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Any thoughts on Expansion?

Discussion in 'Business Fundamentals' started by Snowpower, Sep 6, 2008.

  1. Snowpower

    Snowpower Senior Member
    Messages: 636

    What did you do when you got to the point where you knew you had a choice. To expand, or stand on what you have.

    Any tips? Success, or Horror stories?
  2. Pristine PM ltd

    Pristine PM ltd PlowSite Veteran
    Messages: 3,794

    walk before you can run.

    We expanded faster then we would have liked, but getting through it was a great relief. The problem we haveis that we need more trucks in the winter than summer. So we have to expand in April or have wasted resources.

    The problem is also having work for 1.2, 1.5 trucks. It is hard to carry the unused resources of the truck to expand. It is rare that you will expand into a fully equiped route... it may take months to fill that route for a year.
  3. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    You getting too big SnowPower?

    My line of thought is this. If I can bid a job that can pay for the equipment, labor and me in a season, then I go for it.

    Example: I want to bid a large parking lot. I look at it and think of a number. Then I go on line and see if I can find used equipment that could do the job. If I find it, I subtract the cost from the yearly total. Take out labor, fuel, etc out of the total. What is left is my profit. If I'm happy with it I go for it.

    I have the ability to fix most of the stuff that breaks, so I'm not to scared of used equipment. If I pay for it the first year, it doesn't matter to me if it sits all summer.
  4. Snowpower

    Snowpower Senior Member
    Messages: 636

    I'm at the point where I could add a truck, or add a sidewalk crew, or get involved in subcontracting, and this year Im gonna stand pat, but I should be making some moves.

    I'm a little intimidated I suppose. Not because I dont have the opportunities, or resources, or knowledge to do so.

    I just wondered if there was any stories others would like to share.

    We all started with one truck and a shovel at some point.....

    Generally speaking.
  5. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    I take it you don't have any employees during the winter or summer?

    I went from 1 to 4 this summer. There is a bunch of stuff you have to do to hire the first one, but after that it is pretty easy.

    You can loose a little sleep worring about your equipment, if they did a good job, customers calling, etc. The nice part is to have people out there making me money while you do other things.
  6. Snowpower

    Snowpower Senior Member
    Messages: 636

    Summer wise I have a few years before considering employees. Winterwise I am always booked with one truck. Now I have two trucks.....only one currently equipped for snow, and a lot of bids Ive passed on because I dont have the manpower mostly, and just dont want to make big moves right now.

    Pristine makes some good points as well.
  7. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    did last year then thought better about it and took a couple steps backward.
    expansion isnt the hard part i think paying for it and making the expansion worth your while is what it comes down to. Think you also have to be determined that this is what you want to do and set your mind to it.

    Isnt for me, at least not now i have other priorities so no expansion here. If it happens it will be more by accident ie. because i bought some land and had a backhoe kicking around from clearing it. or i bought another truck because i wanted a new vehicle and decided to throw a plow on it. Bought a little apartment building and wanted something to clear walks with. that kind of thing. more of multi use and because it exists than by planning.
  8. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    You have to do what feels right to you AND what you want to get out of life/business/family.

    Some people want to have 1 job and work hard at it all life and make a living. Some people want to be Bill Gates. Most people fall somewhere in between.

    The way to make money is to do what everyone else ISN'T. This doesn't mean charge 3x the going rate (although that would work if you land any business:nod:), but to contract when others are expanding, to expand when others are contracting. You must do things differently to make the bigger money.

    Ask yourself the hard questions? Can I do this better than everyone else by doing ti differently, and if so, what? Can I/Should I use a loader instead of a truck. A big truck instead of a pickup truck. A quad instead of a shoveler. Etc.

    You simply aren't going to get much more or much less than the going rate for any lot/drive. So, how do you make more money? Do it quicker, faster and/or more efficiently. If I can do the lot in half the time as you, I make more money. If I can do it with 2 guys instead of 3, I make more money. Make your capital work for you.

    For example, the first guy around to adopt a more efficient plow (let's say a V plow) makes a lot more money than the next guy to do it and certainly more money than the last guy to adopt it. But the first guy took a big risk and got rewarded for it.
    Sometimes those risks don't turn out. But if you don't take a risk, you simply can't/won't get rewarded.

    Another example. Nobody is buying pickup trucks right now (in general, over the nation). Trucks are crazy cheap right now. It makes the math a lot better if you are paying 20k for a truck instead of 40k like last year. And the reason truck sales are in the toliet? Everyone is afraid to expand or to replace. Don't get me wrong, it might be the wrong move, you might lose everything, but it might be the right move. Don't just dismiss it out of hand because "everyone else is doing it".

    The time to invest is when it makes you want to throw up.

    Now, to get back to point #1, is maybe that level of stress is not what you want or desire for your life. And that's something important to consider.
  9. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Well I don't think I can beat LoneCowboy's posting (excellent, btw)

    A simple trick I can offer is this: you're booked all the time, right? It might be that you're priced just slightly low of what you should be getting. If you were to increase the cost of plowing by 10% and your clientelle dropped by 10%, you're making about the same $ for doing less work because you've weeded out those who don't truly value your work. Then it's your choice to bring on a few extra accounts in the newly-found free time. This tip was suggested a while back somewhere on here (I can't take the credit!)

    I also like Quad's idea about letting the account pay for equipment. When you know the annual expenses are paid by a new client, your only concern needs to be what you do with the truck over summer. Many units can be used in some other money-making venture throughout the year (ie: backup landscape truck, mowing crew, errand truck, etc). I can't tell you what having a spare truck has been as an asset when the ONLY landscape truck I own was in the shop for something! Just having a Tahoe to pull a trailer or plow is a huge value to me, and it's a personal vehicle 90% of the time.
  10. Snowpower

    Snowpower Senior Member
    Messages: 636

    Good post B. and medic.

    The stress levels are worthy of consideration.

    Im short on words as Im still getting my head on this am, and watching the news shows.
    Last edited: Sep 7, 2008
  11. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    That's a mistake right there. Stop watching the news shows.

    I like Medic's idea of raising costs. I'm sure you have already done it if you are full. Someone calls and wants a quote. You go higher than you normally would because you are already full or making enough money. Then all of a sudden they say you got it. Now what do you do. The good news is that you are making more money per hour than normal. Go buy a truck and hire someone. You must already have someone in mind if you are considering it. Get a cheap truck and a couple of good paying jobs for him to work on this year.

    Hire them. I just did the paper work on a new guy I just hired. He filled out the one page form with his info on it. I went on line and told the state I hired him. I went into my payroll program, entered his info and wrote him a check. At the end of the quarter, I will send in his (and others) tax money.

    Bill the employee out at 1.5 times his labor rate. If you pay him $20 then you bid him out at $30. That covers the taxes, etc.

    Snowpower, there is nothing like getting a check from someplace that you did not plow. Yea, you got the bid, you checked in on him, you bought the equipment, but you didn't drop your blade. I have a two man mowing crew that uses my equipment and my customers, my insurance, etc. I send them out on Monday-Thur. Every two weeks I bill the customers. I get a huge check. I write their checks and I keep the rest without mowing one blade of grass. In the mean time, I'm either doing installs or sitting in the back yard. Checks keep coming in.

    Go For It!
  12. Ipushsnow

    Ipushsnow Senior Member
    Messages: 314

    The way I am expanding is gradually. Started as the typical one man operation and was fully booked the first year. The next year I added a truck and got that one 75% booked. So I have 2 trucks, truck A is fully booked and does nothing but plow, truck b spends 75% of the time plowing, and then spends the other 25% of the time salting all the lots both trucks plowed. Works out VERY well for us.

    I was hoping to add a third truck this year and have 2 trucks that plow 100% of the time, and one truck that plows 50% and salts 50%. The salt shortage put a stop to that, don't want to sign contracts I cant get the salt for.

    I am trying to be careful and expect the worst, what happens when a truck goes down. Well, the other trucks can jump on the broken down truck's accounts right away and the salt just gets put down a little later than usual, but everything gets done.

    Future plans are:
    I am hoping to upgrade to a mid weight dump truck in a year or two and save the running back and forth from the salt pile to the jobs. Just load the sucker up with 6-8 tons and go salt like crazy.
    If we just get a light snow or ice conditions I can just jump in the salter truck and go salt everything myself in one swoop. The other good thing about a dump is if we get a wet heavy one and one of the 3/4 tons is having problems pushing it can come to the rescue. Plus it opens up bidding larger lots because it can push greater/heavier snow.

    So far things have gone well with the exception of the salt issue this year delaying my expansion plans for a year. I am keeping my fingers crossed and wish everyone else that is working on growing their business good luck!
  13. NoFearDeere

    NoFearDeere PlowSite.com Addict
    Messages: 1,709

    Very good points here. The biggest downfall I see is people trying to compete with a specific person or business. They get so caught up in trying to "one-up" the other person than being smart and making good financial moves and who wins that deal? One more company down the drain. I have 4 trucks for snow but dont need that many in the summer. Its just something that I have to deal with. I would say that in 2008 compared to 2007, we have grown atleast 55%. Since I have had this year's growth, i'm not as concerned with adding a 4th truck to the fleet for this winter.
  14. mowerhands

    mowerhands Junior Member
    Messages: 2

    Wow, never turn down work, theres alot of people out there that will do sub work pretty cheap, and even if you are paying top dollar, who cares. Make sure they're on the same page as you, get them there ontime while your regular trucks take care of your repeat/important customers. If needed send a rescue truck. I cant believe how many people are turning down work these days?
  15. Ipushsnow

    Ipushsnow Senior Member
    Messages: 314

    I agree with the philosophy that in order to be successful you have to sometimes do the opposite of what everyone else is doing. I think now is a perfect time to do that with the current salt situation. While others are hemming and hawing and waiting for prices to come down or to see if they can find something cheaper, I am buying every grain of salt I can get my hands on. Bagged, bulk, solar, whatever. As bad as prices are now, they will be much worse when the snow flies. When others run out, or walk away from their contracts, or just say F it for the year and not do any salting I will be there to pick up the business, or at least sell them salt for a healthy profit. I am taking a risk, I know that, but I think with even just an average winter salt will be like gold this year. And the ridiculous prices I am paying now for salt will pale in comparison to what it will be come January.