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renew contract yes or no ???

Discussion in 'Business Fundamentals' started by iceicebaby, Oct 8, 2012.

  1. iceicebaby

    iceicebaby Junior Member
    Messages: 5

    Hi, I am the owner of a snow removal company in southern NJ. I do light grass cutting in the spring-fall & snow removal in the winter. I have a very large commercial account in NJ that brings in over $100,000 depending on the amount of snow. I use ALOT of my grass money towards the end of the season to "fund" the snow removal [hence being behind on my bills]...buying new equipment, fixing any equipment, getting all the plows ready, buying salt etc. Not to mention it is SUPER STRESSFUL. I can be down there for days straight when we do get a storm and its on my chest when/if equipment breaks, people dont show up for work, whatever the "problem" is since Im the owner its resting on me. Im ahead for a few months then falling behind again & for bringing in that much money, I dont think it should be that way. My overhead is alot since its such a large account. Payroll is high, expenses are high, tax on the money is really high !!! So my question is Im thinking about not doing the commercial account this yr. Of course I would lose the contract and thats whats making me want to keep it. I am young (30yrs old) and could do small residential/commercial account right near my home, have ZERO overhead/stress, no fixing equipment & trucks till 2am, and maybe actually "enjoy" the snow for once. Also if i do NOT do not do this contract i can downsize my shop (expensive rent) that i only keep cause of snow stuff i need to store. BUT when you get a check for $100,000 it is nice to be able to pay somethings off . im TORN please give some input, Ive been going back & forth since last year !!!!
  2. Polarismalibu

    Polarismalibu PlowSite Fanatic
    Messages: 9,681

    To me it sounds like you are not biding it high enough to cover all your expenses. If you can cover your expenses I would keep it IMO
  3. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    I would get the client to space out the payments so you can get some cash flow. No need for you to be on the hook for all $100,000.00 at once.
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Did you set it up that why or did they? Even I wouldn't go for that deal.
  5. iceicebaby

    iceicebaby Junior Member
    Messages: 5

    NO, Its not all at once....its overall for the season, theyre billed out per storm & per storm I can make close to that. Its SEVERAL properties including apartments.
  6. nor'easter1

    nor'easter1 Senior Member
    Messages: 138

    Well after reading your post I think you already know the answer bail on it. You have far to many negatives in dealing with this account vs. the positive. I learned a while ago that chasing a number is simply chasing a number. At age 30 you have god willing the most productive years ahead of you do what you want to. As you can see from the posts here accounts, men, machines come and go its a thank less job no matter what some people say. I down sized my business two years ago due to the stress and nonsense that occurs during events. While I might have lost in theory some money, at my age, time behind the wheel, and realizing family is number one, I am all the more wealthier for the move. I actually look forward to the process again and mountains of bills and stress are gone. Best wishes on your decision just giving my two cents from experience.
  7. leolkfrm

    leolkfrm PlowSite.com Addict
    Messages: 1,338

    after all the expenses are you making a profit that gives you a repectable paycheck for your investment? if not dump it...if you are then you need to look at your procedures, money coming in should be putting replacement parts on the shelf..etc
  8. forbidden

    forbidden Senior Member
    Messages: 392

    Find a sub to handle it, have your cake and eat it too.

    FISHERBOY Senior Member
    Messages: 542

    MANNN thats a tough one, i do same thing every season also. if u giv up the plowing can u increase yourself doing lawn&landscaping?? and make a good living, just food for thought.
  10. northernsweeper

    northernsweeper Senior Member
    Messages: 397

    Sounds to me like thats one, only you can answer. I think most companies go through the feast or famine thing at some point. You just keep pushing and trying to make it better, until you just don't want to do it anymore. Then you do something else. Especially if your a young man like you. Good luck to you, whatever you decide.
  11. merrimacmill

    merrimacmill PlowSite.com Addict
    from MA
    Messages: 1,822

    This question is something that I go over routinely. Forget about the equipment and money, just the liability alone is enough to put someone over the edge stress wise on these large accounts.

    But what has been interesting to me over the course of several years of growth, is that I felt like I got into a position of uncontrolled growth, not financially but instead operationally. I was able to get the bigger accounts and provide quality service, however, with each additional account it was a lot of additional stress. Within the last couple of years, I realized that I was going about it all wrong. I could not keep adding accounts to a business that had the administrative and managerial capacity of only myself running around trying to do everything that mattered alone. If I stayed on that course, there would have been a breaking point.

    This is when I realized that I need to delegate responsibility to the employees, which required me to build systems and procedures for the employees to follow.

    The most common thing I hear from others in the industry is "I'm going to downsize because I'm so sick of employees never doing the job as good as I can do it myself." This made me really think, why can they not do it as good as you? Everyones first thought is "they're typical employees, don't care, lazy, and I'll be lucky if they even show up". And many times, I would fall into the category of saying these same things, until I asked myself "have I provided them with all the tools/knowledge they need to complete the job exactly as I would?" And of course when I really thought about it my answer was no. What would have happened if the founder of McDonalds said in his first year "I'm going to downsize because I can't get employees to do things as good as I can."?

    Next time anyone is at McDonalds, Dunkin Donuts, or any similar establishment notice every action of each employee there. They have those companies so systemized that the have created a consistent customer experience across the entire world, which is very impressive. Every detail of what is stored where, who does what and how, and how customers are greeted is standardized and written into manuals of processes. This also reduces the level of significance each employee holds in the system, thus making them more replaceable, and less talented, which means they can be paid less. For example if you have a guy who pours coffee, and he quits, you only need to hire and train someone to complete 1 single task which is pouring that coffee. Pouring coffee is much easier to teach someone than making the entire cup of coffee start to finish is. When I realized this was when I started to get really amped up about business operations and how important they can really be.

    Now of course given the skilled nature of snow and ice management, we can only bring that mentality so far due to the extreme dynamics involved in every process. However, the whole thing can be systemized to make YOUR life easier.

    To say it more simply, create a set of procedures for every action, motion, expectation, and company value that you want your employees to follow. I'm talking about everything down to how not to plow snow onto islands, what direction to push the snow in each lot, what percentage of the blade width to use on what depth of snow to prevent spillage, how to record and turn in service times, what speed exactly to drive the salt truck at to achieve proper application rates, etc.. I can go on and on about this as the more I study the flow of business processes the more fascinated I become with it. 5

    Now to the financial part, there must be a mistake here. If you are billing an average of 100,000$ per year, but still not breaking even (by the sounds of your post at least), then either it was bid wrong or the material and labor usage is being mismanaged to waste.

    It really all comes down to choice. Either identify weak spots and learn to fix them which will allow you to manage the account, employees, equipment maintenance, and finances better, or walk away and learn from it for the future.

    I know my answer got a bit broad there, but in an effort to provide general useful information to the forum I have a habit of doing that... And I wasn't by any means using the word "you" responding to the original poster, more just a figure of speech..
    Last edited: Oct 10, 2012
  12. dieseld

    dieseld Senior Member
    from 90210
    Messages: 627

    Awesome post Collin. Spot on.
  13. juspayme

    juspayme Senior Member
    Messages: 116

    colin has great points. There are some people who just are not the type to have large operations. You see burger kings and then you see mom and pop places who do just fine and the owners look happy. If you decide to be a big operator, you need to set your business up consistent to a burger king. If you feel like smaller is more for you thats fine too. Being a big operation takes alot of time out of ones life and is not always better. You as an owner should always feel in complete control of your business and it should always be better than working for someone else. otherwise you have to ask yourself why am I in business.
  14. shovelracer

    shovelracer Senior Member
    Messages: 525

    This is sort of like guys getting hung up on large construction jobs. They get all excited telling everyone how great they are cause they have a $250,000 install. Then they spend so much time there and waste so much material that they wind up making less than if they just cut grass. Sure the benefit can be a big payout as well, but also can lose the same.

    I suggest you forget the figures you are using and look at your true profit. I mean true down to the last rusted lug nut. Look at that number and look at your true hours. In the end you will see that it is likely not a big payout, but more like a regular job with high liability. To me a 100K check is meaning less if I have to shell out 100K to make it happen.