It is relative. 
This one I would have struggled with at your age. If it comes down to going to a dance with a pretty girl, or putting up the hay that is ready, the hay wins. Congratulations, you just got married to a crop.


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## CircleM98 (Jan 2, 2017)

Thanks for all the advice! I've got about 150 acres total right now, about 40 acres in shares, 20 the guys is buying it all, and the rest is either our land or places where I keep everything off of it. I've got a nice JD 467 with about 7500 bales and have been looking at mowers, particularly the 630/730 series JD moco's. What would be some kind of agreement I could draw up quick to protect me (or them) legally if something happens on the property? Thanks for all the input!


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## r82230 (Mar 1, 2016)

CircleM98 said:


> What would be some kind of agreement I could draw up quick to protect me (or them) legally if something happens on the property? Thanks for all the input!


This would most likely be state specific You might want to talk to a couple of property/causality agents that have some experience of what type of insurance coverage's are appropriate. IMHO.

Larry


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## Lostin55 (Sep 21, 2013)

CircleM98 said:


> Thanks for all the advice! I've got about 150 acres total right now, about 40 acres in shares, 20 the guys is buying it all, and the rest is either our land or places where I keep everything off of it. I've got a nice JD 467 with about 7500 bales and have been looking at mowers, particularly the 630/730 series JD moco's. What would be some kind of agreement I could draw up quick to protect me (or them) legally if something happens on the property? Thanks for all the input!


Be incorporated and insured heavily. I don't have any written agreement. I offer a quote, and I stick by my word.
Edit. Your use of the term "draw up quick" indicates that you have NO interest in putting in the effort to effectively learn and utilize everything mentioned above. Good luck to you.


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## Dan_GA (Dec 29, 2015)

I don't consider myself a "custom operator" but I do cut hay for a few people I know. Customers will act as if you bought all of the equipment just to take care of them and only them, and on the exact day they want, even when you tell them there are others in line in front of them.


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## skyrydr2 (Oct 25, 2015)

There really is no "quick" contract you need to invest some time and money right now to get a legit business so you can get liability insurance (or bonding as it is called here) this takes cash up front in an escrow account that will pay you intrest on it and you can not get that money back with out a battle. You would basically need to go out of business ro get it back. This moneys is to cover boo boos that you might cause. (Mostly utilities that could get wrecked,for example a well head or underground pipinf or wiring) 
Being "insured and bonded" has benefits too. It shows you are serious and stand behind your work. A hand shake is good for a farmer to farmer...all else needs a contract written by an attorney that will uphold it otherwise its just an expensive piece of paper.


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