Business plan for local custom harvesting business - The Combine Forum
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post #1 of 32 (permalink) Old 11-25-2009, 10:37 PM Thread Starter
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Business plan for local custom harvesting business

The following is a small business plan I was just messing around with. I'd appreciate any feedback you might be able to give me regarding the scenario. This is for a local custom operation, staying within a 40 mile radius of home. Thanks in advance.

FIRST YEAR PROJECTED INCOME


WHEAT HARVEST 2010

PROJECTED INCOME:

COMBINES

30 acres per hour (2 combines, 30 ft. headers)
600 bushels per hour (20 bushel wheat)
$19 per acre
$570 per hour gross income from combines
1500 acres to harvest (custom work)
$28,500 gross income from combines

TRUCKS

30,000 bushels harvested/hauled
60 lb per bushel average
1,800,000 lbs hauled @ $.18 per cwt. (10 miles or less. Over 10 miles is an additional .5 cent charge per loaded mile).
$3,240 gross income from trucking

PROJECTED COSTS:

COMBINES

$3.00 per acre fuel
$1.60 per acre labor (4 workers x $12/hour / 30 acres per hour)
$2.00 per acre maintenance
$1.00 per acre misc. (taxes, insurance, etc.)
$7.60 total cost per acre

TRUCKS

$0.75 per mile fuel (4 mpg avg. @ $3.00 per gallon)
$0.50 per mile repairs, licenses, insurance, etc.
$1.25 total cost per mile



$19.00 per acre - $7.60 per acre = $11.40 per acre net profit

1500 acres x $11.40 = $17,100 net profit from combines

Average haul distance is 20 miles round trip. Average net load weight of semi is 55,000#. At $.18 per cwt this equals $99.00 gross profit per load. Calculating 20 miles per trip @ $1.25 per mile cost equals $25.00 per load cost, resulting in $74.00 profit per load.

30,000 bushels would equal 33 loads x $74 per load = $2,442 net profit hauling in wheat harvest. 33 loads @ 20 miles per round trip equals 660 miles of hauling, at $1.25 per mile expense.


TOTAL NET PROFIT FROM WHEAT HARVEST
$19,542




CORN HARVEST 2010


PROJECTED INCOME:

COMBINES

20 acres per hour (2 combines, 8 row heads)
4,000 bushels per hour (200 bushel corn)
$30 per acre
$600 per hour gross income from combines
2,000 acres to harvest (custom work)
$60,000 gross income from combines

TRUCKS

400,000 bushels harvested/hauled
56 lb per bushel average
22,400,000 lbs hauled @ $.18 per cwt. (10 miles or less loaded. Add .5 cent per mile over 10 miles loaded).
$40,320 gross income from trucking

PROJECTED COSTS:

COMBINES

$4.00 per acre fuel
$3.00 per acre labor (5 workers x $12/hour / 20 acres per hour)
$3.00 per acre maintenance
$1.00 per acre misc. (taxes, insurance, etc.)
$11.00 total cost per acre

$30.00 per acre - $11.00 per acre = $19.00 per acre net profit
2,000 acres x $19.00 per acre = $38,000 net profit from combines


TRUCKS

$0.75 per mile fuel (4 mpg avg. @ $3.00 per gallon)
$0.50 per mile repairs, licenses, insurance, etc.
$1.25 total cost per mile

Average haul distance is 20 miles round trip. Average net load weight of semi is 55,000#. At $.18 per cwt, per load, this equals $99.00 gross profit per load. Calculating 20 miles per trip @ $1.25 per mile cost equals $25.00 per load cost, resulting in $74.00 net profit per load.

400,000 bushels (56# per bushel) would equal 407 loads x $74 per load = $30,118 net profit hauling in corn harvest. 407 loads @ 20 miles per trip equals 8,140 miles of hauling, for a total hauling expense of $10,175.

TOTAL NET PROFIT FROM CORN HARVEST
$68,118

TOTAL NET PROFIT HARVEST 2010 HARVEST YEAR
$87,660


*Labor costs are figured with 2 combine operators, 1 grain cart operator and 1 truck driver in wheat harvest, with the addition of another truck driver in corn harvest.

**Grain cart and tractor operating costs are not yet figured into the equation.

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post #2 of 32 (permalink) Old 11-25-2009, 11:13 PM
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Re: Business plan for local custom harvesting busi

Hey Ironseller you have done quite a bit of punching buttons on a calculator, but alot of your information is accurate. There are more variables to guys that are on the road, such as food, permits, combine and travel trailers and such, but you have a very good laid out piece of info here. Thank you for posting it I printed it off to read over more.

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post #3 of 32 (permalink) Old 11-25-2009, 11:30 PM Thread Starter
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Re: Business plan for local custom harvesting busi

Thanks, silver72man, and it's good to see you on the boards again. Yes, this situation is quite a bit more simple in terms of logistics than a south to north run (my hat's off to the guys and gals who do that, it takes special people to make those operations work).
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post #4 of 32 (permalink) Old 11-26-2009, 01:07 AM
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Re: Business plan for local custom harvesting busi

Dont forget about the downtimes you might have. Then you have operators standing around with nothing to do but have to pay for. And, depends on your customers, they hire more equipment to get the job done. happend to me, cost me alot of money. You even have to consider things like a a truck that has to wait for dumping his load or being stuck in traffic. Even if you plan everything perfect, there are still things you cant control.
You maybe wont reach your projectet acres/hr all the time.
cheers
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post #5 of 32 (permalink) Old 11-26-2009, 09:17 AM
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Re: Business plan for local custom harvesting busi

your cost per acre is a little low you will always need to add more unseen cost.
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post #6 of 32 (permalink) Old 11-26-2009, 09:18 AM
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Re: Business plan for local custom harvesting busi

also finding labor that will work for short seasons will be difficult.
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post #7 of 32 (permalink) Old 11-26-2009, 12:04 PM
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Re: Business plan for local custom harvesting busi

I agree with silver, pretty good start. Couple of things, there is no allowance for support equipment, at least one pick up for fuel hauling, etc. What do you think the tractor and cart cost? Probably the biggest hick up will be trying to haul away 4000 bushels per hour on the corn compared to he wheat, it doesnt happen the same way. By the time the first truck gets to the destination the second truck is full, before the first truck is empty, the third truck is full, (is there a third truck, who is paying for that) then you probably need a 4th truck. Who is driving all these trucks. We would probably run 5 trucks on something like this. The other problem is 1 cart with one combine in 200 bushel corn ok, 1 cart with 2 combines gets difficult. May change your acres per hour if the 1 combine has to wait or dump at the truck.

This is not meant to degrade your work here, just real world experience that needs to be considered in these calcs.

At the end when you show net profit, then we need to pay for things, I would like to see what kind of machines we are running and what the payments are.

This is a good exercise.
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post #8 of 32 (permalink) Old 11-26-2009, 12:31 PM Thread Starter
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Re: Business plan for local custom harvesting busi

Thanks, massey. As far as hauling fuel, we do enough running around for other things I don't anticipate that being a big obstacle. The semis will fill in town when they need too, thus leaving the combines and cart tractor (in corn) needing daily fueling. A large tank behind a pickup should take care of combines and the tractor once a day. Good thinking on the possibility of running two carts. The current owner makes due with one cart for his two 2388's, but I have seriously considered getting a second cart.

The payments on the machines are going to be the profit from the yearly custom jobs. The purchase of this harvesting business is part of a farm, and I am trying to get enough custom harvesting to be able to harvest my crops with late model equipment.

Thanks for your input, it's all quite helpful!
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post #9 of 32 (permalink) Old 11-26-2009, 09:51 PM
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Re: Business plan for local custom harvesting busi

Now that we know it is part of a farm I question the acres that can be done?? The extras that are not being accounted for probably add up to 20k. Then the extra hours on the machines? Just trying to keep it real, thats if we take it easy, been there. It would not take much of a hiccup to put 87k net into -10k. You have to be sharp.
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post #10 of 32 (permalink) Old 11-26-2009, 10:15 PM
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Re: Business plan for local custom harvesting busi

The cost for the trucks seems high to me. I had a trucking business for 3 years and my costs per mile were not that high. I ran 80k miles a year. Maybe its because you are only figuring on only having your trucks solely for your harvest crew and not planning on doing something with them in the off season. We have guys around here that seem to want to get rich of the trucking end of things. They seem to want a years salary for themselves for hauling only a month or two out of the year.
But agreed, it appears that you have a GREAT start on a business plan and I have printed it off as well.

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