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Convincing potential clients to outsource

Discussion in 'Business Fundamentals' started by chtucker, Jan 19, 2003.

  1. chtucker

    chtucker Senior Member
    Messages: 618

    There are a few desirable accounts in town the do their snowplowing in house (again no one salts, YET). I can think of many reasons to out source such as:

    1) Labor Cost (payroll, taxes, health insurance)
    2) Capital Cost (Most potential accounts have one beat plow truck with a small plow)
    3) Better service, I would have multiple trucks to cover them
    4) Capital expenses not being used for 4-5 months a year.

    Can anyone expand upon those or add some?

  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Insurance/liability. By outsourcing, they are shifting responsibility to you. Of course, with your contract you will be trying to shift as much responsibility as possible back to them.

    Overall, they will get better snow removal by having you do it using your know how regarding snow removal and using technology and industry knowledge of which they are unaware.

    Not having to keep stockpiles of sand, salt etc.

    No repair costs.

    Assured timely service.

    Any way you look at it, outsourcing snow removal will save them money.
  3. digger242j

    digger242j Senior Member
    Messages: 672

    If I were the customer I'd debate the "assured timely service". Given the case of "Howard will get here when it's our turn" vs. "You! Go get in the truck and plow the lot now!", it would take some convincing....

    As far as payroll cost, I'll bet they're using somebody already on the payroll that'd be sweeping the floor otherwise.

    Fer instance, it seems like most auto dealerships do their own plowing, because they got a plow truck in on trade and they have lot attendants whose job it is to do that stuff anyway.

    We lost a tire service store account a few years ago because the district manager told the store manager to, "just have the mechanics shovel".

    (You understand I'm not trying to shoot the idea down, I'm just playing the devil's advocate here...)
  4. GeoffD

    GeoffD PlowSite.com Veteran
    Messages: 2,266

    I think the reason most car dealerships do snow in house, is because they have so many cars to more. I mean if i had to price a car dealership, the cost would be very high, because of the time spend plowing, moving cars, and plowing again.

  5. drobson

    drobson Senior Member
    Messages: 112

    I can see the validity in both sides of the coin on this one. I guess it comes down to; if the current employees have nothing to do because of the snow, then they might as well be working on the snow.

    However, most businesses that can operate regardless of the weather will look at it differently. They will say "Lets keep our business operating, because that is how we make money. Let the snow removal contractor do their job, they will be more efficient and the end result will be a better quality job of snow management and there will be no interuption in our business"
  6. chtucker

    chtucker Senior Member
    Messages: 618

    The customer I am looking at is a school district, the guy has to come in early and he plows the elementary, middle, and high school with an 80s Ford 7.5 western plow. Takes him 3-4 hours!

    I don't know if he gets to go home early, gets OT or what. We have had pretty light snow years for the last three, but if I can offer them a set rate (with blizzard clause) for plowing and sanding I would be happy. No OT, and fixed cost for the season. At that point I would be able to run 2 trucks plus a jeep and pickup more accounts.

    They would avoid the uncertainty, the employee expenses (which are high for a government employee) and not having a questionable plow truck. I know lots of guys plow with stuff like that, but when you are doing that much commercial I THINK newer is the only way to go.

    I would also plow on school holidays and weekends so that the snow wouldn't pack down.

    I see the benefits, I am just trying to come up with a sales pitch for next season.

  7. NoStockBikes!!

    NoStockBikes!! Senior Member
    Messages: 213

    I think your best bet would be to keep close tabs on what's going on, because soon it will be time for them to get a new truck, and that will be the opening for you. They'll have their choice of going to the board to request a $40,000 capital grant for new truck and plow, or present a request for a couple thousand for outsourcing. My gut tells me that it might be a tough sell if they already have the investment in the equipment and staff.
  8. digger242j

    digger242j Senior Member
    Messages: 672

    So, I was right! He would be sweeping the floors otherwise... I love being right. :D (It happens so darned infrequently.)

    NoStockBikes makes a good point about them replacing their truck, although if it's one they use for other duties they may only be saving the cost of the plowing hardware by outsourcing to you, and then they get less use out of it because it's not saving them money by keeping the plowing in house.

    (Once again, just playing devil's advocate.)

    The fixed cost for the season will probably be a BIG selling point.

    A reminder--I think it was Mark Twain who said, "First, for practice, God created idiots. Then, He created school boards." (Or something like that...)
  9. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Schools are tough. I put in a bid for one in my area last winter. Came in low bid, so "knew" I had it. Started making plans for timing etc. Then a parent decided he'd do it in trade for tuition costs.:( :mad: so for the school it was "free". Told them I couldn't beat that deal.

    My local school is "awarded" each year on the "good old boy system" to someone the school board members have known for years. There's no bid - he just does it. No one seems to know what he gets for it.
    Last edited: Jan 20, 2003
  10. fordman

    fordman Senior Member
    Messages: 327

    I agree schools are very tough to get. However I think you definitly have a better shot at getting them when your bid is a fixed price for the season. This way they can see all the costs up front instead of arguing with you later saying you're to expensive.
  11. ZMC

    ZMC Junior Member
    Messages: 13

    I used to work for a board of education in the maintenance department. The maintenance department was responsible for all buildings and ground of all schools and buildings under the board of education control. The maintenace department had about 16-18 people in it and everybody got called in for snow plowing. The board of ed gets at least one new truck each year that is equiped with a plow. I would view this as a very difficult sell in my area, based solely on experince (sp).

  12. chtucker

    chtucker Senior Member
    Messages: 618

    They own one truck and have no grounds people, only 1 guy who plows.
  13. SLC1

    SLC1 Senior Member
    Messages: 242

    I say go for it, type up a proposal and outline what you will do and what the benifits would be and the advatages would be. Come up with a price and see if they would bite, what do you have to lose, nothing tried is nothing gained. We do alot of work for our local school system. They have outsourced all grounds work for the past 25 years and it goes out to bid every three years. Make sure that you do the proposal early enough for them to think about it(like maybe April-May) and then do follow up calls. I think you may have some luck. Just my two cents
  14. long0

    long0 Senior Member
    Messages: 247

    I plowed the local high schools (Glenwood & Carbondale) when I was in school. I used the sales pitch that since I had to be there anyway, showing up a couple of hours early was more benficial to them. It ensured I went to school. For some crazy reason they agreed with me.:D :D
    But since you can't use that pitch.....

    Considering the amount of snow you usually get up there and the endless amount of lawyers that will sue for anything, I don't think it would be very hard to convince a school board the benifits of your services. I would push real hard with the ice removal portion of your contract. Does anybody else offer Ice removal??

    Another item to consider:
    Who will be doing the sidewalks. I know shoveling was beating to death in another thread, but it is something to consider. Does the current guy do it now? You might want to check into a couple of local kids to do the walks. You might even be able to use the same sales pitch with them that I did.:confused:

  15. chtucker

    chtucker Senior Member
    Messages: 618

    Ok some more thoughts and questions...

    Would it be prudent to write a proposal this year with pricing for the rest of this season and next...offering choices of per push and per season?

    Would it be wise to include photos of hazards in their lots? My lots immediatly next to the schools are dry. They have patchy slush and ice. (up to 3" of ice pack)

  16. SLC1

    SLC1 Senior Member
    Messages: 242

    I personally would not worry about this year, but try and work on them for next year, I am sure they figure that they have made it this far through the season that they can finish out the rest of the year, so no sense in confusing them with half season or whatever prices, I know that your season is longer than most but still would try to push for the entire year next year, but that would be a great idea to take pictures of their lots and of the lots and type of work that you can do. It will make them really think, and also a picture is worth a thousand words, Just My two cents
  17. gordyo

    gordyo Senior Member
    Messages: 527

    digger242j is right on.

    Timely service is what you need to sell them on and make sure you have enough equipment to provide it. Lack of it is exactly the reason why the college I work for now does our own Salting with our own equipment. We had a contractor that did all our Salting up until 1988 and all it took was one ice storm for him to show up do half the campus, tell us he was going to reload and not show up again to finish for 2 hours. He told us that he had to go back to reservice a Hospital. The Director of Physical Plant came down to the garage with a P.O # the next day and told me to go out and buy a v box. I think his comment was something like "We can't wait for service that we could provide ourselves if we had the equipment"
  18. chtucker

    chtucker Senior Member
    Messages: 618