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YES or NO to large contract

Discussion in 'Business Fundamentals' started by iceicebaby, Oct 7, 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. csi.northcoast

    csi.northcoast Senior Member
    Messages: 320

    ok here is my take:

    1. are you making a profit off of this account (taking in all of your expenses)
    2. Are you happy ( no sense killing yourself if you are not happy doing it or making money)
    3. Have you talked to a financial guy/accountant how you van lower your cost (possibly leasing equipment/renting

    do they pay on time.

    You have to take a serious look at your finances as well as your yourself and ask is it really worth it. If it ties up all your money, you may be better off servicing several smaller accounts than one big one. Maybe look at subbing part of it out. All i am saying is maybe look at other avenues and maybe take some time and consider other options

    good luck
     
  3. Dogplow Dodge

    Dogplow Dodge 2000 Club Member
    from NJ
    Messages: 2,991

    Two schools of thought here.

    #1 you could hire subs to do the work for you at that location, and I'm sure you could find some here that would be dependable

    #2. you could not do the job, keep your business small (just as I do) and have fun while making a little bit of money.



    Personally, I've been purposely keeping my jobs small, as to keep the fun factor in the process. Life is short, and if you don't have the desire (or are questioning the desire) then sometimes its better to stick to what you have fun doing, vs making big money.
     
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    I think you need to get your business part straighten out first .Plowing is the easy part if everything is ok on the other side.
     
  5. mpriester

    mpriester Senior Member
    Messages: 404

    lg lot

    i recently had a chance to bid on a Lg account (15 acres), i would have had to hire subs which you can't always count on, rent a skid to leave on site, plus i would have had to almost live on the site, i decided to pass because my smaller accounts are what pay the bills and they pay often with a lot less worries about rental equipment and help showing up on time and if i do have a breakdown its easier to call 1 helper than count on 5 or six. This is a part of how i make my living and in my own opinion the smaller accounts will keep you fed and with the really large ones its feast and famin. I'm not saying the large ones aren't good accounts to have but for me it just wasn't a good idea.
     
  6. BlackIrish

    BlackIrish Senior Member
    Messages: 890

    If you only get your money after the season is over, that's your problem.
    You need $15k 30 days before season starts to be able to prep, min $10k month for the next 4
    and your 6th chq is the biggie.
    If you're no longer happy dump it.
    But I'd be very happy to get a $100k contract and reluctant to dump it if I had it.
    But it's about you.
    GL
     
  7. SnowPile

    SnowPile Junior Member
    Messages: 3

    In a situation like this, I like to refer to the good old 80/20 rule. In other words, 20% of your work brings in 80% of your profits, or 20% of your jobs result in 80% of the stress. I'd suggest stepping back and taking a good look at your contract with that rule in mind, and then assess what you can do to make it easier. It sounds as though equipment is your biggest problem so I'd look there first.

    Whatever you do, don't just relinquish the account! Work some kind of referral deal or sub it out and just take like 5k or something. You worked to acquire the job and worked to keep the customer satisfied. That was a big investment and you shouldn't walk away empty handed.