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Tough Decision, what would you do?

Discussion in 'Commercial Snow Removal' started by buckwheat_la, Sep 21, 2011.

  1. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    Been crazy busy with estimates lately, and have landed a lot of new work while retaining the work I had last year. Was contacted today by 2 contracts

    The first one is a mall, approximate 1 acre of upper deck parkade, they are taking care of the walks and anything on the lower levels (although next year that could change with us taking that part over too), but we would also be responsible for hauling the snow, which would probably be after every 5 snowfall of 3-4 inches, depending on how much melting happens. I have no prior experience with this mall, but I do know that a management company that I do work for has taken over the maintenance of another mall about 5 blocks away, and that next year if all goes well I shall be bidding on that property too. I also have numerous banks and other properties in the neighborhood. If I were to do this property, I would likely buy another skidsteer to do it, but a tractor or loader is out of the question because it won't fit up the ramps.

    The second one is a larger parking lot 5.5-6 acre lot for a department store. There is no management company involved, but their head office. We would be responsible for sanding and snow for the entire property, but I have no prospects of getting any other work in the area. I already have a relationship with this store management and with the company that does its summer work. I would likely buy 1 (possibly 2) loaders to do this work.

    Now I am submitting quotes for both, but I am interested in hearing what peoples thoughts on which one would be more beneficial for me to do. I am not certain that I would do both if I received both as I would have to make some pretty substantial equipment purchases to do them both, not to mention all the extra labour that would need to be arranged. I know that I have room on my routes to handle at least one of these contracts. I am interested in peoples opinions on which property they would take given the circumstances. I see advantages and disadvantages to both. And just to clarify something as people post, I may or may not take on both, or get neither as the quotes are going in at the end of this week. What I am looking for is everyones opinions on where they see the best opportunity in these contracts.
     
  2. snobgone

    snobgone Senior Member
    from CT
    Messages: 122

    which one will commit the longest? whoever offers you a mulityear helps pay for that equipment.

    what is you strategy? Do you want to saturate a specific area and take everything in a specific radius?

    Its really all in your long term plan and financial well being. I personally would not be buying loaders for single year contracts, but would sub them in a second and supply the application services. On a three year, I'm buying some stuff.
     
  3. Spucel

    Spucel Senior Member
    Messages: 413

    Very good points.
     
  4. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    Yes, very good points indeed. Let me try to answer them.

    First off, this is a small city of 80 000 people, so it isn't hard to get from one side to the other in a reasonable amount of time, that being said the closer the contracts are together the better.

    As far as my long term plan and financial well being, concerning these contracts, this is where the crossroads is, because they both offer some opportunity for me. And subbing isn't really a option as being a small market, there are only 3-4 other companies that can handle these contracts, and they have probably already put in bids and are not interested in subbing. We are starting to push more into the large scale commercial now, so both of these offer what I am looking for, a opportunity to do a larger scale, commercial, public facilty. And I should also point out, that next year, the other mall will still be offered to me to bid on, and as I am the only company that deals with the management company that took over that mall, it is pretty much mine as long as I am reasonably priced.

    Both these places would likely be 2 year contracts.

    The equipment is a tough one, so I should clarify that too. I won't be purchasing or leasing brand new equipment. I use skidsteers during the summer in our landscaping so that isn't a big issue, and as for the loaders, if I am smart and purchase carefully, I should be able sell any equipment I purchase at close to the same price as I originally purchased it for in the spring/summer if I needed to, but again, these are 2 year contracts so I see the purchase as justified.
     
  5. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,045

    I'm not sure what your worried about as you havn't got any work yet. Bid it where you feel comfortable and worry after you get it.
     
  6. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Buck
    Its a good problem to have... you want to grow and what a perfect opportunity rghit in front of you to do just that!.... no question you'd have to buy some USED equipment.... if you bid the larger one right you sould be able to EASILY pay off a $30-40 loader investment should you not get the contract back after the 2 year contract expires.... better yet ,during that period go out and bid on larger lots to keep the loader busy shold you lose it......

    With a question, I'd bid both!
     
    Last edited: Sep 21, 2011
  7. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    Not worried at all, it was more of a rehetorical question, out of the two situations, which situation represents the best opportunity. I already know that if given the choice I want the mall. It allows for me to take on more work, with really only needing one new employee. If we do a good job (which I know I well) they will give me more work next year, and I well be bidding another mall right beside this job next year, nothing like having all the jobs close to each other. Makes it a lot easier for things like the sanding truck to go through the lot.

    Good point on the loader investment and the fact is even if I were to not get it as a two year deal if I lost it, next year I am still bidding on a mall that is about 7+ acres so the loaders would still likely have a home.