By: Heather Gooch
Starting and expanding a snow division is easy, once you overcome the challenges involved.
Like many landscape professionals in the Snow Belt, Steve Rak decided to get into the snow business for one main reason: cash flow during the winter to keep key employees on payroll. For Rak, vice president of Southwest Landscape Management in Columbia Station, OH, the decision to jump into snow about six years ago just made good business sense: “We already had a built-in customer base that needed the service to begin with.”
But the follow-up decisions to put the plan into motion successfully are not always as simple. Rak recognized the risk and brought in snow removal industry consultant Rich Arlington about a year ago. Arlington is enjoying a successful run with both his landscaping and snow companies in Erie, PA, and has recently begun using his business experience to help others.
“I have learned over the years that hiring the right consultant pays off if you actually follow their advice,” notes Rak, whose company has been around since 1990. “I brought in Rich because I don’t know the snow business as well as the landscape business, and I wanted to improve my estimating process. In addition, I wanted to see how a larger company like Arlington handles things like using sub-contractors and managing the actual snow event.”
Top 5 challenges
Arlington says he’s been impressed by how many of his clients bring him in before a problem arises. “Of course, you don’t have to bring in a third-party consultant necessarily, but it is important to get help from the start. It could be from an association, or from a non-competing colleague who’s been through it.”
Based on his own experience and what’s he’s seen in the industry, Arlington identifies the following as the biggest challenges facing landscaping professionals when trying to either get a snow division off the ground or take their existing snow business to the next level:
1 They don’t know the numbers and don’t know how to bid. Arlington says the root cause is because no one is taught how to do it. “One client did research on the Web and has more ‘profit’ formulas than he knows what to do with,” he says. “But within 30 minutes, I can find your break-even point, then add in the profit margin.” Arlington notes his formula literally took years to develop “because no one showed me, either. I understand the frustration behind it.”
2 They don’t have the structure in place to adjust to emergency services. Arlington points out that when you take on a new lawn customer, it may be an entire week before your crew gets to the account. “But with snow, you often have only a few hours to get there,” he says. “You’ve got to be structured for response time, and most LCOs are not used to a third-shift arrangement.”
3 They don’t have the right equipment to use. One common “rookie mistake” is bidding shopping centers when you just have pickups as your fleet. In other words, it’s easy to get in over your head. “I teach my clients to scale up equipment slowly. If you have a pickup, I show you how to use a skid steer with a pickup box, and from there, a backhoe,” Arlington explains. “By the time you get to the larger accounts, you understand the philosophy.” If he’s brought in when the large accounts are already under contract, Arlington says he catches his client up more quickly.
4 They don’t know what they’ve just signed in the contract. Arlington often serves as an expert witness in lawsuits, and he often finds the problem lies in an interpretation of liability: “That’s a big thing for newbies out there — and keep in mind a 20-year-old company can be a ‘newbie,’ too, if a large-scale contract is unfamiliar to them.”
5 They are afraid to pull the trigger. While landscape professionals need to go into snow removal with eyes wide open, Arlington notes, “it’s important to not analyze it to death. You have to get your feet in the pond and go swimming.” It’s understandable to hesitate about the possibility of one bad situation sullying your reputation, but on the other hand, the business can be a tremendous growth opportunity for your company, as well as a stabilizing one. And at the end of the day, Arlington assures, “it’s not as complicated as it seems.”
A popular choice?
Arlington says many landscaping companies are “dabbling” in snow, and Jason Schmidt, president of Schmidt Lawn Care in Southington, CT, can easily attest to that fact based on the number of competitors that have recently appeared in his market. Schmidt has done lawn care since 1991, and began plowing in 1994 “because customers were asking for it.” Schmidt strives to be a one-stop shop for his customer base. “We don’t do irrigation, for example, but we’ll find someone who will do it for them,” he says.
With about $500,000 in revenue, Schmidt’s firm has been nearly 100% commercial since 2000. Schmidt says he believes the current economic climate has forced many others to follow his lead. “It’s been a great ride, but in the last two years we’re seeing more commercial competition,” he explains. “Years ago, when we went to bid meetings for state and municipal accounts, there might be four or five other bidders. Now, there are 20+ guys there. We still get the work, but it’s not a good place to be.”
To combat the proliferation of “dabblers,” Schmidt says, the relationships his team has built with the bidding accounts has definitely worked in his favor. But when the market began to tighten, he, too, brought Arlington in to ensure his company was headed down the right path.
Schmidt Lawn Care is unusual in that it runs leaner in the summer than in the winter, expanding from eight to about 18 employees. “We use roofers and construction workers as part-timers, who are otherwise on the sidelines because of the weather,” Schmidt explains.
What the future holds
Schmidt laments that while quality is important, an increasing amount of customers are price-driven. He plans to keep growing at a sensible pace, adding more loyal customers and less headache-inducing accounts. To that end, he’s also signed up for the Snow & Ice Management Association’s new “Build-a-Bid” seminar series (visitwww.sima.org for more information on the program).
Rak, immediate past president of the Ohio Landscape Association, also plans to stay involved with industry organizations. But among his immediate goals are to grow the snow division more aggressively and be less of a “top-heavy” business. With a current mix of 95% landscape maintenance and 5% snow, Rak wants the snow division to become 10 or even 15% of his business next year. His company, which shrinks from a summer staff of 17 to a winter staff of about eight (plus subcontractors), is projecting about $950,000 in revenue for 2008.
“The most rewarding thing in this process has been that my foremen and managers pretty much run the snow division,” he says. “When we started plowing, I decided that from the start I did not want to be involved in the actual field operations of that part of the business. Having worked in the field for over 12 years in the landscaping end of the business, I learned that I cannot grow the company from the seat of a lawn mower. The same is true for snow plowing, so rather than begin in the field and 12 years later trying to get out, I thought it was best to trust my crew to run it.”
It’s a strategy that works, he adds. “It has been six years and I am really proud of the job my guys are doing. I also think they like the fact that they are in charge and empowered to do the job.”
