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Business Case for a Cool Truck

Discussion in 'Business Fundamentals' started by FlannelOne, Nov 5, 2003.

  1. FlannelOne

    FlannelOne Junior Member
    from WNY
    Messages: 6

    I'm new to the community and want to start out by saying that I've NEVER been to an on-line community that deals with people so well. I look forward to contributing.

    I'm trying to make a business case for buying a used truck and plow to plow residential in WNY (quickly). I'm looking for someone to tell me where I might be wrong. (I don't want to join SIMA until I know if it is worth my while to even plow)

    Annual Expenses:
    truck & plow 3,000
    advertising 100
    maintenance 1200
    com truck ins. 500
    gas 500
    billing/ collections 100
    cell phone 300
    total $5700

    Annual Income:
    50 accounts x 15 trips x $11 = $8250

    Annual Money to Pay Me
    $2550 ($42/hr when there is work to be had)

    * $11/push is what the guy in my "hood" gets. Low huh? That's the market. I figure 50 accounts is the max I can handle in 4 hrs. Driveways are short and close together.

    Do you think this expectation is reasonable? Did I leave any major things out?
     
  2. Snoworks

    Snoworks Senior Member
    Messages: 466

    Do you have the truck all ready, or is the $3000 for truck and plow? If you have the truck, the $3,000 should be ok. All other items can fluctuate, but your numbers seem ok. Collections would be higher, even if you are doing it yourself. Say 10 hours of work to get the entire year done for invoicing and collections.

    You dont have any time/$'s for signing contracts? This should be figured in IMO.

    If you are going to advertize in the paper, you will spend more than $100.00. If you are going to hand out fliers, the $100.00 may cover it.

    How office expenses: Computer, printer, etc

    As for the $11.00 a push for a driveway, thats the lowest figure I have ever heard of or seen on this website for plowing a driveway. Just because someone else is charging that rate, does not mean you should. Everyone has there own individual overhead, etc. But to me that number is off!

    What kind of contracts are you going to use, seasonal or per plow?

    Can any one from his area, give some feedback on pricing, to get some averages!

    Chuck B.
     
  3. FlannelOne

    FlannelOne Junior Member
    from WNY
    Messages: 6

    I don't have the truck/ plow yet. I plan on $3,000/yr to pay off a loan on both the truck and plow. As you can see, I plan on starting out with a older used truck.

    I got a really good seasonal contract template to use with my accounts (from this site) and will dig up a per plow contract later.

    IMO = In My Opinion?

    I see your point about not offering the same bargain basement price as the guy up the street. I read that a zillion times in these posts and forgot to apply it to my situation. Thanks!
     
  4. cat320

    cat320 2000 Club Member
    Messages: 2,223

    I have to agree charge what you have to get and not one some one else is and if the customer says that he can get that guy for $11 just say That you are a proffetional and will be there the other guy might not .
     
  5. wyldman

    wyldman Member
    Messages: 3,265

    For $11.00,I wouldn't even start the truck,let alone plow.Charge accordingly,so you make good money.
     
  6. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    You don't have General Liability insurance in your figures. Also, I'd check on that truck insurance rate; you'll need full coverage since it's financed.

    Fifty accounts in four hours? If they're that small, then I'd be closer to agreeing with $11 - that would be $137.50 an hour.
     
  7. FlannelOne

    FlannelOne Junior Member
    from WNY
    Messages: 6

    General Liability Insurance, oh yes. I forgot about that. Thanks for catching that one.

    I'll grab an estimate off this site for General Liability. My agent can give me the full truck insurance rate.

    This really is a great active community. I can't believe that so many people are giving me so much good info so quickly. Thanks!
     
  8. CARDOCTOR

    CARDOCTOR PlowSite.com Addict
    Messages: 1,310

    5 minutes a driveway?

    what about walks,steps
    do you have to backdrag any garages

    that per push

    what you depth per push

    $11.00 per drive WOW

    payup payup



    john
     
  9. snowjoker

    snowjoker Senior Member
    Messages: 283

    FlannelOne where about's in WNY are ya?
     
  10. Snoworks

    Snoworks Senior Member
    Messages: 466

    Regarding commercial truck insurance for $500.00 yearly. - I thought this was your general liability figure.

    You will be spending approx. $400- $600.00 a year for just general liability insurance. As for commercial plowing insurance that could cost you a couple of thousand for the year!

    I know my 1998 Sierra was $2,800 for the year.

    Chuck B.
     
  11. FlannelOne

    FlannelOne Junior Member
    from WNY
    Messages: 6

    The driveways here are about 50 feet long (if nothing is parked in them).

    It seems like most people don't use their front steps/ walkway. Most plowers don't do them (unless requested). I didn't price or leave any time to clear them ... but maybe I should leave a little time in case even 10% of the customers want it done. Good point. Same thing about backdragging. Eveyone doesn't do what I do at my place.

    I used a 3" trigger in my estimates. I guess everyone won't sign on to the same thing huh? Sounds like I'll get some at 3" and some at 2" or bare, etc.

    I still can't figure out how the local guy makes enough money to cover a brand truck and plow at $160 seasonal contracts. Oh well, that's his situation, not mine.
     
  12. FlannelOne

    FlannelOne Junior Member
    from WNY
    Messages: 6

    P.S. I'm located in Rochester, NY (town of Greece)
     
  13. micah79

    micah79 Senior Member
    Messages: 303

    FlannelOne

    I'm glad you aren't in my area.
    By the way, has anyone ever called you "Johnny"?

    To give credit where its due: At least you have a plan.;)
     
  14. Adams plowing

    Adams plowing Senior Member
    Messages: 195

    flannel one you might look into erie ins. there about the cheapest for gl ins. and i believe their in ny state. $11 isnt enough for me to go knock the snow off my truck. let alone go out at 3 or 4 am to drop my blade. i would recomend going with atleast $25 or $30 per push on those drives becides if you can get by on 50 drives pushing them 15 times at 30 you could only have 19 customers and push 15 times and make the same as you would with 50 at $11.... work smarter not harder...
     
  15. Snoworks

    Snoworks Senior Member
    Messages: 466

    Flannelone - Sometimes you get what you pay for, if you know what I mean.

    There was a plowing company in my area that did only residential driveways; he had between 600 to 800 drives under contract. He would send out contracts to every home in specific cities. His seasonal plowing rate was the same for large and small drives = $180.0 for the season.

    He had been around for a long time, and he got bigger every year, I wonder how! Well to make a long story short in December of 2000 here is what happened.


    It snowed 4 times in the first two weeks of December. This company folded up shop and called it quits for all residential work. It snowed anouther 7 times in december and all his customers had enough. They contacted the proper athorities, and he was prosecuted. He was found guilty and was ordered to pay back over $260,000!

    He tried to gamble with people's money, and tried to make his contract work only for his benifit. For example:

    -His plowing starting and ending dates were December 1st to March 1st. There are usually two snowfalls on avr., between Nov., March and April
    -He would charge extra for plowng out of those dates.
    -He also had a clause that stated he would only plow when 2" of hard pack snow/or 3" of fluffy snow had fallen. Well this clause alone takes about 4-5 plowing events out of a typical season in the Suburbs surrounding Chicago. We get about 10 plowable snowfalls a year.
    -He also had a clause that stated, that if he did not show up he would pay $20.00 for each time he was absent! So with the way he had his contract written he basically only had to come out 3-4 times,tops, for that $180.00, and he could never show up and pay them back up to $120.00. Hey, thats $80.00 profit min. for doing nothing. Times that by 800 and your year is looking preaty good. By the way, as far as I know, he never gave one penny back for not showing up during a snow event.

    These were just a few of the crazy things this contractor did. It was very hard to break into the business with this guys agressive marketing and attractive pricing.

    But you get what you pay for. Now I have about 120 customers that used to use his services, and they love the level of service I provide. On the flip side, it did effect alot of people with regards to plowing contractors. Every other phone call, regarding residential plowing, this guys business gets mentioned. No one wants it to happen to them. I just have to sell my company and give referals if they are really skeptical.

    Chuck B.
     
  16. ADLAWNCUTTERS

    ADLAWNCUTTERS Senior Member
    Messages: 212

    Welcome first thing don't worry about what other guys are getting .i was charging 40.00 to 50.00 per month for driveways over 20 years ago.I would charge a min of 60.00 per month. If it's a per time i would charge a min of 20.00 per time and thats if its close and on my route..Most important you are going to need a serious back up partner because your truck will break..don't be greedy only take on what you can do.If you have more questions call me after 5.00pm at 716-830-8808.ask for al .
     
  17. FlannelOne

    FlannelOne Junior Member
    from WNY
    Messages: 6

    micah79: I'm missing what you mean about calling me "Johnny" .. but no, never been called that.

    Snoworks: That's a pretty ugly story. The guy must of spent all his time just to figure out how to word all those loopholes - complicated! I guess he didn't have anytime left to plow. Maybe that's why he never showed up? Hopefully the people whose business he absorbed made enough $ to eat until he went under. I get your point about getting what you pay for.

    ADLAWNCUTTERS: Thanks for the offer to call. I'll give you a ring in the next few days. I'm trying to find a good used unplowed F250 in rust free PA and will be on the road to hunt for one (if all works out).
     
  18. micah79

    micah79 Senior Member
    Messages: 303

    I'm just saying that I don't think it is right to base your bid soley off of the other guy. You aren't doing yourself or the business any favors when you do that. Do a search on Johnny Lowballer and you will see what I'm getting at. Don't do it man ! Fight the urge! lol:D
     
  19. Roger Dodger

    Roger Dodger Senior Member
    from nw Pa.
    Messages: 240

    It's better to do a push for free/charity than to lowball. I had an old gent on fixed income that wanted to set my price to $10 per show. A mid-aged woman felt $5-6 was adequate to do her double-wide drive. I did the old gent a favor and did him a charity effort since his health wasn't up to shoveling and his wife recently died, to make life worse for him. As for the woman, I told her she needed to get a second snowshovel or a snowblower that her mother could use to help pitch in with! In the end, the old gent cut down a tree and gave me the firewood from it (cut to size too!).
     
  20. EIB

    EIB Senior Member
    Messages: 258

    I won't drop my plow for any less than 15.00, and that is if I'm in the area doing others. I bid on drive at 20.00 and the customer tells me that the other guy did it for 15.00. I said that she must have been unhappy with the other guy, to want a bid from me. She told me he would back into the drive drop the plow and drive out, leaving about twenty feet of the drive undone. I told them how I do it and I now have to contract at my price. Service is the first thing I sell them on and after it's the price. Most customers go for that. Some still want the lowest price, but that is not me.