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Season cant end soon enough

Discussion in 'Commercial Snow Removal' started by procut1, Feb 11, 2011.

  1. procut1

    procut1 Senior Member
    Messages: 380

    After 15 years doing this, thankfully this is my last year.
    Have been downsizing for the past 4 years and now only have 2 condo complexes on seasonal contract and I cant wait to be rid of them.
    Its going to be interesting for the first time in my life to experience snow out the window and not have to do anything. Im excited about that.

    Where I finally made my decision.

    One of the two complexes I have had for 10 years minus a couple months when they went with someone else and the second storm asked me to please come back.
    Have kept the price the same for 10 YEARS, no increase.
    I get along great with the board, and have that place down so well that it would take years for someone to do the job we do.
    The board is always happy and loves the work.

    This is the last year on the contract. Keep in mind its the toughest year I have plowed and have lost my butt bigtime on this contract. We have been there every 3-4 days for a storm and its been a living hell.
    So the board president approaches me the other day and we;re talking.
    He says....

    "Youre definately taking the contract again right?"
    I said. Most likely yes
    "Good because we definitely want to continue with using you guys."
    At this point I was almost reconsidering leaving the business.
    "Send us a new contract ASAP and we'll sign it at the upcoming board meeting. But obviously with a SUBSTANTIAL REDUCTION TO BRING YOUR PRICE IN LINE WITH CURRENT MARKET PRICES"


    I said......"You mean, obviously with a reasonable increase to bring my price in line with the more severe weather patterns over the last few years, double fuel price, and all other costs through the roof"
    He laughed.

    They took other bids and he informed me I need to TRIM THE COST BY 30%. And on top of that add machine work as an INCLUDED SERVICE"
    I went to the office with him and he handed me a folder with bids they took.
    Sure as hell. The bids are 20-30-50% less than mine and include more.

    Now. With a couple exceptions these arent your typical scrub lowballers. They are established companies.
    After 10 years there, I know the costs dam near to the penny. On a bad year like this year, costs are exceeding revenue. But I do multi year contracts and that is supposed to level out. Unfortunately we have had about 5 above average, very costly years in a row. So I know its time to raise the price.

    What these "well established" companies are doing is they are jumping on the National Management bandwagon.
    They are using their names to bid the work cheap and then sub it out to independent guys with one truck and a couple shovelers for even cheaper.
    Now....I will say......Its a good idea....
    It makes a lot more sense doing it that way than trying to run trucks employees and equipment in house.

    Im not posting this to whine or complain. I knew the business was heading this direction, its been obvious for years which is why this being my last year, has been in the plans for a long time.
    Im actually moving halfway across the country, so it doesnt matter.

    I just thought it was funny as hell how far off we were.
    Happy customer
    Overworked contractor who didnt raise price in 10 years
    Contractor that absorbed doubling fuel cost, doubling salt cost, and winters much more severe than the norm 10 years ago.

    Surely time for a "cost of living increase"
    And they want me to cut the contract by a third.

    Im getting out at the right time.
  2. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    Procut, best of luck to an industry veteran..........

    To comment on your timing and some parallel issues I've been seeing the last couple seasons, which are troubling.

    Timing, couldn't hit it much better. Nationals are pressing markets to the point where things and smaller contractors who got in bed with them will pop. Thus it will create a whole new breed of low balling bottom feeder to fend off. SO MANY of my prospects this year were specing "all inlcusive" contracts, no limit seasonals, not a 3-5 year deal to at least let averages play out, but 1-2 year contracts including ALL plowing, salt, shoveling, calcium and machine work to stack or relocate included. People are actually fighting over these contracts, those who took too many are folding right now, others will likely drop their growing season prices to creat volume to (in their eyes) recoup some of the beating they're taking now.

    We've seen the trend coming, we've NEVER had a no cap seasonal contract before this season. We took one on, 3 year deal, with a really sweet landscape maintenance portion. (otherwise there is 0 upside to these no cap, all inclusive turds). I look forward to having less local competition, but dread the guys who stick out the winter and lowball their way through the growing season, to then draw down the market further next year having the same issues they've had this season with snow, and looking for a way to generate quick income.
  3. procut1

    procut1 Senior Member
    Messages: 380

    Its going to keep heading that direction.

    One of the first warning signs I saw was back a few years ago when I was still interested in growing the business. ONE YEAR SEASONAL contracts.

    Guys were fighting over those and to me, It made no sense. How in the world can you do a seasonal contract that is one year without dam near doubling your price.
    The whole point behind seasonal contracts is the multi-year part. You need AT LEAST 3 years. 5 is better
    This year for example....Im losing butt on my couple seasonals

    So you had a bunch of guys, all going after these one year seasonals, and all charging less than the next guy.
    I saw that as a recipe for disaster and in fact it has been.

    Very rarely do you see the same guy doing the same contract 2 years in a row.
    There is not a single contract that I know of that is not AT LEAST 30% LESS than it was 10 years ago.

    This isnt computers or pharmaceuticals where the cost to make is nothing. But customers look at it this way. "Years ago a laptop was $2000. Now I can get one for $200"
    They think snow should be the same.

    10 years ago diesel was 1.25
    Insurance was $2000 for the year
    Trucks were 20,000 brand new
    A cadillac of a snowplow was $3000
    Salt was $35 a ton
    We averaged 10 events a year with 2 being around 12" (aka a big ass storm) and a couple salting only events
    And "zero tolerance" for commercial accounts was the norm

    Now diesel is $3.75
    Insurance is $10,000
    Trucks are $30,000
    My last new plow was almost $7,000
    Salt is over $100 a ton
    We get some snow event at least once a week...About every 4 days this year
    The snow events we are getting are ALL 8+ inches with some 20 inches and hours of sleet and ice
    Customers are expecting the same level of service in the condo market.......Or in the commercial market (big box) are more than happy to sacrifice some service for the huge cost reduction.

    And the idea of a price increase is out of the question.
    Year after year, when I went to renew contracts, they all involved LOWERING the price to resign. If you included an increase they would laugh at you.

    And Ill toot my own horn here and sound a little arrogant.......But my snow work was far better than my competitors. I lived and breathed the snow business. In June I was already 100% into snow planning.

    Years ago that meant something and mattered.

    Now. It doesnt. Yes, you can point out exceptions but Im not talking exceptions.

    The business model is moving toward more service....less money.....And its a trend that only accelerates as the unemployment rate goes up, and established contractors struggle to keep a client base and stay afloat.

    Its just burned me out.

    To spend 3/4 of a year like an Army general planning, buying, and catering to customers.......So when it snows I kick ass......Only to see in the end.....The time and effort that I put into it has not one penny of value over a guy that shows up with a pickup and his 2 kids in November and offers a low price.

    When I see contracts that I used to have that to me appear to be disasters. They are in a condition that would never have been tolerated. Contracts that were so picky they were still calling me for a snowball falling off a roof 3 days later. To see properties like this that barely look like anyone serviced at all.........Only to find out that the customer is "perfectly happy" with the service and doesn't see a problem.

    There is only so much cost cutting and volume work that you can do.

    There are ways to make money in this business. And I have thought about them. But it would involve essentially starting over.
    I got out of residential when the pricing was going below $200 a MONTH. Guys up north like Niege are charging that for an entire season and using $80,000 tractors.

    Now dont take that for a second as a knock. I envy his business and think its awesome and he really knows his stuff.

    The residential system would work around here. But mentally, I just dont have the drive to start that all over. I imagine as soon as I started doing that for $300 a season, a year later there would be 20 guys with tractors at $200.

    Ok...Now Im just ranting.

    Spending all day on the phone in the office trying to get customers to pay you on one line, and the other line ringing all day with people looking for me to pay them will do that to ya.
    Last edited: Feb 11, 2011
  4. WIPensFan

    WIPensFan PlowSite Veteran
    Messages: 3,468

    Sorry to here about your troubles and you leaving the business, I dream of that day. The problems you list are everyones problems these days. Seasonal contracts IMO are a gamble, I've always said that. I have never, nor will I ever choose to take those contracts on. Of course I still fight the price issues every year, as does everyone.
    I hope you're happy doing whatever it is you choose to do next. :salute:
  5. Pinky Demon

    Pinky Demon PlowSite.com Addict
    from Ohio
    Messages: 1,121

    I can't help but to agree with you ProCut. Things are going downward, fast. There are a few triumphs here and there, but the rewards are so short lived. I wish you sucess in whatever you chose to do next.
  6. 18lmslcsr

    18lmslcsr Senior Member
    from WI.
    Messages: 113

    I too can sympathize with the OP.

    I normally do not post all that much but felt compelled to add a thought or two.

    This is the 11 yr.I been fortunate (aka blessed) to do this and it is getting more and more aggrevating. Cutting corners,,,,
    Cheaping services....
    Impractical wants....
    High cost of business....
    Cold, long hours....
    Equipment cost on runway to Pluto....

    To even get enough capital to purchase a new blade, trailer, walk behind is getting (gotten) really tough.

    Alas, I keep doing the service because the rest of the economy is as bad or worse.

    I'm just filled with gratitude I'm able to even put food on the table.
  7. 18lmslcsr

    18lmslcsr Senior Member
    from WI.
    Messages: 113

    That in the end is all that really counts. Being able to eat and have a place to rest my head.

  8. Jacobsmovinsnow

    Jacobsmovinsnow Senior Member
    Messages: 315

    10 years without a rate increase is about 8 years too much.
  9. jrodgers

    jrodgers Senior Member
    Messages: 156

    Just imagine sitting in your house when there is snow forcast. Hunkering down to hang out and watch the snow fall. Watch a couple movies, take a nap, drink a beer, all while everybody is stressing out about plows now working this broke that broke, guys not showing up, blah blah blah. I would love to just enjoy snow fall for once. FOR ONCE!!! Good luck. Might be my last year too. 22 yrs and I'm tired.....
  10. Jacobsmovinsnow

    Jacobsmovinsnow Senior Member
    Messages: 315

    tymusicln all those years if ya liked it more than hated it , you will miss it when you quit.I quit after 22 years for one season, back in it again however only took back customers and driveways, lots that suited my way of doing business. Much more enjoy able. Also hired drivers to fit the job, not vice versa.
  11. albhb3

    albhb3 PlowSite Veteran
    Messages: 3,505

    heck you should see the truckin industry it makes the green industry look like kings:gunsfiring:
  12. Jacobsmovinsnow

    Jacobsmovinsnow Senior Member
    Messages: 315

    Yes when your trying to make money heading out from home and someone takes the load on a backhaul just to get back to base.
  13. V_Scapes

    V_Scapes Senior Member
    Messages: 940

    Hahaha! I agree. Im sure theres a few guys that would like to punch me in the face for what im about to say but im only 22, ive been doing snow for only about 4 years. me and a few of my friends who plow talk about this, for once itd be fun to just have fun in the snow, like rip the quads on the roads instead of stressing and waiting around all day and night to go out to plow. cant complain though december and january made me alot of cash.

    ICE CREAM MAN Junior Member
    from MA
    Messages: 29

    I here all you guys. Plowing for 18 years has taken a toll, but I still love it. I do miss playing with my kids though, they want to go sledding I want to go to bed. I have been lucky with what I am doing, I have a few private accounts that are small and plow roads for a Town. The money is decent $75 per hour plus a few other small perks. I know I could have always made more chassing down accounts, but as I have seen and heard from peers chassing the money has been ridiculous this past year. So I am thankfull for staying whith what I got.
  15. procut1

    procut1 Senior Member
    Messages: 380

    Plowing I enjoy. Its the business of plowing I can't stand. When I move, I'm done with the snow business. If all I had to worry about is actual plowing, I could do that all day.
  16. Jacobsmovinsnow

    Jacobsmovinsnow Senior Member
    Messages: 315

    Sounds like you will make a good employee, immigrating to Canada??????????????tymusic
  17. PTSolutions

    PTSolutions PlowSite.com Addict
    Messages: 1,533

    I agree with the OP, though the prices that have been mentioned have been the norm around here since before I started taking this over from my dad. though we dont shovel at all, strictly plow at 2", unless they pay extra for it and we have maybe 10 customers out of 200 that do.

    ive lost a couple clients to $150 seasonal prices. That I just dont understand. To make money at those kinds of rates you need ultra efficient equipment to turn out volumes of clients, but these are just joe schmoes with older trucks.

    Since taking over the snow side a few years ago i have heavily invested in more efficient equipment that allows us to do more in less time. Thats the only way to stay afloat in this market of stagnant or declining prices.

    I have been seeking out the customers that are willing to pay for above and beyond service. I won a 62 unit HOA contract being the 2nd highest bidder b/c of what I was bringing to the table; excellent references, top notch service and a unique approach to their particular situation.

    my next move will be introducing the tractor setups like Neige and others use, most efficient driveway setup out there.

    Honestly, I often dread snow forecasts, i like sleep. warm comforters, a soft bed, whats not to like?
  18. goel

    goel PlowSite.com Addict
    Messages: 1,079

    If you do not want to go to that much snow, you could come our way instead!!!!

  19. AA+ Landscaping

    AA+ Landscaping Senior Member
    Messages: 142

    I just can't get how they get paid for such poor quality of work???????
  20. WIPensFan

    WIPensFan PlowSite Veteran
    Messages: 3,468

    Yup!.....Maybe not ALL day.