Getting Into Snow and Ice
When the chilly month of October rolls around, landscape businesses in the colder climates of the country often close their doors for the winter. When the grass goes dormant, that’s the end of the work for the season. You lock up your tools, empty the gas out of the mowers, and watch your employees leave to find work elsewhere.
A few months can be a long time to be out of work, and some of those employees might not come back in the spring, finding full-time employment elsewhere. If you’re in this position, did you ever wonder how you could keep those motors running, keep your staff working, and keep the revenue coming in?
If there was just some way you could keep your doors open, winter wouldn’t be so stressful. You may have heard about other landscape companies that have added snow removal to their list of services. Snow removal may prove to be the answer for your company.
It can keep your crew—or at least some of them—busy. Working the winter months ensures that there will be an experienced labor pool to start work in the spring. It also lets you provide year-round service to your clients, leaving them happier and you with a better reputation.
Most importantly, it’s a way to boost your cash flow at the end of the year. There is some serious money to be made in this winter market. Some landscape companies started plowing snow in order to generate an additional revenue stream, and found it so profitable that they ended up making it the main focus of their business.
To be sure, it has its share of risks, but it also has the potential to strengthen your business. Without oversimplifying what’s involved, pushing snow could become a profit center for you, and smooth out problems inherent in an otherwise uneven business year.
Even if you start on a test basis, it’s possible to make money. Just ask Chris Beaudry, owner of Pro-Turf Landscapes, Pelham, New Hampshire. When his company first added snow removal services, they plowed a handful of driveways that first winter. Even with only a few contracts, they still saw more than $30,000 in profits that season. Next winter, they added a few more driveways and made $50,000. By their third year, they had picked up a commercial parking lot and their gains climbed to $70,000.
Seeing this steady increase, Pro- Turf got serious about snow removal, and it now earns more than $200,000 every winter, thanks to it. You could start small like Beaudry and work your way up. Knowing what there is to gain, maybe it’s time for you to explore this additional revenue stream.
You don’t need to make a major investment to get things rolling, because you already have trucks and lawn mowers. You can buy a snow thrower attachment for your mower or add a small plow to the mower, even a power broom. Attach a plow to the front of your pickup truck and violà—you’re ready for winter business.
Maybe buying plows and blowers, especially the larger units, your first season is too big of a commitment. Peter Schultz, owner of Pleasant View Landscapes, Annapolis, Maryland, recommends renting the plows and other tools from a rental company, at least for the first year.
Check out the prices—you’ll find that you can rent the equipment for a fraction of the cost of purchasing.
A word of caution: just make sure that you contact the rental company ahead of time to reserve your equipment. If you don’t, you might be shocked at how “prices skyrocket right before a big snow storm,” like Schultz did when he first started.
Once you get a contract for a sizeable project, no matter how early in the year it might be, Schultz suggests that you reserve the tools you want and for the period of time you want them. Like the contractor, rental companies too would like to hedge their bets. So if you sign up and reserve early, you’ll get a much better price.
Also, be sure to ask the rental company about their repair policy. Bigger rental companies will generally have repair personnel on-call 24/7, which is something you want. Schultz knows that when you’re plowing parking lots in the middle of the night, it’s easy to miss those concrete parking stops covered in snow.
That is, until you hit one and pop a tire on your skid steer.
Chances are, you won’t be able to reach a mechanic and even if you could, he won’t be cheap. It’s moments like this when you’ll be thankful for the repair man who came with your rental contract.
In the meantime, you want to get going. So how do you do this? You have the equipment, you have your labor pool (no guesswork there); you already know your crew and what they are capable of. However, there is one ingredient that’s missing, and even that one you already have: your clients.
Send a letter to your clients to inform them of this additional service your company is offering. But one letter won’t do it; get on a schedule of sending out a different letter, maybe even some sort of promotion, at least once a month. You’ll find that every time you send a letter, more clients will respond. As they respond, take them off the mailing list, so you don’t irritate them with letters for something they’ve already signed up for.
Don’t be afraid to talk to people in person, either. Find a residential neighborhood nearby and talk to everyone in the area. Ask them if they need their driveways plowed during the winter, and build up your client base. Several small contracts can add up to large profits.
Don’t forget about commercial projects either. These include factories, office buildings, hospitals, restaurants, and malls. Hundreds of people use these companies’ parking lots every day, so they need regular service.
Solicit them the same way you do residential clients. Go to an area with several businesses nearby and ask every single one of them if they need snow removal services.
John Allin, snow consultant and owner of the Snowfighters Institute in Erie, Pennsylvania, recommends that you keep your clients close together. Say you are plowing the parking lot of a Rite-Aid and there is a Burger King across the street. You might offer a lowered incentive price to plow Burger King’s lot as well. The money you’ll save from unproductive travel time, gas, and vehicle maintenance more than makes up for the lowered price.
Keeping your clients within a few blocks of one another is also a great strategy to expand your business. Do the same thing for the Home Depot and Wal-Mart down the block, and you’ll soon be making a lot of money, as your crews move quickly from one job to the next.
If you’re still unsure about starting on your own like this, another way to get into the market is to become a subcontractor to a larger, more established snow removal company. Frank Dedon, owner of Abraxus Snow and Ice Management, Cleveland, Ohio, says it’s important to work with larger snow removal companies where you become one of their subcontractors. You can make money while learning the ropes.
Many people got their start in the snow removal business this way. Dedon’s company manages more than 250 subcontractors, and other large companies do the same thing. They can teach you how to operate the equipment, how to ensure you’re getting the job done, and how to manage your crews.
They’ll even teach you intimate details about the sites and how to service them, such as clearing a specific lot at the hospital before doing anything else, so the dialysis patients can safely walk in for their treatment. Learning these kinds of details will separate you from other contractors, in terms of service, and will keep your customers coming back year after year.
So now you have the equipment and you have interested clients, but how do you charge for these services? Some contractors price their services by the hour; others prefer to charge a flat seasonal rate, and then there are those who charge “per push,” which is the same as per visit.
Charging by the hour is straightforward; your client pays you for each hour it takes until you finish the job. “Per push” means that they pay you a fixed amount each time you come to the site and provide a service, regardless of how long the job takes. With seasonal pricing, you charge a flat rate to come out to the property whenever they need your services that winter.
Hourly really should only be used as a starting point. It gives you time to make sure things are done right and figure out how long different snow removal services take. Beginners like to go for the hourly rate because it requires no knowledge of the market.
You just show up and start working. Realize, though, that this also has the lowest gains, normally producing a profit margin of 20 to 25 percent.
Long time pros like Ron Muller, owner of Aspen Companies of Vernon, New Jersey, warn that only charging by the hour makes you unproductive. He’s seen contractors who only do hourly jobs suffer in the long run. They take longer to finish projects, they use low-quality equipment, and their clients get angry.
“It’s got to be a win/win, for us and our customer.”
As for the “per push,” you need to know how long the job will take and how much you need to make it worth your time. Efficiency is where the money comes from. For driveway projects, Muller recommends pricing it by the visit. Plan it right and you could clear ten driveways in an hour.
Seasonal fees are a little more complicated. You charge a flat rate for all the services you provide that winter. To do that properly—so you make money—you need to figure out the average number of times you think you might visit a client that season and how much money you need to make on each visit.
Don’t fall in the trap of using only one model to price all of your work. This business relies on the weather, which is unpredictable, and that can make pricing a risky matter. If you charge all your work by the hour or per visit and very little snow falls, then the company will lose money as your crews stand around. The safest way to cover your expenses and make a few bucks is with a combination of all three pricing structures.
Seasonal fees are guaranteed cash.
They’re your safety net. No matter how light the snowfall is that winter, you still get paid by clients on the seasonal plan. Savvy contractors suggest you charge 30 percent of your client base a seasonal fee, so that you can cover your overhead. If you have heavy snowfall that year, you might not make much from them.
It’s with the other 70 percent of your clients where you can make serious cash. With these guys, contractors use a mix of hour and per-visit pricing to generate the highest profits. Remember, it’s a good idea to start off with an hourly rate while you’re learning, but you eventually want to price with the “per push” model more and more as you gain experience.
To reduce your risk even further, price the job and ask to be paid for the first two plowings up front as a retainer, with the understanding that it is non-refundable. So whether it snows or not, you have some cash. Not only does this give you a little protection during a light winter, it also tells you how profitable the job will be.
One last piece of advice: make sure you keep thorough records. Dedon of Abraxus says that you need to keep track of your clients, your employees, your supplies, the weather, the number of times you visit any of the sites, and for how long.
When it comes time to give the clients their bill, they can be a little forgetful. They might forget exactly how many times you stopped by last week or how long you were there or just how bad the snowstorm was. If this happens, just bring up the records and show them exactly how hard you’ve worked. Thorough records can spare you a lot of unnecessary headaches.
At this point, you’re pretty much ready to roll once that first inch of snow falls. You know what equipment you need, you have your clients signed up and ready to go, and you have a good idea of how to manage the pricing of the jobs.
If you plan everything right, then the returns can be enormous. When you’re out there in the middle of the night during a heavy snow storm, sweeping snow aside, remember you’re also sweeping more dollars into your company’s bank account.