Know Your Numbers

ASCA Update - Director’s Note

October 26, 2022

While talking shop with ASCA members from around the industry, the topic often turns to pricing. We’re all aware the only requirements to get into this industry are a pickup truck and a used plow. This low entry point invites a lot of people, but by no means does it mean they’re responsible professionals.

As a result, it’s not unheard of to lose business to a low-cost newbie in your market. They sway those less savvy and sophisticated clients with dreams of high-level service at rock-bottom prices. The fact is many clients, and even members of our own industry, don’t completely comprehend their financials or understand how to calculate them accurately.

Now, I am not going to lecture on financial formulas. The truth is every contractor conducts his or her winter ops with variables unique to their market and strategic outlook. Therefore, the most valuable advice I can offer is to sit down with a financial professional or a solid snow industry business coach to affirm you are earning the correct profit margins for your services and not just covering your expenses.

However, there are some basics everyone should abide by as we head into Winter 2022-23. For starters, in your proposals account for your costs and then add for profit. Expenses include everything you spend money on to make your business operate, including employee salaries (don’t forget yours), equipment leases and loans, fuel, insurance (auto, CGL, workers comp, medical, etc.), equipment maintenance, material costs, building leases/mortgages, technology expenses, clothing purchased to outfit staff, copy paper, printer ink, even software subscriptions. The list goes on, but you get my meaning.

Too many industry professionals fail to calculate the true costs of managing snow and ice throughout not only the winter months, but the entire year. You’ve all heard the cautionary tales of contractors who won the jobs but then went out of business halfway through the season because they ran out of money. A part of that story often left out is those abandoned clients must scramble to hire another contractor mid-season. It’s a near impossible (and very costly) task, and the collateral damage is the blemish left on our entire industry’s professional reputation.

While we all appreciate getting the lowest cost for a product or service, that cost can’t be a fantasy. Remember the old axiom “You get what you pay for.” To avoid the fallout, the contractor must educate clients about the current business climate and challenges of the snow and ice industry, as well as provide transparency with the numbers included in winter proposals.

And if they balk at the bottom line in your proposal, remind them the valuable service you provide under challenging and stressful conditions so they can keep their doors open for business, their employees, and clients safe, and reduce their exposure to costly slip-and-fall claims. It’s not a crime to earn a profit for the service you commit to providing. However, it’s reprehensible to throw a figure at the proverbial wall and cross your fingers everything works out for everyone come spring.

And if property owners and managers require additional motivation, provide a cost comparison between your bottom line and the cost of a snow professional hired in late December to cover for a contractor who’s just gone out of business.

As always, feel free to reach out to me with any questions, thoughts, or feedback. And have a safe … and profitable ... Winter 2022-23.