Seeing Green

Features - Finance & Accounting

Residential accounts could prove to be a valuable financial safety net for your snow ops. Snowfighter Mike Callahan shares how he leveraged these accounts in his ops.

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April 20, 2020

© Anne Kitzman | adobe stock

Commercial snow pros typically shy away from handling residential accounts, mostly because they’re viewed as labor intensive and low profit margins. In fact, many see residential work as the domain of the truck-and-a-plow guy, going from property to property for $20 a push.

Those professional snowfighters who do tend residential accounts gravitate toward home owner associations (HOA), condos and private communities.

However, Mike Callahan, who’s spent a quarter century pushing snow in Upstate New York saw residential accounts as a solution to a much bigger logistical problem

About five years ago, Callahan was looking to take some of the risk out of securing the salt he needed winter snow and ice management. “[The problem] was how do you estimate your salt need when facing inconsistent winter weather patters year after year,” he asks.

Part of the salt solution lies in establishing a network of contacts throughout the industry who he could purchase salt from in a pinch, like during a particularly long or consistent winter. However, Callahan recognized he needed liquid cash flow to purchase the salt when the need presented itself. That’s where the residential accounts came into play.

Callahan and his team secured around 600 residential driveway contracts and subbed nearly all of them out to service providers. These residential accounts needed to be prepaid, in full, by Nov. 1 to be serviced throughout the winter.

“It was a way to create liquid cash flow and secure residential landscape and lawncare companies from the summer,” he says. “We were able to pull in several hundred thousand dollars in liquid cash flow from those residential clients. That allowed us to go out and put deposits on the tonnage of salt that we needed so we’d never run into a [salt-deficient scenario] again.”

Mike Zawacki is editor of Snow Magazine.

For More…

For more tips and insight on this topic, CLICK HERE to check out Mike Callahan’s recent appearance on The Snow Magazine Podcast.