Hello folks, I'm Ray, and I am trying to start a railroad, but I could use some advice on just about everything with the business end of railroading. as I do not know very much about running a business and what all is really needed to start a class three short line operations in the U.S.A.

Thanks

-Ray

Not that I'm any example to follow, but here goes: LEARN THE BUSINESS ON SOMEBODY ELSE'S DIME. Go to work for somebody who is doing the kind of business that interests you, and do your learning from the bottom up. Railroading can really eat up a lot of money and labor if you try to approach it from the top down...

Best of luck to you.

What he said. Also, you might find out that you really don't want to start your own railroad.

I'll hit some basics from starting both freight and passenger operations. The list is actually very, very long, but here are the broad basics I provide when asked.

[1] Understand what you will have to submit to the Surface Transportation Board and the Federal Railroad Administration to even get started, and then on a routine basis.
[2] Go read 49 CFR (Code of Federal Regulations) - there are a large number of regulations that you will need to comply with.
[3] Plan for who your qualified employees or contractors will be - train crews, mechanical, track, bridge, signals, etc. Develop a plan to get the paperwork on each of these done and how you will qualify them (most details are in 49CFR). You can also get some of the FRA Enforcement Manuals that cover the details that each qualification must comply with.
[4] Create your basic business plan - revenues versus expenses. Create a budget, but know that the expense side will probably be under estimated.
[5] Determine your revenue stream, and how long it will last. Railroads can see a 50% or more turnover in freight shippers each decade, and passengers are about 90%+. What is your marketing plan? Who is going to do it?
[6] What is your cash status? You will need to have significant amounts of available funds (cash or loans) to cover operations, as revenue often comes after expenses. By significant, I mean a great deal. For a small excursion train, $50,000+ is probably a minimum after initial bills are paid. For a small freight railroad, $250,000 to $1 million is a good start.
[7] Technology and equipment - an entire issue. Computers, radios, locomotives, track maintenance equipment, etc. Own or lease?
[8] There are a number of professional organizations that you can join that provide information. AREMA for track and bridges, for example. However, they are seldom cheap.
[9] Insurance - it isn't cheap and one policy generally doesn't do it.
[10] FELA - are you covered and are you prepared?

Even the most successful and experienced people have failed. There is no guarantee of success. What are your failure plans?

Someone wrote to get experience from others. Good idea, but make sure that it is good experience. Ask questions, keep notes, and learn to live with the risk.

Good luck....

Bart

An old rule of thumb that comes with a cornucopia of caveats: You have to handle 100 cars per mile per year to start earning a profit. This is after Bart’s points above. Railroading is a hideously expensive business.

One of our fantasy bull sessions was about taking over local switching. We considered mileage to maintain, operating costs and car counts and quickly realized that it would be a such money pit that we’d go teats up rather quickly. It was fun to think about, though.

A "big-picture" question:

Why?

What's your motivation?

Is there a freight line that has customers that are getting lousy service and pricing from a Class One, and/or the Class One wants to quit serving the line, and you hope to rectify that with a short line?

Or are you the next incarnation of Walter Mitty or Andy Hardy?

Bartman-TN definitely explains the big items quite well in hist posting.

If you're the Ray that volunteers in Boyertown for the Colebrookdale Railroad, follow Nathaniel around and learn how he writes grant applications, as that can apparently be a lucrative proposition also. Mr. Guest and his team have successfully received more grants than any railroad that I've ever followed!

This is no knock on the Colebrookdale Line or its operators--indeed, it behooves any non-profit railroad operation to pursue this strategy wherever and whenever appropriate--but:

"The problem with spending other people's money is that you eventually run out of other people." --most widely attributed to Margaret Thatcher, but a theme commonplace even before her utterance

Anhd be sure, if you use OPM, never come back to them for more if you start running short.

(Zeroth Law of Venture Capital.)

I feel compelled to ask, how old are you, Ray?
This sounds like the post of a very young person
Ray, the first thing you should do is not to ask for general 'peanut gallery' advice from an internet forum.
I'd find an attorney's office which handles business startups, then ask them who they'd recommend.
That, or find a consulting company that does this kind of thing. I'm sure there are several out there.

Come on, it's easy to make a small fortune in railroading. Just start by investing a large fortune in it. Hire some good brains to vet any concept you may have from a marketing, financial, and community relations perspective before even thinking about turning a shovel.

get to know someone who already owns/runs one and convince them to go to lunch etc and let you ask many questions.

As I understand the valuations are quite high for many shortlines, that you better have some deep pockets to buy one. Not sure how willing C1s are to lease/sell secondary lines currently, but I'd think they'd be very hesitant to deal with a new player, not someone already in the industry.

I don't know many college-age kids who have successfully started their own railroad - but if you are one and the same, then good luck to you, sir!!

You really need more than a desire to "start a railroad".

What do you have in mind? A restricted speed tourist line? A freight short line? Taking over an existing line or starting up fresh?

What's your business formation experience? It's been my experience entrepreneurs are born, not made. They have a rare fusion of vision for a need = opportunity, plus an ability to filter details into the important ones, plus a parsimonious nature, and an appetite for risk. Most entrepreneurial ventures fail. Some people fail and learn from it, some fail and end up like most of us-employed.

What's your business operation experience? Are you good at procuring money, assets and people?

Before doing anything like this, keep in mind the enormous barriers to entry involved with railroads.

Who will be with you, to extend your experience and provide counsel?

Are you married or engaged? You both need the stomach to pursue the dream.

I suggest you watch the story of Tim Leatherman and how his wife tolerated years of him tinkering with results before his name became synonymous with multi-tools.

But first understand without specifics and a plan, and a willingness to stick it out when the plan goes South, you have a pipe dream. There's a reason so many people's railroad empires were built in 1/48 or 1/87 scale.

When I was much younger I wanted to start my own tourist railroad by buying a ten mile line that was being abandoned. I wrote to several other tourist railroads for advice and from their reply’s realized that unless I could get investors with millions of dollars it wasn’t feasible. So who are your investors? Several years later I was told that you don’t need money to start a business, you need to be able to convince those with the money to back you. Just my two cents, good luck!