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What are your "costs" for snow plowing commercially?

Discussion in 'Commercial Snow Removal' started by Ramairfreak98ss, Nov 16, 2007.

  1. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,905

    I know i know, in NJ sucks more than anywhere else...

    Im a "small" company, i have always done snow blowing of residential driveways, some small commercial sidewalks and 2-6 spot parking lots for local companies.

    A company that is looking to sub out work to me is requiring workers comp insurance on the employees on their managed properties. I got a quotation for ONLY myself and it is nearly $1,000, that was written as a "Lawn company" not a plowing contractor which would have been $1,850 :(

    I pay $2,400 per year FULL coverage commercially with a 1 million dollar aggregate for my 06 F350 diesel Ford pickup.

    I pay $1,600 per year for my companies business liability insurance.

    I was quoted the above $1k for workers comp for only me, and i need it for my brother that will work as my "shovel" man for small sidewalks etc

    I was quoted $2,150 for JUST the plowing contractor rider onto my business policy just to plow snow. The company that is subbing out the work also requires theyre company listed on the plowing rider, thats another $75-100 per company.

    What I worry about, besides no snow, is if this company drops me from sub work at any time, my fault or not, Im already paying the $100 fee for their name on the policy, for an umbrella coverage.

    I had planned to make this year my first for snow plowing AND snow blowing residential and commercial areas.


    With the costs below, would it be worth it to you? I know i could buy "used" equipment etc, but with the figures below, give me your honest opinion :)

    Truck and vehicle insurance $paid
    Boss Power V Plow $5400
    Boss 800lb cap Tailgate spreader $2150
    Whelen or Code 3 amber LED & strobe Lightbar w/ mount kit "used" $500-900
    Plowing Rider 2mil coverage Liability "1 plow vehicle only" $2100
    Workers comp insurance for myself/owner $965
    Salt/CMA "provided by Property management CO, must pickup $-
    Diesel fuel @ $3.29-$3.39/g $?
    My time value?
    Wear and tear value on 06 F350 diesel truck and equipment?
    One worker/Brother @$13.00/hr

    Grand total to "plow some snow" $11,500 w/ sales tax on equipment

    Property management CO is offering $140 per push every 3" in pharmacy parking lots. Must hand shovel all areas such as trash, walks, in between curb stops for parking spots, fire hydrant etc. They state it can easily be done in an hour or less. If that was so, Is it worth my time running around $11,500 in expenses ?

    Subtract the cost of equipment i must buy, assume i already have it and its unused.

    I have $3,565 in insurance expenses alone before i have to pay my employee out each snowfall, plus fuel, my time, wear and tear etc.

    What if something is damaged on site? The Property management CO backcharges your paycheck when they cut you a check "about" 45 days after they receive your invoice, or 3x longer than my average customer pays in my own company.

    I also must use their supplied magnetic company signs over top of my company vinyl on my truck while plowing. Is this common? At the very least, i thought id generate some residential business driving around during a whole snow storm back and forth to properties to boost my own business for those accounts.

    In jersey, theyre "forcasting" 15-19" total snowfall for this season, lots of rain just like last year :/

    Figure we get 24" total,

    two 6" storms and four 3" storms.

    4 properties managed/plowed per 3" is $560.00

    Assuming we get a full 24" at least 3" increments or more, thats $4,480.00 in income between November -May 2007/2008 when the contract expires for the winter season.

    That income leaves me with $1k for fuel expenses for going out 6 times to clear out a total of 32 parking lots.

    Of course i have my own work to plow/snow blow once the storms are over, but i would need a minimum "guessing" average of 20"+ to break even with the insurance alone.:realmad:

    Who else "looses" money after the winter season plowing? Are you insurance figures nearly as high as mine in NJ? Im 26 y/o, no points on the drivers license, my residential insurance policy just lowered 20% because of succession years without a violation, ie speeding, turn on red etc.
     
  2. iceyman

    iceyman 2000 Club Member
    Messages: 2,547

    you live in trenton you should know first hand that NJ isnt happy til you losing money:realmad:
     
  3. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,905


    lol, true. Actually i don't live in trenton anymore, i gotta fix that. Trenton sucks, its so darn rundown, only a few nice buildings even. All i pay is taxes and insurance, or so it seems.:confused:
     
  4. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,000

    Welcome to being self employed.

    That's the way it's always going to seem, because those are the biggest checks you write out.

    Fuel doesn't seem that bad, because compared to insurance and taxes, fuel nickel and dimes you, with $80 here, $100 there.

    Wages doesn't seem that bad, because you can see you got something for your money.

    I personally don't "lose" money in the winter, but I do operate in the red.

    Biggest issue is, that I can work 7 days / week in the summer. In the winter, all my snow work has to be done within 24 hours of the end of the snowfall.

    In 6 months from May-October, I have about 165 days, minus rain days to work. In 6 months from November - April, I have 15 days to work, when it snows.

    This means when I can gross $19k / month in the summer, I only gross $6500 / month in the winter. My bills in the winter are about $9500 / month, mostly because I took a second mortgage on the house a year ago for $100k and am paying it off in 4 years at a rate of $3k / month.

    Soooo... I just put away an extra $4k / month in the summer to help out with the winter bills.

    And yes, if you're going to have bills and trying to pay them off with a per push / per hour type payment, you're only asking for trouble. All of my plowing, except 4 accounts to help with fuel and wages, are set on contract rates, so I know my payments are covered all winter.
     
  5. Jbowe

    Jbowe Senior Member
    Messages: 167

    Costs

    Son you said a mouth full. One thing you said that would have me backing out completely from even bidding a job like this is where you said they will require you to cover your signs with theirs while on their property. Other words they want you advertiseing for them so when potential customers see the signs they call them instead of you. Thats totally bogus. If your bidding the job then its your contract and your only hired to do a job, not give them free advertiseing. The other thing is your costs are to high to warrent an investment like your talking in my books. Maybe you need to look at a lessor truck and used plow to cut the initial investment. Then work up to the nice expensive truck and plow. Last is I have dealt with companies like your talking about before and my guess is they will want you to sign one of their contracts rather then yours. That way everything is in their favor and you can get royally shafted if they don't like what you do. Stay with what your doing until you are in a position to branch out and can do it out of pocket rather then through financeing which is what it sounds like you plan to do. Also if you have to wait that long for money then by the end of the season you will be almost done with summer by the time they send you your final check. I'll almost wager they hold back a percentage of your billings as well with the excuse they want to see if they get leaned. lol They will be looking for ways to either hold off paying you or not paying you everything that is owed every time. "BE CAREFUL WITH THIS ONE!!!!!!!"
     
  6. Jay brown

    Jay brown PlowSite.com Addict
    Messages: 1,783

    i hear ya Ram air freak........ most around here DONT make any $$$$ when it is all said and done. we have 4 dedicated plow trucks and two more loader/plows, and 1 salter truck and one more that will be ready soon...... plus labor, ins etc. etc..........all for a whooping $20k per season. i guess it's a hobbie for me and my roofing company pays for the equiptment and therefore lowers my income tax.
     
  7. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,905


    Thanks for the comments guys. Eventually ill plan to get more into this or just expand more than i have already, maybe next year ill find my own contracts for commercial work that warrants the excess of insurance etc. My feeling is that if "I" need this much insurance to cover myself, why do it all for another company? The $140 area per hour average sounded good as gravy until i try to justify the expense, it just doesnt work out. NJ isnt MN or WI or MI here, hell we get mostly COLD days here and there and then suddenly warms up to 32deg for a day, rains all day and some slush then cold 4 days later and repeats. Rarely do we get those monster 12-24" storms where guys are coming back 36hrs later with thousands on the books suddenly, i could only wish. But being that i would NEED that sort of miracle to break even or profit, it doesn't make sense for now.

    Ill stick to all of my original accounts and pass this off until i find better jobs later. I know what most jobs go for and the sub contracted jobs @ 140 per push are probably $250 per push accounts for the main company.

    If only i could sub out some far lawn accounts for $75 for a $40 lawn cut instead of my $45 for a $40 account lol.
     
  8. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,000

    FWIW, here in MN, we rarely get 12-24" storms anymore. Last year we had back to back weekends with 20" of snow, other than that it'd been something like 10 years where we had a bigger storm than 10" where I'm at.

    2 years ago I didn't plow for the first time until Feb. 2nd.

    If I didn't have most everything set up on contract, there's no way I'd plow, for the exact reasons you mention.
     
  9. PerfectProperty

    PerfectProperty Member
    Messages: 33

    Start charging minimums for plowing. Let your customers pay for your upfront expences rather then it being an out of pocket expence.I usually charge a first storm and salting minimum up front. Your first storm wont be as profitable but it wont cost you anything either.
     
  10. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,905

    I hear ya perfect... I used to just have people sign contracts, of course then a few here and there would shovel out themselves or some "kid" would come by for $10 before i got there. I mean you cant do everyones driveway in 3 towns within 2hrs after a 18" storm is over :realmad:

    I had the g/f with me that day too, i had so many people calling on the phone she was barely able to help my brother and I do our jobs, she was on the phone with freking customers the entire day it seemed.

    I now require a $50 deposit with a signed contract that will be refunded in April 15th of each year or may be used as credit towards their last bill if there is a snowfall towards the end of March of that year. This eliminates people calling to cancel, or worse yet, doing it themselves then you drove to their house and their drive is already clear :gunsfiring: and no one informed me, yet they'll never want to pay the $25.00 cancellation last minute out of pocket so this way you already have it. They also know this and wont have joe smoe clear their drive because they're in a hurry :/
     
  11. framer1901

    framer1901 Senior Member
    Messages: 813

    I'm not sure how it works with your insurance, but here we can have an uninsured sub - I just have to carry them on my insurance, of course we deduct that from wages. Also workers comp up here does NOT cover the owner of a company as far as I know or understand. A minimum policy for construction type work is like 750 and after an audit and no claims, you get a credit of 500 back............ Workers comp in MI is sorta a gray area so you'll find alot of no employee companies using a State Waiver...