Snow Business: Set the Stage for a Great Winter
|By Igin Staff|
You probably already have much of the equipment you need. A relatively small investment in a blade for an existing pickup or snow removal attachments for an existing loader or skid steer is often all it takes to convert a strictly three-season service into a year-round operation.
If you're already providing high quality summer services, you probably have a good base of customers ready to do more business with you. With all of these systems in place, jumping into winter maintenance may seem like a no-brainer.
But hold on. This isn't like any other add-on service. The rewards are motivating, but you need to approach it thoughtfully to avoid slipping up.
"This is not a forgiving business," says Dalton Hermes, owner of Hermes Landscaping in Lenexa, Kansas, a suburb of Kansas City, Kansas. "There's very little margin for error. In the lawn business, if we're a day late, it's not a big problem. But in snow removal, if we're an hour late, it can be a huge problem because it's such a big liability issue."
Inadequate preparation and overzealous commitments coupled with even one extreme weather event can lead to near disaster for an inexperienced snow removal company. Alan Steiman learned these risks early on. Steiman owns Pro Sno, a successful commercial snow removal business that he operates in addition to his high-end residential landscaping firm in Northboro, Massachusetts.
"I started plowing in 1974," says Steiman. "I learned how NOT to plow during the blizzard of 1978. I was over-committed and under-prepared. I worked twenty-hour shifts for five days. At the end, I had two trucks disabled and in need of repairs. I've dedicated the rest of my snow removal career to doing things right."
Steiman joined SIMA, the Snow and Ice Management Association, ten years ago and served as its president last year. SIMA, a non-profit trade organization dedicated to ensuring professionalism and safety in the snow and ice management industry, offers numerous educational opportunities, including a certification program and an annual three-day symposium. Involvement in SIMA can greatly reduce the learning curve for both new and experienced snow and ice management professionals.
Snow: What's in it for you?
If you want to do snow and ice management the right way, a good question to ask is why you're getting involved in the first place. "Doing snow removal simply to subsidize a business that can't otherwise function in the winter is a mistake," says Steiman. "You have to use it to make a fair amount of money or you might as well stay home."
Troy Clogg, owner of Troy Clogg Landscape Associates in Wixom, Michigan, agrees. "One of the biggest mistakes people make in this industry is not taking it seriously enough," says Clogg. "This can lead to lack of planning, over-promising, and under-delivering. Then you have a reputation issue that can impact the rest of your company."
That said, there are many great reasons to get involved in this service. When managed correctly, it can add significant winter revenue during otherwise lean months. It can enable you to hire and keep quality employees who want more than seasonal work. It can also strengthen your existing relationship with clients and allow you to become the full service, one-stop-shopping company that many consumers are looking for.
"Snow removal has allowed us to become a single source service provider," says Jerry Schill of Schill Landscaping and Lawn Care Services, Inc., in Sheffield Village, Ohio. "It allows our clients to have a single point of contact at our organization all year long, allowing us to build long lasting relationships." And let's face it, snow and ice management can be very lucrative.
The best reason to add the service is to enhance your company with a significant new profit center. But as Steiman points out, in order to make it profitable, you have to manage it for profit -- not just as a winter safety net or as a means for getting more use out of your equipment.
"You can't just decide to go plow a few driveways for $25," says Steiman. "You have to charge a significant amount of money and account for everything. I was in the lawyer's office yesterday being depositioned for a slip and fall case that happened in 2003. Did I budget an extra four hours and the cost of parking for that? You have to be prepared for these things. When fuel goes from $2 a gallon to $3 a gallon, you have to be prepared for that, too."
Contractors who take the job seriously and manage snow and ice removal as a significant profit-making service do realize the rewards. "I do it well and I make good money at it," says Steinman. "In some years our snow removal business equals our landscaping business."
Clients and Contracts: Know your Limits!
Before adding snow and ice removal to your services, take a look at what kinds of clients will best fit your existing equipment, personnel, and company operations. Most importantly, know your limits. "Do not promise more than you can deliver, and know your service limitations," says Schill. "Failure to perform during a major event could cost you everything . . . reputation, clients, money, and even your business." Schill's company included snow removal in their service mix from the beginning. "We started out, like most, with a pickup and plow, along with a couple of shovels and a snow blower," says Schill. "We serviced our summer client base from landscaping. That included residential and small commercial/industrial and retail clients. We did not offer de-icing services until our second winter season. As our client mix grew, so did our service offerings."
Some companies break into snow removal by first offering services as a sub-contractor. Many contractors include sub-contracting as part of their own business plan. This gives them a bigger team to work with and allows them to take on more clients with a smaller equipment investment.
When considering clients, remember that every property is different, and different properties carry different equipment and labor requirements, safety issues, and time limitations. Some contractors take a streamlined approach by catering to one type of client. While Steiman serves primarily residential clients for his landscaping business, he serves only commercial clients for snow removal. "I found it easier to work with a few larger clients than several smaller ones," he says.
Clogg takes a layering approach with clients. "It's like building a financial portfolio," he explains. "When investing, you don't put all of your money in stocks, bonds, or real estate. Instead you spread it out."
As he points out, in this business, everyone needs their snow removed but not all at the same time. "For example, churches and synagogues need it removed at a different time than shopping centers. If you think of your customer's needs and layer these within the twenty-four hours you have to plow, you can target different markets and different types of clients."
The types of contracts you offer can make or break your chances for profit in any given year. There are contracts that provide compensation per season, per event, per inch, per push, per hour, or any combination of the above. No single option is right for every company or customer.
Making these decisions takes careful thought. "You have to first understand the financial pulse of your organization," says Schill. "Having this understanding will help you make sound decisions on how much to invest in the snow and ice side of the business, the costs of doing so, and how to recover those costs through the contracts you provide your clients."
It all starts with knowing your climate, understanding the averages and extremes, and budgeting with all possibilities in mind. "Understanding the weather patterns in your area is critical," says Schill. "Having that understanding allows you to develop models that will work in your market."
Anyone who lives in a snowy climate knows that in any given year, actual snowfall may be way above or way below annual averages. Many companies offer a variety of contracts in order to buffer the risk. "We are extremely conservative in how we approach budgeting for snow," says Schill. "We use a combination of contracts that allow us to collect revenue even in the mildest winters."
No matter what types of contracts you offer, make sure you also have appropriate insurance coverage. Unfortunately, snow and ice removal has become a notoriously litigious business and this is reflected in insurance rates. As with any service industry, it's important to protect yourself and your company. Getting involved with SIMA is one of the best ways to learn more about insurance, contracts, and other business logistics.
"SIMA has added a lot of credibility and professionalism to the industry," says Schill. "Snow is a unique industry and there are a lot of great service providers throughout the country. SIMA has allowed us to learn from those great organizations and shorten the learning curve through networking and the annual symposium."
Prepare, prepare, prepare
With clients, contracts, and insurance set, the most important thing you can do to ensure success in this field is to prepare. This has been a major part of the success story for Hermes. "This service takes an extraordinary amount of preparation," he says. "I'd say it involves 80% preparation and 20% execution. You need to have a ready supply of materials for ice control. You need to have spare parts for your equipment. You need to have a communications plan and a back-up communications plan. If you rely on computers, you need to have back-up power."
Planning is critical. "We build a minimum of four plans per year -- two for snow removal and two for ice removal," says Clogg. "We have a different plan for heavy and light events. Plans are broken down to each crew and each person. You have to slow down and think about each person's night. Where will each driver be and for how much time"
Prepare for the extremes and everything in between. Remember, even in years where precipitation meets annual averages, it doesn't often spread itself conveniently over several months. Sometimes it all comes at once. Sometimes it comes in April. Sometimes it comes on Superbowl Sunday. Will your staff be ready?
"This is a service you have no control over," says Clogg. "You don't know when you're going to work or how long you're going to work. If you're not the right person to take that on and you can't add the right people, you're going to be the one coming to my door asking if I can get your work done -- because you can't."
Clogg credits much of his company's success with employees who are willing to make that commitment. "The most important aspect of this work are the people," he says. "There are always good people out there and we're blessed to have some of them." Not everyone has what it takes to run a successful snow removal business. But those who do are often singin' in the snow on the way to the bank while everyone else is holing up for the winter.