It’s not a great winter for snowfall in the Midwest, but that doesn’t mean it can’t be a good winter for equipment prices.
Should I expand? Should I sit tight? I'm sure many of you have been faced with the question a time or two. Over here, I was faced with that question this past November. We had been running three trucks and tailgate salters for the past four seasons. The economy hasn't been exactly stellar to say the least, and bids are tougher to win now than they were six or seven years back.
I know many of you are or have been in the same boat I was in. Is it financially smart to purchase a fourth truck in times as rough as these? I decided it was. And boy, am I happy I did, even with a low snowfall year. I also went a step further and completely scrapped my old way of doing things along the way.
In this business, if you want to continue to grow you need to work smarter, not harder. That's exactly what I did. I got rid of all my tailgate salters but one. I switched everything over to bulk salt. Rewired everything, new control boxes the whole nine yards. You see, in my business plan, I set out to expand by looking for good used equipment for snow and ice removal. I've never bought a new plow and I probably never will. The turnover in this business is so high you can purchase almost-new snow equipment annually if you know where to look and what to look for.
I have to admit I was as nervous ever to purchase another truck, add another driver, add more accounts and take the “mid-size” plunge. Most people in this business are either small one-or two-truck guys or larger. Very few guys have four to five trucks. Why? Because it's hard to make money when you can't work off volume or low, low overhead. You have to know what to bid projects at, have your overhead manageable, and have good employees that hang on when you have a bad winter. Fortunately, I have some of the best drivers in my area (at least I like to think so). A funny thing happened along the way, too. I saved money by spending money. Funny how that works. The old adage is true, you have to spend money to make money. When you have more money you can invest more money into equipment and supplies. When you have more of those you can take on more work. When you can take on more work you make more money. When you make more money you can buy in bulk, when you buy in bulk you get supplies cheaper. You still charge what you were charging before for the same supplies but your cost is lower.
I have been affected by the low price war going on as much as anybody. My margins are thinner on some things and they are still good on others. Salt was a place where I needed to trim the fat. I needed another truck to speed the routes up. I accomplished both. I added another truck, added productivity, saved money on bagged salt and can provide faster service and a greater coverage area than I could before. This wasn't a decision that I came up with lightly. I studied my business, my market, my projected sales and talked with my landscape guys about it. Everyone agreed. Another truck would make all our lives a lot simpler. Bulk salt would save us all time. They can start on the residential route while I finished hitting the accounts or Curt, my winter foreman, could. Another funny thing happened along the way. I picked up an entire shift worth of residential plowing, at the cost that some of you guys are plowing commercials for. But that my friends, is another article in and of itself. Exciting things are happening here and I couldn't be more optimistic about our future. I hope you guys do your homework on situations like these you’re in. Bigger isn't always better. Sometimes smaller is better. That's for you to decide. And they said this was a “down” winter. The only thing “down” is my competition. Until next time, stay safe and stay positive. It’s turning around out there. The question is, will you be there when it does?