Starting a Hydro Excavation Business

Hydro Spy partners put their faith in the emerging Technology of hydroexcavation and quickly built a business with a multistate clientele…

Richard Young and partner Jose Santos developed Hydro Spy LLC with a business plan that saw the emergence of hydroexcavation as a major force.

Opening in January of 2009 with $50,000, a business plan, and a rented vacuum truck, the two put their combined 10 years of experience with the process and their managerial skills on the line as they promoted their company.

They attended business networking events in Texas and developed the website that now attracts 75 to 80 percent of their clientele. Along the way, Hydro Spy, based in Houston, has served customers in Texas, Colorado, Louisiana and Mississippi.

As they closed the books at the end of 2010 after 24 months of operation, they were awaiting the delivery of a 2010 GapVax hydroexcavator, bringing them closer to their business plan goals.

With four employees, the company has seen its client list grow. From doing jobs that lasted three or four days, they’ve grown into larger projects lasting three to four weeks. They have also snared a contract for standby hydroexcavation services with a major gas producer for utilities in several states.

Breaking the barrier

Neither man had special training in hydroexcavation when they hired on for construction jobs. Santos was 19 when he started. Young also wanted a paycheck after he tried unsuccessfully to make a career in writing and music. The two discovered their future in mud and worked their way up to management before becoming partners and going on their own.

Both saw potential for a business built entirely on hydroexcavation and its many applications. “We wanted to provide a service where the benefit to the client justified the cost,” Young says.

“That was our concept. We did research and found what had happened in Canada, where they use hydroexcavation whenever digging near utility lines. Our company believes we are in an emerging industry. We wanted to go for fast, quality service with referrals and repeat business.

“In my experience as an operations manager, I found that people had been searching on the Internet for this service. And still, a lot of contractors just don’t know about the process, but are running into situations where they would prefer not to dig.”

They shopped a business plan trying to get financing, building a model based on four trucks. “We didn’t envision a huge fleet because we anticipated others getting into the market, and this is a capital-heavy business,” Young says. “Trucks are expensive. You need to keep them working. You have to pay the note, the insurance, the personnel. If the work isn’t there, you still pay all those.”

Lenders liked the plan but did not come through with financing: They questioned why anyone would start a business in a recession. “People said we couldn’t get the money, and we wouldn’t get any work,” Young says. “We thought: Why not start out in a recession? Get your foot in.”

Picking targets

Hydro Spy started by targeting utilities, pipeline contractors, and refinery service contractors. However, clients now also include electrical contractors and others.

Determined, the partners gathered their funds and built a website that launched in June 2009. They also took part in Blue Book Showcases held in major cities, where contractors, subcontractors and suppliers meet under one roof and at no charge to offer their services to prospects. The Blue Book Building and Construction Network has been supporting the construction industry since 1913.

Through Showcase events in Houston and San Antonio, Young and Santos were surprised to find that of 100 contractors, only one or two knew about hydroexcavation. At one event, they generated more than $100,000 of work from one new client.

They had to educate potential clients on the benefits of hydroexcavation and provide data on their work backgrounds. They did one of their first jobs as a donation – which turned into a three-day job with pay.

Another call came on a Saturday at midnight: A customer needed an emergency job on Sunday morning. They researched the project overnight, showed up in the morning, did the job, and picked up a customer.

As a startup, Young and Santos took on some daunting projects. A utility company needed to locate some lines believed to be at least 50 feet deep. “It took us several probes, but we found the utility without ever opening up the ground,” says Young. “The lines were 54.7 feet deep.”

Even in building pipelines above ground, support piers must be constructed, requiring deep holes. If the location is restricted, Hydro Spy parks a GapVax hydroexcavator up to 400 feet from the site and extends the water and vacuum hoses.

Pulling it together

Launching the website gave the company a huge presence in the Houston arena. Young put his experience with websites to work and spent about four weeks on the effort, so that anyone searching for hydroexcavation would find Hydro Spy. “Our focus was on the right domain name and keywords to get us ahead of others who come into the region,” Young recalls.

In 85 percent of jobs, Hydro Spy is a subcontractor. In that role or as the prime contractor, the company strives for integrity and customer satisfaction. The website lists a service guarantee: If the customer is not happy, there is no charge.

“We are that confident in our ability to go out and do a great job,” Young says. “Our company knows how expensive the technology is. We want a client to know how hard we work to get a job done. We go over and beyond. This is why educating the client about the technology is critical. When we go on a job site, we brief them on the process and the scenario and what they want us to do. We want it to go smoothly.

“We explain that when we dig this hole, because of the ground conditions, there may be a need to insert a casing to keep the hole open. All is discussed ahead of time. The workers in the field need to know if there will be a casing in the hole. After we dig, we have 10 to 15 minutes to get a casing in, or it will cave in.

“On one job, the client’s workers left the site for lunch and were not there to take care of the casing, and there was a collapse. The owner was upset, but we said we would not charge him. In fact, he did insist on paying the bill.”

Growing and gaining

During the first few months in business, rental costs took a toll on the company. “We had our client base, but we were not making much profit,” Young says. “We needed our own truck, but still didn’t have the financing.”

After 11 months, a 2002 GapVax HV-46 HX vacuum loader became available for purchase through a lender in North Carolina, and that’s when things really kicked off.

The GapVax unit remains the truck of choice. It came with a 1,600-gallon aluminum water tank, a water pump by Giant delivering 2,900 psi/19 gpm, a 14.5-cubic-yard debris body, and a vacuum blower developing 3,800 cfm/28 inches Hg.

The equipment list expanded to include a Rycom Instruments cable, pipe and fault locator used to supplement subsurface utility engineering projects and locate hard-to-find utilities. They also have an Ingersoll Rand compressor with 185 cfm free-air delivery rating for air excavation and directional bores for electrical PVC conduit installations.

Staffing up

Hiring technicians was always in the plan. Initially they hired part-time help when jobs came along, but in 2010 they added four technicians, some experienced and some new. Santos says starting from scratch with a new hire is not a bad thing.

“It’s good to find people not set in their ways,” he says. “We bring them in and go from the ground up. We want open-minded people who are not afraid to get muddy. This is tough work, and we want people to push forward.”

Santos and Young give new hires an orientation about the equipment and the industry and take them out for training, teaching them how to dig holes, trench, and locate utilities without damage. “We know in a couple days if a person will make it,” Santos says. Safety is always an issue, and the training makes workers aware that the water lance can be a formidable cutting tool.

Sorting it out

As a rule, Santos goes to job sites with the truck and two operators to maintain quality control. Young stays at headquarters to manage and generate business, but also works in the field when necessary.

Equipment maintenance is a top priority. The firm keeps careful records on the hydroexcavators, which receive maintenance including new fluids and filters every 300 hours of operation. Drivers are encouraged to check the trucks for leaks or loose bolts and to crawl under the trucks to inspect critical components.

Everything to do with Hydro Spy carries attitude and accomplishment. “When I first got into this line of work, it was just for a short-time place to get some experience driving a truck and to pick up a paycheck,” Santos says.

“But I found it exciting and interesting. Richard and I decided we would make something out of it. We just segued from being operators to being owners. It took a while, but we have proven we’re on the right track.”

Cleaner Magazine’s website posted this article and the following is reference to it:

                                      Bond, Marian. “Mud Is Money.” Cleaner Magazine. N.p., June 2011. Web.

                                                    http://www.cleaner.com/editorial/2011/06/mud_is_money

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