Expanding Business Services

Most contractors and landscapers in cold weather climates view the seasonality of the business as both a blessing and a curse. For more than two-thirds of the year, days are long and work is hard, making for a welcome reprieve during the winter months. Then again, providing a constant flow of work

Adding another realm to your existing business makes sense, but how do you market a new set of service offerings to your existing clients? What factors should be considered before making the leap into snow and ice management?

Because every market is different, some questions will depend on the specific needs of your area; however, sometimes the most valuable information is gained by learning from those who have successfully added snow and ice services to their own business.

Structure for Success

Douglas Freer, CSP*, owner of Lawn Lad, Inc., started the landscape business 15 years ago. About five years into the business, Freer decided to expand offerings to include snow and ice removal services responding to requests from residential customers for the added service. At that time, snow plowing accounted for less than 10 percent of his total revenues.

"In hindsight, snow services were more of a distraction to our core landscaping business, and it was actually costing us money," said Freer. "However, I felt it was a necessary service to provide to please our current landscape customers."

After 10 years of overlapping seasons between landscape and snow, Freer had to make a choice: "We couldn't continue to operate without a solid plan that addressed the changes in the season. Without upgrading equipment and committing completely to snow services, I felt we were better off getting out of the snow business.

"With a lot of careful planning and a solid business plan, I created Blue Moose Co, Inc., a second company that would handle only snow-related services," explained Freer. "From the start — and without an ounce of regret — I structured the snow and ice portion of the company as a completely separate business segment."

By structuring each of the two business units as its own unique profit center, Freer is able to gauge profitability of each segment and price services accordingly. He maintains separate equipment for each business segment and has two independent fleets maintained and ready for the demands of both landscape and snow and ice.

In fact, one of the most critical differences between the two segments is the nature of the service. Snow and ice removal is an emergency service demanding an immediate response time, while most landscape and construction services are not. For that reason, Freer has salt trucks and other snow-related equipment ready for use whenever a snow event necessitates their operation, even during the transition months of November and March when landscaping crews might also be working.

"Success comes by having backups," noted Freer. "We have more plows than trucks and more trucks than drivers — when that storm hits, we're ready. An equipment malfunction is not going to keep us from doing our job."

For companies considering adding additional lines of service to their business, Freer recommends that the move be made deliberately. Business owners should understand what impact the cost of the added service will have to their core business and determine whether it will complement or distract from the core business.

Realize How to Make Money

Snow removal services may seem like an obvious, almost seamless fit for seasonal landscape and construction companies. After taking a closer look, however, many business owners find that the primary customer base will very often change for the two business segments.

"Although it may come as a surprise to business owners looking to expand the breadth of their own business, our two segments rarely overlap even when it comes to our customer base," said Bob Smart, CSP*, president and founder of Yard Smart, Inc., based in Cleveland. "We primarily service residential customers on the landscaping segment of the business whereas snow and ice is mostly commercial."

In addition to understanding where to look for new customers, Smart also places significant value on carefully qualifying every potential new client. He recommends considering these questions:

• How did they hear about our company?

• Do they fit our service model?

• Are they within our service area?

• Do they have one or multiple locations?

• Do they have a "zero" tolerance policy for snow accumulation?

• What services do they want?

Business owners new to snow and ice services should also review various types of contracts and decide which option best fits their needs and those of their unique marketplace. Contracts may be determined by any number of factors including hourly rate, per push, per occurrence, per service, monthly retainer fee, and per inch, as well as seasonal and limited seasonal contracts with service caps for maximum number of inches or occurrences. The main factor to determine when deciding on structuring client contracts is return on investment.

"Every contract has benefits and consequences," said Smart. "The best of both worlds is an even split between a variety of contracts which protects the company from extreme conditions including a record number of snow events or none at all."

Utilizing a variety of contracts minimizes a company's risk by providing greater flexibility with payments. Per inch or per occurrence contracts protect a company in a season full of snow events, but provide little revenue in a season of minimal snow. Incorporating a mix of contracts, so that some customers are set up with monthly minimum charges while others are structured on a per event basis, helps to disperse the risk factor associated with the volatility of snow and ice removal services.

"The biggest mistake business owners in this industry make is failing to recover overhead," explained Smart. "Regardless of Mother Nature, or employee retention, or improper estimating, at the end of the snow season, companies must, at the very minimum, recoup expenses."

Power of People

So much can be said for learning from the success — and, at times, failures — of others in the industry. To understand what to do and what practices to avoid, it's important to talk to and learn from companies that have successfully added snow and ice management services to their seasonal business.

In addition to talking to existing customers to understand their needs and expectations when it comes to snow removal, business owners serious about adding a snow segment should also explore the benefits of joining industry associations such as SIMA, the Snow & Ice Management Association.

Jim Monk, CSP*, president and founder of Markham Property Services in Toronto, explains, "After becoming involved with SIMA, my management team and I had the chance to visit successful operations all over the United States and Canada. We could relate to problems facing other companies and recognize solutions that could also work for us."

Not only does Monk stay involved by serving on a SIMA sub-committee, but he also attends the annual SIMA Symposium, regularly seeks the advice of other members, and reads the association publication and newsletter.

As the professional association for the snow and ice industry, SIMA's membership includes contractors, service providers, manufacturers, property managers, municipalities, and educational institutions.

For more information about SIMA visit www.sima.org , or call (814) 835-3577.

* Recently introduced by SIMA, the CSP (Certified Snow Professionals) Program provides a recognized set of professional standards for the snow and ice industry.