CALFIRE Water Tender Profitability

Hello everyone,

New to the forum here and have a question about profitability of running a used Type I fireline water tender for the CALFIRE hired equipment program. Im going to throw together some numbers below and let me know your thoughts or if I am missing something. This assumes a Type I water tender on extended rate with two operators (both owner/operators). Vehicle is used (100k) and financed over a 5 year term at current rates (roughly 4%).

Debits:
CALFIRE Type I extended rate: $3085.00/day

Credits:
Fuel: ~$350/day
Food: $65/day/person ($130 total/day)
Housing: $250/day
Truck Payment: $71/day
Maintenance: $25/day
Insurance (GL+Commercial Auto): $53/day
Total Credits: $879/day*(does not include vehicle depreciation)

Profit: $3085-$879 = $2206.00/day = $1103.00/owner operator/day

Assume you run 90 days out of the year: $99,270/owner operator
Less continued truck payments and insurance for remaining 275 days: $82,220.00/owner operator

Assume you run 60 days out of the year: $66,180/owner operator
Less continued truck payments and insurance for remaining 305 days: $28,360.00/owner operator

Assume you run 30 days out of the year: $33,090/owner operator
Less continued truck payments and insurance for remaining 335 days: -$8,450.00/owner operator

Not terrible if you can get 90 days of straight work.

Thoughts? Missing anything? Yes, I know you can put the truck to work the rest of the year doing construction spray day and what not.

Yes, I can remember not turning a wheel for 2 years. Some years, worked 1 maybe 2 weeks. Over the years, it was a very enjoyable part time gig. Unless you have a variety of equipment or financial backing it can be very tough.

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Right. Best time to buy a water truck or Type VI engine is after 2 or 3 slow years. Though to be honest, slow years are a distant memory at this point.

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Being a supplier is like running a small business. Sounds like you have the beginnings of a business plan. You will need to calculate not just your daily costs but your startup costs.

Cash flow will be a big deal. You will need to budget 75-90 days of all expenses to float your unpaid invoices. You don’t want to find yourself having to sell your invoices (“invoice financing”) to pay your fuel bill, or worse your rent.

Housing: $250/day

That flew out at me. Yes, you will want to stay in hotels some of the time. However there may not be hotels available (at any price!) in the fire area.

Maintenance: $25/day

Again with the credit. $600 per month sounds like a lot, but what does one routine (let alone emergency!) maintenance or repair cost? Incidents will sometimes repair but then you eventually get a bill.

Insurance (GL+Commercial Auto): $53/day

Double check what the hiring authority needs from you on insurance. Endorsements of agencies as additional insured; workers’ compensation; and $1 million of general liability.

Fuel: ~$350/day

You will want a fist full of commercial credit cards for all the fuel vendors, as soon as your credit permits. There is a warm and fuzzy feeling to knowing that you can use any pump anywhere. Gasbuddy.com can also be your friend. The incident will bill you for fuel through them.

Food: $65/day/person ($130 total/day)

If you are willing to get out of your Nomex, and lucky enough to operate out of a fire camp, the camp may feed you.

You might find this GSA calculator helpful to calculate per-diem rates: Per Diem Rates

For example, Redding, CA is $96 lodging and $55 per diem.

$____.00/owner operator/day

Pay yourself FIRST. What I mean by that, is that you need to budget the prevailing wage for a Water Tender operator, the Feds pay $23.60 per hour, figure out your own number, as direct compensation to your owner-operators. THEN after everything balances out, you can split your profit based on whatever formula.

Remember taxes! You get to pay taxes quarterly.

Your profit margin may well end up being ‘putting the truck to work’ during the off season.

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For planning purposes how many days are water tenders running per year?

It’s hard to say without knowing… your basically asking how many fires will there be this year. No one on this site has a crystal ball that can give you that information. Some years you’ll get 90+ days and some years you’ll be lucky to hit 9 days. It all just depends on a number of factors. I would speak with an equipment broker about winter work, i.e. construction jobs. If you look at the most successful fire contractors most are diversified and fire is just a way to make extra money, not the end all be all of their business.

Also something else to consider, water tenders are by far the most competitive fire contracting there is, it’s a very long list. So unless you have a few business designations, certified small business, veteran owned, minority owner, woman owned, your gunna be at the back of a very long list.

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Sacklunch has some excellent comments. I also didn’t see anything for contingencies or any set-aside for replacement small tools and equipment, fittings etc. Time for billing, the CPA or person who files your taxes (even if it is you), and at the end of the serviceable life of the WT, then what? No set-aside for a down payment? Most small businesses do not understand loaded versus unloaded rates, what a chart of accounts should include, and that overhead and profit are two different elements. You need to understand, you ARE a small business and need to think like one. Although it is considered a pass through, it needs to stand on its own.

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Unless I am reading this wrong. The payment you receive based on the invoice you submit at the rate you are offered is a credit. Everything else are considered as expenses, charges or debits. You have fixed expenses, those that are present regardless of whether or not you are working, like loan payments, licensing and registration, and then those that are considered as “direct expenses” of operating. For example, you only burn fuel and per diem if you are operating. Your fixed expenses can really hurt you if are not receiving any income. We referred to our fixed costs of doing business as our monthly burn rate (salary, rent, utilities, etc.,). You HAVE to cover those one way or another or you go broke or borrow more (digging a hole). You have to get a handle on the burn rate and then understand its implications. Most people are good at understanding how to account for expenses and budget, because they are more familiar elements. The big issue is keeping the financial bucket filled. The finance company doesn’t care about anything other than the check you have to send them every month, on time – or you will be in the cast of one of those “repo shows.” That is the one element that most do not understand. Unless you are made of money you need to plan for NOT having fire assignments. It takes a while to get on the inside of the contracting side to get “side work” you will need to meet your burn rate. We averaged 6 months of time invested to get a contract. Larger ones could take a year. The WT business certainly has less time involved in that, but even a one to two month delay from project start to getting your first invoice paid could be disastrous. Planning ahead is the key to any business. I didn’t discuss the invoicing delay. Some agencies are 60 day, some are better and some are 120 day. I do not know what the terms are for those contracts, but if you have to cover your Direct Expenses AND your Monthly Burn Rate for a 30-60- or 90 days, you can see the issue. Again, planning ahead is key. Anything that puts you supplying equipment, materials, or services to the government/civilian side is a business, period. It must be treated as one. In the seventeen years (and counting) of being in business I have earned a Harvard business education, but I received it by enrolling in the school of hard knocks.

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Kind of off topic here but I am wondering how to get into the hired equipment program and if it’s worth that big of a investment?