But for a growing number of contractors, those first flakes elicit a different reaction. Winter is not just a time to coast; it’s a time to reap new rewards. If they are among the many who have added snow and ice removal to their list of offerings, they know that a snowstorm can be one of the most lucrative events of the year.
“A good snowfall can turn into a windfall,” says Maurice Dowell of Dowco Enterprises, Inc., based in St Louis Missouri. “It’s just a phenomenal vehicle for injecting cash into an organization.”
But while snow and ice removal can be a profitable service, it can also be a tricky one to manage. It requires careful budgeting, diligent planning, and excellent communication. It requires an investment of trucks powerful enough to push snow, plows, and in most cases, snow-blowers and salt spreaders. It also requires a committed, well-trained, and well-compensated crew who are willing to go the extra mile in the toughest conditions. But green industry professionals who are serious about this service find that they can often turn snow and ice into white gold.
Bring it on
Landscape contractors expand into snow and ice removal for a variety of reasons. One of the most obvious is to provide cash to carry them through the winter and to maintain good employees year after year. Other businesses add snow and ice removal because they feel pressure to provide year-round maintenance services in order to remain competitive. Others simply add it as an additional profit center that fits in well with their company’s existing resources.
“I looked at snow removal from the get-go as a new profit center, as well as a way to extend the season,” says, Chris James, president of Chris James Landscaping in Midland Park, New Jersey. When James purchased the company from his former employer in 1981, it was a small residential maintenance firm that only provided snow and ice removal for a select group of clients. James has since expanded his company into four separate divisions that provide corporate and residential grounds maintenance, construction, irrigation, and snow and ice removal. Now, snow and ice removal contributes a major portion of the company’s revenue each year.
“Today, the snow and ice division is our second largest profit driver and our shortest season,” says James. “Together, snow removal and grounds maintenance account for eighty percent of our business.”
Snow removal has turned into such an important part of James’s business that he also founded Snow and Ice Solutions, a snow and ice removal consulting firm. James offers consulting to professionals interested in getting started in the snow removal field, those interested in perfecting their existing operations, and to government and other agencies. “Snow and ice removal has been a nice fit and a great way to ensure long-term client relations,” says James. “A lot of my clients are on a 24-, 36-, or even 60-month contract. It’s just the ultimate value-added service we can provide.”
The client relationship is one of the primary reasons landscape companies expand into snow and ice removal. “We added snow removal to be competitive with our commercial clients and to keep clients year after year,” says Susan Hill, who with her husband Bill owns a landscaping company called A Humble Abode in Westminster, Colorado. “It gave us a chance to offer a yearly contract. It allows us to be an all-encompassing maintenance company.”
The fact that a loyal client base is already well-established offers one of the most attractive reasons to go into snow removal. It’s easy to market the service to people who already appreciate your work and the care you take with their property.
However, as Lance Schelhammer II points out, snow removal can be a double-edged sword if you are not committed to doing it well. Schelhammer is owner of Grassroots, Inc., which serves the St. Louis and Kansas City metropolitan areas. “If you start doing snow removal for your landscaping clients, and you don’t do it well, you can end up losing both contracts. Make sure you have the equipment and wherewithal to do both jobs right.”
Chris James agrees. “There are no excuses with snow and ice removal. You’re either the goat or the hero. It can either be the great solidifier of relationships or the great black eye that sets you back years.”
Becoming a Snow Removal Hero
So how do you make sure you’re the hero instead of the goat when it comes to snow removal? And how do you make sure your company gets the most out of this new venture? Good communication, careful financial management, and a billing structure that provides your company with ample compensation are just a few of the keys to success. Clarifying expectations is critical for keeping clients happy, says Susan Hill. “Open communication is number one. Make sure you go over the contract in detail at the beginning of every season and explain clearly what their choices mean, so that everyone has the same understanding.”
Among other things, clients need to know what depth of snowfall will bring you out, and when they can expect you in relation to other clients. Use specific examples based on real situations to help clarify contract details. They also need to know the limits of your resources. All snow removal companies have an upper limit to what their equipment and crew can handle in a timely manner. In the event of a twenty inch snow storm, clients who know what to expect have a lot more patience than clients who were promised the world.
|Attachments work great until you need heavier equipment. Photo courtesy: Grasshopper|
Going over the contract doesn’t mean drawing a line in the snow, however. If you’re not sure whether a client expects you after a marginal snowfall, default to yes. “When in doubt, overdo it,” says Schelhammer. “It’s better to have a bill question than to have a service question, especially because snow and ice removal is a liability issue.”
Keeping clients happy is one thing; keeping the business afloat during off years is another. Let’s face it, snow removal can be one of the most unpredictable services to offer. A year with too little snow can leave you with lots of equipment and no way to pay for it. Too much snow can be just as big of a problem. You may find yourself locked into a contract that calls for you and your crew to be out three times as much as you budgeted for. Or you may lack the crew and equipment needed to handle it, which can sour your hard-earned relationship with good landscaping clients.
The key is to plan for the best and prepare for the worst case on either end. According to Ronald Muller, well thought-out contracts can help buffer irregular weather patterns. Muller, co-owner and CEO of Aspen Environmental in Vernon, New Jersey, has been in the snow removal business since he was nineteen and the landscaping profession for more than six years. “We offer a variety of snow removal contracts,” says Muller. “We have some clients who are seasonal and pay whether it snows or not. We have some who pay per event. We also offer ‘per inch’ pricing. Keeping a mixed bag of contracts helps balance out the good and bad years. In our area we average about fifty inches of snow per year.
If you have a year with seventy inches and all of your contracts are seasonal, you might only break even. But if you have a variety of contracts including ‘per inch’ and ‘per occurrence,’ this can help balance out the low snow and high snow years.”
Making sure clients are a good fit for your resources is another strategy. “Our core client is a subdivision street,” says Dowell. “This is a pretty straightforward job. We don’t do retail operations. We stay away from places that are open twenty-four hours a day or apartments, because cars are parked there at night when you want to do the work. Our trucks make $122 per hour running, but you’ve got to keep those trucks running.”
Dowell also subcontracts out some jobs to companies that are better equipped to handle them profitably or distant jobs that would take his crew too far from their base of operations. This way, his company still gets a piece of the pie but doesn’t sacrifice manpower and equipment hours to unprofitable jobs.
Careful budgeting is critical in this variable business. “Budget for around twenty-five percent less than the poorest expectation,” recommends Chris James. “Snow removal can be risky because of the financial investment and because it’s a hit-or-miss market. To do it right, it has to be operated as a profit center, not just as something to tide you over. The gross margin and net margin should be considerably higher than anything else you do.” James emphasizes that contractors should invest the time and money it takes to learn good financial management skills. “All contractors should know their costs. Most of us got into this business as practitioners, not as business people. But as business owners, we need to know how to do the numbers. I have an obligation to my employees. I have employees who may know more than I do about horticulture and snow removal. But I’m the one who has to keep the lid on the whole pot.”
One of the most important things you can do is to learn from others. “I attribute a lot of our success to SIMA,” says Muller. SIMA, the Snow and Ice Management Association, is a non-profit organization dedicated to professionalism and safety in the snow and ice removal field. SIMA offers a variety of resources, including training events held throughout the country. “I don’t think we would have gotten where we are today without their symposium training,” says Muller. “It helped us increase our revenue and helped with our planning. Networking alone and meeting other contractors in this field has helped a great deal.”
Chris James agrees. “I’m a big believer in professional development and networking. There are great resources out there. Why reinvent the wheel?”
Keeping your equipment running when you need it is vital in this business where jobs literally melt if you don’t get to them on time. Spending money to get reliable equipment and developing a good relationship with vendors pays off. “Contractors who rely on vendors for servicing should be less concerned with price and more concerned with accessibility,” says James. “What’s your relationship with the vendor? Does he have extended hours? Does he stock extra units? Is he going to make you a priority on that snowy day?” Finally, successful companies stress the importance of billing jobs appropriately and going for profit, not just maintenance. Appropriate pricing will help you pay for the extra investment in equipment you need to make. It will help carry you through low-snow years. It will also help make the job worthwhile to you and your employees.
“Do not undercharge!” says Dowell. “We look at snow this way: if we’re going to haul our guys out of bed in the middle of the night, we’re going to be well-compensated.” “We’re working in the toughest conditions,” adds Muller. “Sometimes you go for a couple of days straight without seeing your family.”
According to Muller, the right attitude can make a big difference in managing snow and ice removal profitably. “Some landscape companies look at snow removal simply as a necessity, a way to stay afloat and cover wages during the winter months. Instead, you need to look at it as a valuable profit center. This is a very profitable business, and it should be.”