Snow removal is a tough business. It’s seasonal in almost every state, the equipment is expensive and the hours are irregular. However, if the business is run well, then you can count on profitability year-round.
There is money in the snow removal business with the right plan and process in place. City streets, parking lots, roadways and residential areas all need snow removal services when there is a snowstorm or ice storm.
Here are a few basic tips to make money plowing snow.
Pick the right clients.
You don’t want to be too picky with potential customers, but it will serve your business if you make wise decisions. First, make sure you are working with clients that are profitable. For example, a longstanding company is likely to stay in business and make you a profit through snow removal. If a brand new restaurant reaches out it’s worth taking a moment to consider if it will be a profitable client.
The best clients are also those with little competition in your way. It’s likely there are other snow removal professionals hoping to get the attention of many of the same prospective clients. To save on overhead and beat the competition, consider clients may be out of competitors’ realm. You’ll save resources by not chasing clients that are already in contracts and might find unexpected cash.
Signing seasonal contracts is one of the best ways to ensure profitability through your snow removal business. Ask your clients to sign on for recurring services so you know exactly what your expected revenue is for the season ahead. A recurring contract also builds trust and loyalty between you and your client.
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While residential snow removal work is plentiful, it is also a relatively low-margin and high-effort contact. The travel time between jobs can quickly eat into your margins. If you do choose to pursue residential work, consider competing for HOA contracts.
Properly manage cash flow.
The concept of managing cash flow may not seem obvious. But your cash flow management has to be excellent to make a profit with snow removal.
You have to estimate your snow removal jobs accurately to actually make a profit. There is a margin for error in this area which can lead to money left on the table. For the most accurate calculations take everything into account such as labor, equipment, materials and site conditions. For example, factor a difficult layout for a parking lot into your estimate if necessary. It will take extra effort but will be worth it for your snow removal business. This transparency and smart accounting will lead to better business and higher profits.
Alongside estimating the cost of a job you need to pay your employees correctly. If you overpay them, you’re losing cash, but if you underpay then you might lose employees. Snow removal is a tough job given the unpredictable hours, and good employees can be tough to find. Therefore, you want to keep them happy with the right pay.
The equipment in the snow removal business is expensive, but there are ways you can cut down on some of those costs. During the off-season shop last year’s models or excess stock (ie. plows) for any new snow removal equipment you need at a discount. Additionally, maintain brand consistency to keep your repair-supply expenses low. It’s also wise to have multiple plow trucks and plows in case of damage or maintenance. It may be a stretch or investment at the forefront but will save you money in the long run.
These are a few ways to ensure a profit with your snow removal business in the midst of a tough industry. Snow falls or shine, the business has to keep running.