Are you worth 400% more?
This is a question worth writing about and it applies not only to snow management, but to any of the other trades you’re also involved in, like landscape, lawn maintenance, construction, etc.
Let’s consider the last quarter century. For many of you, like myself, this is a tale of dwindling profits, larger debt (with personal guarantees), and less respect and appreciation for the folks who toil away every day in the elements.
And one real question persists -- When will the pendulum swing back? When will the pendulum swing from a country that creates less and less 18-year-old tradespeople, a country that encourages stifling student loan debt for so many young adults who should not go to college (for one, I am not a college graduate). When will trends swing back from having less children, more stuff and making a living in front of a computer instead of with their hands and hearts?
How much longer will it take for that pendulum to swing back and reinstate respect for hard-working laborers who put in an honest day’s work? Without these folks who could get through a month without running into an issue, such as how I change my oil, cut my lawn, or paint or remodel my home?
But let me be clear, this is how I feel about the people I respect – physically hard-working people -- who I believe deserve the best.
With this in mind, are you charging prices today that are +/- 400% greater than they were 25 years ago? And if you consume services from the trades are you paying +/- 400% more than you were in the 90’s? And if not ... why?
Let’s revisit the mid 1990s. Much like today, our economy was growing and people were working. It was a time when 4 x 4 3/4-ton pickup cost about $20,000 and the snowplows we put on them were about $3,000. Field worker wages were about $5 to $7 an hour and health care for a single adult was around $100 per month. A residential lawn cut was between $20 to $25, and a residential push in the winter was about the same. A ton of salt was about $25 and a snow blower was around $400. Now, keep in mind these numbers are out of Metro Detroit … the first large US city to file for bankruptcy (July 8, 2013). If anything, these prices are high. However, when compared to cities in adjoining states we are far from near the top when it comes to economies, wages and cost of living.
Now, forward to today. Those of us in the trades usually spend most of our revenue on our people, which includes the cost of health care, education and training. After this expense, most contractors spend a large percentage of revenue on equipment (which includes gasoline, maintenance and insurance) and materials (like salt, brick pavers, etc ). None of these costs have remained the same, even by a close margin. For example, the $5-per-hour worker is closer to $20. The $20,000 truck is closer to $65,000 (and maintenance costs have escalated, as well) and materials like salt are easily $85 to $100 per ton. Most of the key expenses on the contractor’s P&L statement have gone up about 400%.
So this begs the question: Why isn’t the $20 or $25 lawn cut closer to $100? Why isn’t the residential driveway closer to $100 per push? And if we use this same logic when it comes to commercial projects, then why aren't the clients with parking lots and walks that spent $100,000 in the 1990s spending closer to $400,000 today? And if you’re a business owner or top player on your team and you were making $100,000 per year in the 90s, then why aren’t you making $400,000 per year now?
I wish I had the answers to all these questions. What I do know is all of the hardworking snow contractors are worth every penny. You are “first responders” who keep the roads, parking lots and sidewalks safe in your communities, all the while knowing you’ll probably get sued and have to defend your efforts.
My call to action: Keep working hard, dig deep into your numbers; hire the best, educate yourself, your team, and your clients; and become confident in pricing your work in such a way you can afford the best people, materials, equipment and make a good living for yourself.
Why? Because owning or running a snow company is a greater challenge than most will choose to ever undertake. Therefore, you are worth it.
A 2010 Leadership Award recipient, Troy Clogg is the Founder and President of Troy Clogg Landscape Associates, Wixom, Mich., and a Snow Magazine contributing editor.