Budgeting

Logan Hill

— 4 min read

this is work in progress post. last updated: 11/05/24

tldr:

Windfall Startup Budget - $2,500,000
Part and Parcel Startup Budget - $100,000

In an ideal world, and of course, there is no ideal world. Then, this is how it would play out if the funding dropped from the sky in one big lump sum. That would be my preference - one investor. And it would be in the form of a loan. Now, equity might be preferred for the investor. And, of course, if there is an investor, then there must be an investment return. I will discuss that in another post.

Now, there are two general strategies I can employ when it comes to purchasing equipment. Either equipment can be purchased new, or it can be purchased refurbished but used. And/or lightly used.

The catch is that the machines must be bought from hobbyists or men who took care of the equipment. Reckless operators might have a cheaper machine, but there is a cost that can only be paid by expertise. Mechanical repair and welding skills too. For example, I would not want to buy an excavator or a skid steer if it were coming from a small business and the operators were on the young side.

There are deals to be had when purchasing used, retiring farmers and those going out of business, but the deals come at the expense of 1) experience with mechanics and repair and 2) higher potential for breakdowns.

I do not have much experience with mechanics and repairs, so it will take me time to learn. And that would be time I do not have right now. For full disclosure, if and when there is success, then I will not need to be repairing the machine. In all likelihood, success would mean I would be in front of a screen most of the time. That or on a call.

Keep in mind that when I say purchased new, I mean equipment where it would make sense to purchase new. For example, a diesel truck, a tractor, a skid steer, or a mini excavator. I would not consider a bulldozer or a large excavator to be smart new purchases. They might be smart purchases for rental companies and/or multi-million dollar construction/demolition businesses. But for agriculture? No. Neither moldboard plows nor transport discs are wise new purchases.

In an ideal world, the heavy machinery will never have to leave the premises, but to the surprise to no one, breakdowns occur. And because there might come a time to transport the heavy machinery, then one of two things can occur: hire the transport out or buy the equipment. And since you can't exactly plan on breakdowns, there might be added cost for short notice transport, if there can be any transport at all. That is the justification for the truck and the trailers.

Also, with this equipment, there's optionality to earn extra income. Someone might come knocking with a really good offer. Good offers meaning either good pay or an interesting problem. For example, well-paid mulching and brushhog jobs in July in an air-conditioned cab might be preferable than sitting around doing nothing. Designing and building regenerative farmscapes would be an example of an interesting problem.

After much explanation, I'll tell you my wishlist. There are built in redundancies. The compact track loader (CTL) and compact wheel loader might seem redundant, because they can do many of the same things, but the biggest difference is that the wheel loader will not be as harsh on the ground as the CTL. That, and because I live in a northern climate, the wheels do better in snow. And even more tangible, that despite being in the same weight class, the compact wheel loader has a higher lift capacity - both in volume and weight.

Then, you might be wondering - why the CTL? Because it's more versatile and is more compact. It's more suitable for forestry work than a compact wheel loader. While a CTL will be harsher on the ground when it turns, it also has better traction in wet and muddy soils.

Likewise, you might be wondering why I have the same attachments listed for different machines. One answer is simply - the same job needs to be done at the same time in two different places. An accompanying answer is that there are variations in size.

Vehicles

  • Fleet Truck 3/4 ton (3) - $105,000
  • Class 5 flatbed truck - $70,000
  • Class 6 dump truck - $80,000
  • Ram 3500 High Output - $85,000
    • Southland GN Dump Trailer - $20,500
    • Southland GN Equipment Trailer - $21,000
    • Corn Pro Bumper Livestock Trailer - $13,595

Heavy Equipment

  • CTL - Takeuchi TL12 - $105,000
    • Forks
    • Bucket
    • Grapple Bucket
    • Bale Spear
    • Ruckus Rake - $16,500
    • Harley Rake - $9,000
    • Soil Conditioner
    • Stump Bucket - $2,700
    • Log Grapple - $3,600
    • Forestry Mulcher - $50,000
  • CTL Takeuchi TL6 - $60,000
    • Brushhog
    • Harley Rake
  • Mini Excavator - Volvo ECR88D - $150,000
    • Tiltrotator - $28,000
    • Mulcher - $23,000
  • Mini Excavator - Volvo ECR50 - $80,000
    • Tiltrotator - $24,000
    • Ripper - $2,400
    • Root Rake - $3,600
    • Land Plane
  • Compact Wheel Loader - Volvo L30 - $130,000
  • (USED) Telehandler - $35,000
  • (USED) Track Loader - CAT 933 - $40,000
  • (USED) Dozer - CAT D3 - $25,000

Agriculture

  • Massey-Ferguson MF 62.145 - $160,000
    • Roller Crimper
    • No-Till Seed Drill
    • Yeoman's Plow
    • Transport Disc
    • Flail Mower
    • Manure Spreader
    • Subsoiler
    • Forks
    • Bale Spear
  • Massey Ferguson 2850M - $40,000
    • Brushhog
    • Rototiller
    • Bale Spear
    • Forks
    • Grapple
    • Rear Blade
  • Kubota L2502 - $25,000 ($40-45k incl. all implements)
    • Bale Spear
    • Forks
    • Grapple
    • Brush Hog
    • Rototiller
    • Land Plane

Positions and Salaries

  • Founder (LMH) - $150,000
  • "Right-hand Man" - $120,000
  • Farm Manager - $85,000
  • Farmhand (3) - $60,000

Keep in mind that this just the payroll that is paid out. I need to find out the specific numbers, but I am assuming a 1.3x-1.5x for the cost of employment. General liability, health insurance, social security, taxes, worker's comp, and other things I'm sure to be missing.

I will have to keep in mind legal fees. Bookkeeping. Accounting.

To attract and retain competent talent, then either I will have to raise the salaries, and/or give out equity packages. Subject to vesting, naturally.

One or two of the farmhands will have to be mechanically inclined. In all likelihood, a CDL-license will be required for any "serious" driving.

Everyone will have to be able to wear multiple hats.

Infrastructure

  • Fencing - $30,000
    • This is for a 12 acre 7ft high woven-wire pasture. 15 year lifespan before major repairs. $2k/yr annualized.
  • Pole Barn 30x32 - $32,000
  • Pole Barn 32x80 - $86,000
  • Pathways - $10,000

Miscellaneous

Sony FX3 - $4,000

Part and Parcel Budget

Realistically, this project can get started for a fraction of the cost. But progress will be slow, and more importantly, there will be inefficiencies and more risk. Risk comes in the form of personal injury risk, dependence on potentially flaky contractors, and therefore loss of income.

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