What is in this article?:
- So You Want To Be A Custom Operator
- A Business Plan
Dick Kraus has seen it often in his 17 years as a custom operator. Someone loves handling a chopper or baler, finds out what custom operators charge and jumps into the business.
“They think we’re making money hand over fist,” says Kraus, who, with his brother, Bill, operates Kraus Custom Forage Harvesting LLP, Elkhart Lake, WI. “They get a chopper, go get a couple customers and figure they can do it for a lot cheaper.”
To launch a successful custom business, it takes more than the desire and ability to operate machines, he and several other veteran custom harvesters say.
People looking to break into the business should first consider what kind of custom work they want to do and the type of equipment needed. They also should know how much they can spend on equipment and if they have enough clients locked in to justify it.
Operators need to be on top of the business side of operations, Kraus says. He suggests they ask themselves the following questions:
- What rate will cover the bills while remaining competitive?
- How will I advertise my business?
- When will it be time to expand, and when should I hire more help?
Moving forward without answering those questions, and more, can be a recipe for failure.
“Many small businesses fail because people love doing what they start out to do, but kind of forget about making it work from the business side of things,” says Kraus, a Wisconsin Custom Operators (WCO) board member.
Breaking into a custom operator market is difficult.
A farmer isn’t likely to switch from a reliable operator to a new guy who knocks on his door. Before putting any money into a business, potential custom operators should make sure there’s a growing need for their line of work in the area and have a few customers lined up.
Kraus and his brother got started when there was little competition, and dairies in their part of Wisconsin were expanding.
Mark Anderson, Bridgeport, NE, considered leaving his Denver office job for some time before coming home to start his custom harvesting business. But he didn’t pull the trigger until a harvester in the area retired and created an opening in the market. Anderson met with several potential customers and the retired harvester before moving.
He borrowed his down payment on a chopper, and chose a local dealer he knew would quickly provide service when needed.
The Kraus brothers used savings and took out loans to buy more than $300,000 of new equipment. Their self-propelled forage harvester and its kernel processor were both rare at the time and helped attract new customers intrigued by the equipment.
Plainview, MN, harvester Robert Eggenberger started with only a silage truck in 2004, then slowly added used equipment. Now, he’d recommend getting a large loan and starting out with lightly used or leased equipment.
All three operators advise anyone starting out to make financially responsible decisions and avoid putting themselves in financial straits.