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The Exclusive Magazine for the Building Service Contracting Industry Since 1981
Tuesday, 26 January 2016 12:21

There’s No Business Like Snow Business

Written by  Richard Jones

Theres No Business Cover

As the saying goes, "There is no business like show business.” And as every building maintenance contractor can and will testify, that is especially true for the seasonal vagaries of snow removal. When the weather is your master you have the toughest boss in the world. Seasons can be mild and gross sales even milder. But, you never know when Mother Nature will throw in the statistically unlikely and literally bury you in work. Furthermore, Mother Nature does not understand we are on an eight-hour work day. In this issue, SERVICES Magazine examines the ins and outs of winter snow removal and we want to share what we found with anyone thinking of offering these services.

Does snow and ice removal make sense for your company?
Snow and ice removal can dovetail nicely into the overall business model of a Building Service Contractor (BSC) and it can be highly profitable. Offering this service can also make your workforce more productive on an annual basis by turning a snow-day into a workday. But it also has its own unique challenges. Here are some of the considerations we discovered.

Snow and ice have different characteristics. Therefore, both have to be considered separately. Obviously business operators want their clients to have easy access to their places of operation. Snow can physically prevent them from gaining that access. Ice, on the other hand presents a serious safety issue. Vehicles slipping and sliding in the parking lot are a danger to other vehicles and pedestrians. Maintaining parking areas safe from ice not only lowers vehicle collision potential, but reduces your clients’ future liabilities in the event of a civil lawsuit. Your client is depending on you to keep his area accessible as well as safe.

David Murphy, president of Supreme Maintenance Organization (SMO) in Greensboro, North Carolina shared some of his experience and insights. SMO began as a janitorial company and then expanded into landscaping about two-years ago. He explains that his customers prefer to have a one-stop solution for all their facility, grounds, and parking maintenance issues. So, landscaping along with parking lot maintenance was a natural growth area for his business. He also feels that his one-stop approach gives him an advantage over the competition that offers just landscaping.

If you are considering adding snow and ice removal to your repertoire, there are pros and cons; some of which are not obvious. Careful, thorough business planning is paramount. The first area of focus is the probability of snow. In the northern latitudes snow removal is a fact of life and there are different levels of probability that make this particular venture a challenge. In your business planning, the National Weather Service should be your first stop. They keep regional and national records going back to the Civil War and beyond. You should know averages, as well as ten, fifty and one-hundred-year maximums and minimums, and a bit of climatology wouldn’t hurt. Learn the language of the weatherman. Get comfortable with concepts like isobars, high and low pressure areas and cold fronts.

Planning and preparations
Preparation for the cold season begins in autumn. If you should prepare for more snow than actually falls, you will have excess inventory and unproductive equipment. If you run out of material or your workforce can not remove the snow in a timely manner, your client, and even worse, your reputation and business relations will suffer.

Contractors in this field speak of snow and ice in terms of events rather than the actual amounts. Five snow events of fourinches on average is a different matter than one snow event of twenty inches. Anticipating amounts is secondary to the total number of events.

When planning for a winter’s supply of salt, the question should be, “How much excess are you willing to carry from one year to the next?” Most BSC’s prefer calcium chloride which, which costs six-hundred and twenty dollars for a pallet of forty-five, fifty pound bags. Coverage is approximately four hundred square feet per bag. This translates to three dollars and forty-five cents for every one-hundred square feet of coverage. His expected number of events was four per season. Of course as you move farther north, this number will go significantly higher. He has contracted for 500,000 square feet of parking and roadway. Material costs per event are therefore easily derived by:

$3.45 x 500,000/100 = $17,250 per event = 1250 bags or 27 pallets of material per event

However, this quantity does not take any contingency into consideration. Over any given twenty-five year period, it is not uncommon to see up to six and as little as two snow and ice events. By planning for two additional events, the contractor committed to an expected excess capacity of 2,500 bags, or fifty four pallets, of material. His sunk cost will then be $34,500 in material plus the cost to store it over the summer and fall. As a comparison, SMO, mentioned above, maintains stock for only two events. This is because the snowfall in North Carolina is typically much less.

We go into planning to this detail to show the less obvious cost factors which must be incorporated into your margins to insure a suitable profit when you make your bid. After all, if you take this risk you should expect your clients to compensate you accordingly.

Product safety issues
While we are speaking of the different salt products, please keep the environment in mind. Sodium chloride (regular salt) can pit concrete and kill plants. The local government may have restrictions on certain types of salts. Learning how to apply these products in a safe and environmentally friendly way is important. Read and understand the manufacturer’s Material Safety Data Sheets (MSDS) and check with your local government regulatory agencies.

Operational considerations
Ice is much more difficult to remove than snow and it causes much more slip and fall danger than snow. When considering offering these services snow and ice removal should be two separate issues. Light snow, which may not be a concern to your client, may freeze into a sheet of ice, and that is a major concern. Ice removal is a much slower and more tedious process for the equipment operator than snow plowing. In this case, the ice mitigation should include a pre-treatment with a liquid brine before the expected freeze. Pre-treating may be enough to relieve the need for physical removal. But in case it does not, pre-treated areas will be much easier to clean. Planning for the amount of brine needed would follow the same format as calcium chloride mentioned above.

Your agreement with your client as to how much snow they can tolerate is important. With most of the building service contractors we spoke with, toleration levels average between two to four inches. But whatever your client’s level is, the maximum amount should be clearly understood by both parties. You should also take the time to inform your client as to the typical amounts of ice and snow, as well as the maximums you are able to remove. One or two sequential hard freezes may be your limit before crews are expended. Two inches of snow per hour may be your maximum removal capacity. Whatever these are, make sure you communicate them clearly, and as you reach those limits make sure the client knows in advance.

Coordinating with your clients
Once the weather report says snow, you should be on the phone coordinating with your client. The heaviest snow or ice events occur during the cold of the night, but can continue into the day. Your client will want his parking area and entrances cleared by normal business hours. This means snow removal crews will need to be working before sunrise. Crews may even need to be working before the government plows have finished the public highways and streets. Most of the contractors we spoke to provide overnight lodging close to their service areas to avoid any travel problems.

For very large service areas such as regional malls, airports, and industrial centers, equipment and material are pre-deployed to ensure it is available at the site and not stuck in the contractor’s equipment yard. Another consideration is night shift and overtime costs. Snow and ice removal will undoubtedly be more costly to provide than day-time operations. It would be wise to double check profit margins to be very sure this does not come as a surprise your client’s financial manager prior to quoting your service.

Of course, for some clients, heavy snow fall is just an unforeseen holiday. Customers will not go shopping during bad weather and the owners will expect low customer turnout. Other clients can’t afford to shut down for any reason. They have commitments and must meet them. One BSC we interviewed will watch the weather forecast and keep his building managers apprised of his plans in case of snow or ice. He has his routes preplanned with top priority clients first. During the clearing operation, he continues to communicate with his clients to let them know where his crews are and when to expect them.

Run-off, equipment and insurance
One fundamental tip a contractor gave us seemed obvious, but we hadn’t considered it until then. “Where do you put all the snow while it is melting?” For lack of a better term, let’s call this your snow-plowing plan. And let’s do a quick volume calculation for a small parking area. Assume we expect four-inches of snowfall and have one-acre of surface area to plow. A simple calculation for volume shows this will generate 14,520 cubic feet of snow.

43,560 sf x (4/12) square feet = 14,520 cubic feet

Let’s further assume we can pack our snow five-feet high. Then the total square footage we need is roughly 2,900 square feet, or a rectangular area of fifty feet by sixty feet, and depending on how the parking area is arranged, this may or may not be a problem for the business owners. So, the tip is to discuss this with your client and designate the snow removal area. Mention to him or her that as the snow melts, they do not want the runoff to drain over the parking area. If the temperatures drop below freezing, the runoff will turn into a sheet of ice. Therefore, the best removal area will be at the low point of the parking lot.

We haven’t touched on equipment issues so far. But just like materials, snow and ice removal equipment will need to be maintained, and stored during the off-season. These costs have to be included in your gross margin calculations.

Insurance costs may go up in order to offer snow and ice removal. This will depend on your insurance carrier and the types of services you currently offer. Be sure to contact your insurance agent to make sure your liability coverage is adequate.

Summary
Snow and ice removal services deserve careful consideration as part of your business model. Because they are needed during the off-season for normal landscape contractors, these services make sense to keep your crews busy. Due to weather dependence and the risks involved, a contractor can expect much higher profit margins. But risk is a double edged sword. Abnormal fluctuations in weather can create significant operational problems. Make sure you have thought the entire process through and your clients are comfortable with your approach before making the leap and bid the work.

Last modified on Thursday, 07 April 2016 10:29

1 comment

  • Comment Link Petes Plow Thursday, 25 February 2016 15:38 posted by Petes Plow

    I hasn't snowed here in Florida for years.

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