Snow contractors have never had better tools to run a safe, profitable and professional business.
I recently received a crash course in snow business fundamentals at the Snowfighters Institute, which develops instruction on business disciplines for snow and ice management professionals. Modules include sales and marketing, pricing formulas, accounting, business valuations, labor, liability and insurance best practices.
My takeaway: This is a complicated, convoluted and intensive business on the back end for something as seemingly simple as managing snow. But you already knew that. Few of your clients complain if you miss your mow and blow day. But complaints start rolling in the minute snow hits the ground. Likewise, none of you have been sued for dangerous conditions from an unmown lawn. But just a delay on snow and ice management means some serious repercussions — legal, operational and customer satisfaction, and maybe all three.
Here’s the good news: There are a slew of resources out there that can help manage the pinch points in your business. Continuing education is the key to understanding and flourishing under evolving liability guidelines, subcontractor agreements, customer contracts and, of course, variable weather that requires nimble management of back-of-the-house operations and customer-facing service and communications.
SIMA, ASCA, Snowfighters and other business seminars can be the difference in a successful business and a winter full of work and little profit to show for it. Here’s a major pitfall to ponder as a primer for your next continuing education class:
Turf‘s recent business management survey reveals that just 50 percent of responding businesses use an operating budget or P&L. This is embarrassing for any service industry. You can’t manage what you don’t measure, and at very least, you must measure and manage your expenses and revenues. If you’re just cashing checks and hoping you can pay your bills, then you’re not running a business, you’re managing a church mission.
The biggest mistake reported by those taking the survey: Almost half of all respondents say they don’t budget for enough costs. This can be even trickier with snow and ice management, which often has variable costs depending on the amount of snowfall and amount and frequency of deicing. So here’s a rudimentary outline of what you should be forecasting, recording and monitoring for the season, and ideally is should be broken down by client.
- Equipment purchases (capital expenditures)
- Equipment leases and rentals
- Equipment maintenance (Fuel, oil changes and repairs)
- Overhead (insurance, administration, accounting, tax support, office space, software)
- Salt/deicing contracts: Yes, this should be broken out. You need to know how much product you are putting down and at what price you are paying. Your profit should be at least 50 percent on this service.
- Equipment plowing service contracts: Trucks, skid-steers, loaders and lease payments will become clearer when you understand how much money you are making at each site.
- Shoveling and sidewalk contracts: The labor on this service is significantly higher and harder to find. You need to know whether or not your business should offer it and if your clients are willing to compensate you fairly for the added service.
- Snow hauling: This requires different equipment and labor requirements
- Per-push snow removal
- Per-application deicing
We’re dedicated to providing the tools you need to create better businesses, and it starts with these basics. We’ll continue to cover these crucial topics, including cap-and-floor pricing, cash flow tips, company valuations and more. In the meantime, you should be looking at the best practices approved by the industry to insulate you from unnecessary liability and operational mishaps, and you can always visit PlowSite.com for peer advice on budgeting, expenses, equipment and anything else that affects your business.
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