In these tough economic times, we’re all looking for opportunities that could add revenue to our business. In many parts of the country, when the cold weather blows in, snow isn’t far behind. Landscape contractors in many of these areas shut down their business for the season.
In a number of locations, opportunities for landscape contractors to enter the snow removal market abound; many of your competitors have already jumped on this bandwagon. While not wanting to minimize what’s involved in snow removal, you should know that the crossover for a landscape contractor is ideal.
Non-refundable retainers are a great strategy in markets where they don’t get a lot of snow.
Even if it doesn’t snow, if they agree, you know that job will be very profitable; in addition, you get your money up front.
To begin with, the timing is perfect. In the spring, landscape contractors get their equipment ready and when the weather is right, they and their crews begin their season. But when autumn is in the air and the turfgrass goes dormant, there’s no need for mowing. So, it’s time to close up shop for the winter.
Now the dilemma sets in—what do you do with your crews? In the past, you might have kept a few of your key people, because you didn’t want to lose them. You might have wanted to keep the others, but you couldn’t afford to have them just sitting around. Those that you let go will find other jobs, but hopefully, they will return to you in the spring. However, if those people found work that wasn’t seasonal, they do not come back in the new year.
In addition, we’d all like to develop an additional revenue stream that adds to our gross volume for the year. However, like any other business, ‘pushing snow’ offers great opportunities, but it also has its downside.
When it snows, your crews have to be ready to roll on short notice. You should have a place for them to sleep and rest, because during a heavy snow event, a crew could be out for many hours, then grab some much needed sleep and they’re off again. However, depending on how you pay your employees, many are more than willing to swap regular hours for the additional money they receive.
Most of the elements you need to make this portion of your business a success you already have. Here is an opportunity to enter into a new segment of a business with very little cash outlay. You already have the trucks, you have lawn mowers, you have your crews, and more importantly, you have the client base.
So, what does it take to get into the snow removal business? You need to outfit your trucks with snow plows, a few salt spreaders, a broom attachment, a snow thrower or two, and you could be ready to go. Some lawn mower manufacturers offer attachments that will turn their mowers into snow blowers.
I would strongly suggest that you join the Snow & Ice Management Association (SIMA), if you choose to go into this business.
They can help you train your employees in the proper and safe way to remove snow.
Pricing snow services requires some basic knowledge of the snow industry. Some want to price snow services by the hour, others feel there should be a seasonal price, while still others want to price by the visit.
Charging by the hour doesn’t require any knowledge of the industry or of production values of equipment. The margins for “by the hour” work are usually low, generally in the 20 to 25 percent range. Seasonal pricing is where you figure out how many times you might visit a site (average) for the winter season, figure out how much you need to get for each visit, and give the customer a flat fee for the season. Charging for services “per push” allows for higher margins for your services. This means that the customers pay each time you visit the site and provide some service.
Because the weather is unpredictable, pricing snow removal services can be treacherous. If you price by the hour or the push and very little snow falls, and you have crews standing by, you can lose money. It is precisely for this reason that many contractors have a tiered pricing schedule.
To ensure that you generate cash flow, many contractors may take 30 percent of their clients and charge them a flat fee, or a seasonal price, for the year. If it snows more often than you project, this could be a low margin; however, at 30 percent of the total winter revenue, you can handle it.
If you cover your overhead with the 30 percent of your client base, when it does snow, you can really generate high profits on the other 70 percent, if you charge per snow event. Many contractors will usually break that down even further.
They could take the 70 percent and split that with a per-snow event and an hourly rate.
Non-refundable retainers are a great strategy in markets where they don’t get a lot of snow. Price a job (for example: residential, $25; commercial, $150) and tell the client that you need two plowings paid for up front. This is nonrefundable, even if it doesn’t snow.
If they agree, you know that job will be very profitable, in addition to which, you get your money up front. Then you can start eliminating some of those non-profitable, $15 driveway accounts. Your clients will pay for it, knowing that they can rest easy when the snow comes.
Why should you shoulder all the risk of snow-free winters? You have trucks that need to be started up every week to get the oil through the engine. You have trucks that you have to drive around to avoid dry-rot in the tires. You have a mechanic that you need to keep on staff. You have rent and utility bills that hav to be paid. The customer should pay to have you waiting and available to take care of them as soon as it snows.
Commercial snow projects generally come in three types. Industrial-type accounts usually generate the lowest amount of revenue for the season. Ordinarily, this is because workers going into and out of an industrial manufacturing facility do not need the parking pavement bare in order to walk to work. Office parks and office-type facilities require a higher level of service quality because of the nature of such sites. White collar workers’ shoes are such that accidents can happen more often than with work boots. Retail facilities (including hospitals, restaurants, malls, etc.) require the highest level of service. Having many visitors to a site requires higher safety concerns. They are inherently more prone to liability claims, and it’s the snow contractor’s job to keep the site safe for vehicular and pedestrian traffic.
Residential snow plowing can be very lucrative, if handled properly. Many contractors make generous livings doing strictly residential snow plowing. Residential customers usually require less time per site, and, if you have several customers situated together so that you move from one driveway to the next, the potential for profit rises dramatically.
This is where small skid steer loaders or lawn mowers make an impact. Fitted with snow-throwing attachments and enclosures, so the crew person is shielded, it’s ideal for moving from one residence to another.
With the proper marketing and the right timing, you can begin to sign your clients up for snow removal, and once the snow arrives, you’re ready to roll.
Pushing snow is profitable, increasing your bottom line. In addition, you can now keep your crews working year round, and equally as important, your clients know they will get excellent service both in summer and winter.