Gravel is an important commercial product, with a number of applications. Many roadways are surfaced with gravel, especially in rural areas where there is little traffic. Globally, far more roads are surfaced with gravel than with concrete or tarmac; Russia alone has over 400,000 km (250,000 mi) of gravel roads. Both sand and small gravel are also important for the manufacture of concrete. Sand and gravel enterprises operate in one of two main ways; they either limit the scope of their business to the storage and delivery of sand, rock and gravel, or they take part in the actual quarrying and manufacture of the raw material. The success of both types of sand and gravel companies depends on the local demand for sand and aggregate materials and the amount of competition in the area.
Launching a sand and gravel company is a rewarding experience but it's important to plan out the business in detail before you start. This article contains nuts-and-bolts information to develop the business successfully.
Wondering how to start a sand and gravel company? We take you step-by-step from start to success.
How to Create Effective Sand & Gravel Company Business Plans
A great business plan will lay a strong foundation for growth in your start-up sand and gravel company.
- Business plans address a wide range of issues, including startup financials. The financial chapter of your business plan is one of the first places investors and lenders look, so it needs to contain forecasts and budgets that are rooted in business realities rather than your personal best case scenario.
- Subsequently, a thorough understanding of business plan financial basics is a prerequisite to effective business plan writing for sand and gravel companies.
Don't Overlook Competitors
- Well in advance of opening a sand and gravel company within your community, it's essential to determine how strong the competition is. We've provided the link below to help you find competitors in your city. After clicking on the link, type in your city, state and zip code to get a list of sand and gravel companies near you.
- Gain a knowledge of how existing firms have positioned themselves in the marketplace, and then design your business in a way that sets you apart from the others.
Getting Advice from Experienced Entrepreneurs
- As part of your due diligence on opening a sand and gravel company, it's a wise move to have a conversation with someone who is in the business. If you think your local competitors will give you advice, you're being overoptimistic. It'd be crazy for them to teach you the business.
- Thankfully, an owner of a a sand and gravel company in a location that is not competitive to you may be more than happy to give you a few tips, after they realize you reside far away from them and won't be stealing their local customers. Indeed, many experienced entrepreneurs enjoy offering advice to startup entrepreneurs. Our estimate is that you may have to contact many business owners to find one who is willing to share his wisdom with you.
- Where would you find an owner of a sand and gravel company on the other side of the country to talk to?
- Easy. Find them using our link below and start calling until you are successful.
Financial Benefits of Buying a Sand & Gravel Company
- Worried about the financial aspects of starting a sand and gravel company? Most start-up sand and gravel company owners are.
- Financial risk management requires you to at least consider the possibility of setting your startup plans aside to explore acquisition opportunities. Many entrepreneurs buy an existing business for the sole purpose of tapping into the financial benefits of an established customer base.
- But most importantly, existing sand and gravel companies have documented financial histories. Although you can create pro forma earnings and financial statements for a startup, a business-for-sale should have a well-documented, multi-year history of financial performance.
Is Franchising the Right Option?
- If this is your first venture, your best bet may be exploring whether there are good franchise opportunities that would be right for you.
- Before you consider starting a sand and gravel company, it's worthwhile to assess whether franchise opportunities in your space might simplify your entering the business.
- The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.
How to Start a Sand & Gravel Business
Market Need
The first step in starting any business should be a detailed analysis of the intended market. Sand and gravel businesses thrive in areas of rapid development and new housing starts, as long as aggregate companies don’t already saturate the market. The best way to determine the feasibility of starting a new company is to find out what local sand and gravel companies are charging per ton for their aggregate and then compare that to the prices charged in nearby communities. If the cost in your community is substantially higher, there might be room for some competition in your area.
Start-Up Costs
Starting a full-service sand and gravel operation that quarries and crushes aggregate requires a substantial initial investment that could easily run into the hundreds of thousands of dollars, or more. Land acquisition, excavation, extraction, crushing, screening and washing equipment are necessary in addition to trucks for hauling the material. A delivery-only sand and gravel business has a lower start-up cost, which includes dump trucks to haul the aggregate and loaders to load the trucks. Dump trucks can run anywhere from $25,000 for a pre-owned model, to $80,000 for a brand new truck. Front-end loaders are comparable in price. Delivery-only companies can haul directly from the quarry to the customer, or can purchase large amounts of aggregate and store it at a local distribution site.
Licensing and Permits
Obtaining a permit to quarry can be a complicated process since the operation is similar to strip mining, which forever alters the properties of the land. State environmental management authorities regulate quarrying activities and the requirements necessary for obtaining a license. These might include paying a land reclamation bond, undergoing an environmental study, publishing a notice of intent in a community newspaper, filing a map of the intended quarry site with state and county authorities, as well as filing a plan showing how you intend to discharge process water and contain pollutants. Your county extension agency can provide the contact numbers for the state agency that will oversee the permit process. Obtaining a permit for a delivery-only company is less involved but might still require holding a hearing for neighboring landowners before the county authority issues a permit.
The Business End of the Business
Local, state and federal taxing authorities are very interested in the profit you stand to make from your sand and gravel business. Even if you intend to handle all your own bookkeeping, it’s a good idea to consult an accountant for advice on taxes, payroll and how to structure your company to best protect your assets. You must comply with your state’s laws governing unemployment compensation, workers compensation, commercial liability insurance requirements.
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