Plow Snow Into Profits
|By RICHARD LENTI|
The days are getting shorter, the nights longer. As summer turns to
fall, more than just the weather is changing for the landscape contractor.
The dynamics of the work before you is undergoing a major shift.
In many parts of the country, the autumn foliage will need to be cleaned up and irrigation lines winterized. Some trees will need to be pruned. But as lawns and plants start to go dormant, the workload for your crews is going to diminish. For some businesses, this is a time to downsize and lay low until spring. In some cases that may not be a bad idea.
If your cash reserves are sufficient to get you through the winter months, and hiring and retraining new workers every spring is not a problem, then going into business hibernation is certainly a viable option.
However, if keeping busy year-round is in your plans, then providing winter services will help you achieve that goal. That’s when you’ll want your head in the clouds because there’s money falling from the heavens. The snow that is a headache for most is a goldmine for you. That “white gold” will have to be removed by someone, and that someone could be you.
If you think about it, removing snow is not that much different than what you already do in nicer weather; you’re taking care of someone’s property, making it look good and keeping it accessible and safe. In the warmer months, you’re primarily dealing with plant materials. In the winter months, it’s snow.
Before getting started, you will have to take several factors into consideration. Although many favorable conditions are already in place, to be successful you will want to do more than buy some equipment, mail out some flyers and hope for some snow. You’ll need a business plan that takes into account all the contingencies that accompany being in business for yourself.
When Christine and Denis Gagnog of Sherbrooke, Canada, decided to turn their landscape company into a year-round operation, they submitted a detailed business plan to their bank for the additional funds they felt were needed to get started. Now the specifics of their plan may not pertain to your needs, but the guiding principal behind the plan serves as a good road map of what to consider before shoveling your first driveway.
They initially offered the service to their existing residential and commercial clients, securing commitments from 60 of those clients, along with a local senior citizens' home, a shopping mall and a local community college.
By offering a snow removal service to your existing client base you have everything to gain, and nothing to lose. Since you are already going to the property on a regular basis, it adds nothing to your travel time or expenses. And because they are already your clients, there is very little, if any, marketing expenses.
Another benefit is that because you already know the property, you can sell that knowledge as part of your service. Before the first snowflake falls, you can prepare and protect the vegetation from the elements. You can provide snow removal as part of a winter service package and include it in a yearly contract you offer to your clients -- sort of like an insurance policy against inclement weather. The one-stop shopping is a convenience for them and a guaranteed, steady source of income for your company.
When it comes time to remove snow, you already know what’s on the property and where it’s located. And since you’re the landscape contractor servicing the property, that’s a selling point that no one else can offer. Damage to the existing landscape because of snow removal mishaps should be minimal. But because accidents happen, if something is damaged, you’re already in a position to repair and replace the item in question.
If you have a large client base, you might be able to get by for a while just tending to their needs. But if you hope to experience any significant growth for your business, you’ll want to increase that base by marketing yourself to new clients.
Back at Christine and Denis Landscapes, they used their computerized database of clients as a stepping stone to market their snow removal service. It allowed them to track the services they provided, while soliciting further business from those clients through direct mail. But that was only the beginning.
The couple then produced and delivered 10,000 handbills door-to-door, advertised in the community newspaper on a weekly basis from November to March, and posted notices on bulletin boards in community centers, sports complexes, community colleges and shopping centers.
While getting more clients is always a good thing, it can turn ugly for your business if you’re not prepared. That means having enough crews and equipment available when the need arises. If you fail to deliver during a big snowstorm, you will lose that client. And that will certainly have a snowballing effect.
Because snow removal is extremely sensitive to seasonal factors, you’ll have to be prepared to weather the storm when snowfall is light, and tackle the storm when a blizzard hits. Depending on how your contracts are structured, a mild winter could be potentially devastating to your company.
There’s no one right way to decide how to bill a client. In fact,
billing is often the most difficult task for companies first starting
out. One method is to implement a flat monthly rate for snow removal
based on the size of the property. Another employs charging by the job,
factoring in the size of the property and the amount of snowfall.
As you establish a client base, prioritize the needs of those clients. Knowing which client needs a particular job to be done at a particular time is crucial. A commercial client may need a parking lot cleared before the start of the business day. For that customer, crews can go out at midnight and have the lot cleared by daybreak.
A residential complex may only be accessible during the day, when all of the residents’ cars are gone. A fresh crew can then tackle that job. By spreading your crews around in an organized manner, you can lengthen your work day while avoiding biting off more than your company can chew.
If for some reason you do over-schedule, don’t overwork your crews. In a pinch, you can sub-contract out the work. In fact, some snow removal companies incorporate sub-contracting as part of their business plan. It’s a way to take care of growing customer needs without taking on the burden of additional equipment and its maintenance. If you can’t afford to buy enough equipment to take care of all your customers, share the load with a sub-contractor.
Knowing the weather patterns of your area is also a good indicator of the demand there will be for your service. While that knowledge is no guarantee of snowfall in a particular year, it is nonetheless a good indicator of what the area’s average annual snowfall is.
Knowing who the competition is will help you better market your service. When presenting their business plan, the Gagnogs noted that there were a total of eight snow removal services in the Sherbrooke area. The two largest services controlled 80% of the local market. The remaining 20% was split between six smaller contractors.
Because of a decision by the city of Sherbrooke to contract out snow removal, there was an increased business opportunity. Since the couple had built good relationships in both the residential and business sectors, as well as the municipal government, they felt they were in a good position to win contracts not only from the government, but also from private sectors and residential customers.
While confidence in their ability prompted the Gagnogs to put together a realistic business plan, it was their firm’s expected growth which prompted the submission of that plan in order to secure a loan to purchase the equipment they needed based on those projections.
That brings us to a crucial decision you’ll have to make and one that could make or break your snow removal business: What equipment do you need to buy? How much do you need to buy? And when do you need to buy it?
Fortunately, you probably own several pieces of equipment that will get you started. And some of the attachments you’ll need to modify that equipment for snow removal are relatively inexpensive.
While your business may eventually grow to include a full fleet of snow removal equipment, many landscape contractors are able to get started by simply attaching either straight plows or v-plows to the ¾-ton or 1-ton pickups and skid steers they already possess.
A five-foot or six-foot blade will handle many commercial jobs and just about all your residential jobs. Manufacturers make plows that fit on nearly every American and foreign-built truck. You’ll probably want to invest in a snowblower; they range in size from small walk-behind machines to large units that attach to front-end loaders. Salt and sand spreaders can often be fitted onto truck tailgates.
While your initial outlay of cash is minimal -- you already have much of the equipment and the crews – by no means is this easy money. It’s hard work. The harsh winter weather can be taxing on whatever equipment you decide to use, so good maintenance is imperative. Make sure that you’re properly equipped and that you have replacement parts on hand.
The work is also hard on your crews. It’s cold out there. Your crews will need to be properly outfitted to protect them against the elements. There’s a good chance you will be called up at all hours of the night and on holidays. You will lose business if your crews don’t show up in a timely manner, or if equipment constantly breaks down. Your reputation will be damaged, and your profits will melt like snow on a warm day.
On the other hand, if you do your homework, you can make sure that
you have the equipment you need when you need it. You will schedule
your crews to maximize the work they can do in the least amount of time.
And by properly bidding a job to cover your expenses and turn a profit,
you can heat up the dead of winter, parlaying snow and ice removal into
cold hard cash.