What’s the difference between a good snow removal contractor and a great one? Is it accolades and accreditations? Is it number of accounts and gross profit? This is something I spend a lot of time thinking about as someone looking to improve efficiency and productivity in my own company. I’m still learning, but over the years what I’ve observed is this: as professionals, I think our ability to pay attention to the details is what sets us apart from other “fly-by-nighters” and “one-truck-wonders.” When running an organization of any size it’s easy to get lost in the minutiae, but the work is worth it.
It’s especially important to pay attention to the things that impact profitability in today’s market, with fuel and salt prices on the rise and the decreased labor supply (more on those below). But understanding those factors will not only help you make more money in the long run, but it will also allow you to better communicate with your clients about what they’re spending money on, and why they’re doing it.
So, here are some of the key factors that can have the biggest drain on profits in our industry.
Skyrocketing Salt Prices
In Ohio, the 2017-2018 winter was one of the coldest and hardest we’ve had in years, and many other areas of the country didn’t fare any better, with significant snowfall getting as far south as Florida. This caused a significant increase in the demand for salt, and that, along with limited supply from some of North America’s largest salt mines, is going to drastically increase prices for the upcoming season. Government entities and municipalities get priority for filling reserves, which will put additional supply pressure on snow and ice management contractors.
Now is the time to reassess your current contracts and adjust how you structure future bids. Do your research and be up front with customers about what’s causing the shortage and how it will affect their budget. Some of your clients may have some additional money to spend, while others won’t be able to alter their budgets based on changes in the weather. Get creative on how you can reduce your use of salt. Invest in research and experiment with alternative deicing formulas that deliver equal results as salt and meet with your clients to discuss their options to help reduce consumption of bulk materials when appropriate.
For instance, consider using stand-alone liquid deicing products and brines that can be used alone or mixed with bulk products (e.g., salt) to reduce the consumption of price sensitive material. Many liquid deicing products significantly reduce the amount of chemical de-icing products needed, which gives clients a more sustainable and cost-effective solution. This way, treated road surfaces require fewer chemicals and applications throughout the season, saving both time and fuel.
If you keep your eye on the news, you’ll know this is one of the best economies in living memory. The unemployment rate is 3.9 percent, and while this is great for American workers and our financial system as a whole, it puts employers in a real pinch. Those of us who work with seasonal laborers are especially hard-pressed to fill open positions. In the past, our typical labor supply was supplemented by other seasonal construction trades laying off workers in the winter, but that’s not the case today. Infrastructure projects are on the rise as the economy continues to improve.
Meeting the labor shortage is going to require getting creative. Talk with your operations team to determine what sets you apart (or what could) as the employer of choice in your area. Are you offering adequate incentives? Is your company culture inviting? Winter is a stressful season in our industry, so it’s important to make sure that you’re continually thinking about how to create a better environment for your workers. Look to technology and equipment that can improve production, reduce manpower needs and provide better working conditions for snow fighters
Pumped Up Fuel Prices
Prices at the pump can increase or climb depending on the day, and even the time of day. The reality is, fuel prices are not going to decrease, even if we experience a daylong dip. And fuel is essential for operating every piece of snow removal equipment: skid-steers, ATVs, heavy-duty trucks, so high fuel prices can obviously have adverse effects on your bottom line. Pushing snow is hard work on engines, which burn through fuel faster in cold temperatures and when plowing literally tons of snow. Meanwhile, when the weather is bad, fuel deliveries slowdown, which drives up prices at the pump.
Consider focusing on efficiency when planning routes for your crews this year. Take every mile into account, which will maximize your fuel spend and allow you to maintain stable prices for clients. Some landscape and snow removal firms add a fuel surcharge to contracts to help absorb the cost of fuel, which clients may or may not take lying down. But focusing on improving your internal operations to make the best use of fuel is a strategy that’s more likely to keep your customers happy and your company running leaner.
Footing The Cost Of Insurance Premiums
If you’re anything like us, then safety is your No. 1 main priority in the winter. Your clients need to maintain clear parking lots, driveways, sidewalks and walkways for their employees, tenants, guests and customers to minimize the chance of injuries.
Snow and ice removal services are performed to maintain that safety, and the last thing our clients are thinking about is the insurance we pay for safeguarding their properties. Nevertheless, it’s no secret that insurance premiums in our industry can be prohibitively expensive, with many snow removal companies shutting their doors every year because they can’t keep up with rising costs and increased liability.
The fact that insurance premiums for firms like ours are indirectly impacted by other parts of the country where slip-and-fall litigation is more prevalent (or even rampant) doesn’t make things better.
You can’t control your insurance carriers’ pricing, and you also have no say in slip-and-fall litigation across the country. The only way to mitigate the insurance premiums you’ll pay to operate our business is to focus diligently on safety.
Mitigating risks for all parties is the name of the game. Spend time in the off-season training your crews to perform their jobs safely and maintain a fast response time during snow and ice to help your commercial and retail property owners to keep their properties safe and alleviate slip-and-fall liability. Lastly, make sure that your company is following industry standards by looking into becoming ISO9001/SN9001 certified. Organizations with this certification end up having 70 percent of the claims against them being dismissed outright, compared to 35 percent for companies that aren’t ISO-certified.