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Stay small or get big?

Discussion in 'Commercial Snow Removal' started by tiestick, Mar 5, 2007.

  1. tiestick

    tiestick Junior Member
    Messages: 8

    I am in the lawn care business. I am starting in on my second year of being self employed. A friend of mine is a manager at a commercial warehouse. He informed me about submitting a multi-year bid for snowplowing the 24 hour operation plant.

    His company is owned by a even bigger company, they want me to carry workmans comp and liability for snowremoval. Insurance will be around $5000. I will need to buy/lease a loader and a employee or two. Is it worth the headaches and bigger bills to make more money? I do not have any insurance for snow, just landscaping. Big difference in price, add about $2500 more a year if I carried snow plow insurance.

    I own 2 plow trucks and a skidsteer(no box or blade).

    I have about 50 residentials now. They pay pretty good. I have no contracts. NO snow, no money. It has snowed only once this year. I would have to drop most of my residentials to plow out this business. I will try to find out what the winning bid was last year.

    What do I do? I starved all winter. This could be a big check for me, and it could lead me into a early grave or divorce!
  2. DaySpring Services

    DaySpring Services PlowSite.com Addict
    Messages: 1,065

    Seems kinda steep on the insurance. Im carryin a million dollar policy through Erie insurance company. It's running me around $1400 for the year. I'd do some shopping.
  3. PremierLand

    PremierLand PlowSite.com Addict
    from detroit
    Messages: 1,572

    wow thats alot. I carry 2mil and its 800 for the year. I would bid it though and if you get it then decide what to do.
  4. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    you already do snow removal and you don't have snow insurance?????????????????

    ummm, not good.
  5. Sydenstricker Landscaping

    Sydenstricker Landscaping PlowSite Veteran
    Messages: 3,882

    I have 1 million GL coverage for landscaping and snowplowing just for me and it is 300 for the year. Commercial auto is about 3,000 a year now cause I am under 25 and had a few tickets two years ago. My provider is Nationwide insurance. You should def. have snowplowing listed, cause if you wreck your truck or someone else's car doing plowing, guess what?? You are screwed. I am not flaming or whatever, just be smart and dont lose everything you have going for yourself over a couple hundred bucks extra for good insurance.
  6. framer1901

    framer1901 Senior Member
    Messages: 852

    You need insurance yesterday for one thing.

    Second thing, why give up the 50 residentials?? I wouldn't ever put all your eggs in one basket. Growth means adding business, not substituting. Besides, when you look at the bottom line profit, the resi's might be a bigger percentage verses just the commercial.

    Go big or go home tryin............

    If you only get a few events, it won't be that bad to manage but be prepared. One mad custumer will outweigh fifty happy ones.
  7. magnatrac

    magnatrac PlowSite.com Addict
    Messages: 1,059

    I wouldn't say buying ins. makes you go big or stay small. It is just part of doing buisness. I also have a small co. w two trucks and one skid ( I am a buisness partner w/ my brother) . We do commercial and residental( detached condos) maintinace. For us to even get into these jobs we had to have ins. If you are running two trucks and 50 accounts w/o ins. thats crazy. I know it sucks paying for it but when sh** hits the fence you'll be glad to have it. We don't have any full time employee's but we do carry workmans comp, it is required for some of our jobs. It goes by amount of payroll so it's cheap for us. It is hard to compete with the guys running under the table. They can't work on bigger jobs so let them have the small ones. If you think you have a shot at getting into a good commercial account go for it. Either way you should cover your a** and get some ins. Good luck !!!
  8. troy28282

    troy28282 Senior Member
    Messages: 178

    In all honesty, you are the only one that can answer that question. Does the reward out weigh out the sacrifice? Are you ready to plow at all hours of the day/night? Accounts like these have work that need to be done so they need it cleared so they can do their day-to-day operations. If you do decide to bid on this account, just make sure that you have all your numbers in line so it doesn't come back to hunt you in the end.

    Like every one else said, you need insurance even if all you are doing is residential. One little mishap and it could be your last.
  9. kemmer

    kemmer Senior Member
    from NJ
    Messages: 329

    Im guessing this account would be a seasonal contract. if so i would rent a loader or backhoe w/ a box. Have the loader and the skid on site for that property and have to 2 trucks for the res. the loader and skid will be much more productive and manuverable than a truck. do you even really need the loader? you can just rent one after or before when you hear a big storm is comming that you think the skid and trucks cant hande.
  10. John Mac

    John Mac Senior Member
    Messages: 374

    Depending on how big the lot is I think you will need the loader. I came across the same issue this past month and this is my $.02. I do commercial accounts but I do them with a truck. Took many years to earn these accounts that I have and they are good ones that pay the bill that in itself is a major plus. I only have about 8 hours to plow on any given night to get these accounts opened up. I was asked to quote a very large factory in my area; this one account would be larger than everything I have now put together. Yes I want this account but I also do not want to loose the ones I have. So I need the fastest way to get this done and my others in the 8 hour time frame I have for a 4" to 6" storm. I also want to do this with the least amount of employees. Employees are the week link and employees are the most undependable issue. So I plan on getting a loader with a least a 14' pusher, possible an 18' pusher because my goal is speed. The faster I can do the work the more money I will make. The smallest number of people doing work the more money I will make. Get the correct tool for the job. My investment will be the most in the first year but if everything works out I could own needed equipment in two years. Once you own equipment your options are wide open. In the summer I do excavating so I have equipment just not a 4 to 6 yard loader but I could use the loader in the summer. If you have no need for the loader in the summer than it could take longer to own equipment but still think it is possible to use it just for winter work if the work is big enough. Bigger investment bigger return. On the insurance issue, lots of guys do it with none. I would assume that they have nothing to loose. So if you are someone that has nothing to loose than by all means plow with out insurance, but by the chance you own anything of value then be ready to give it all up if something happens.
    Last edited: Mar 5, 2007
  11. Superior L & L

    Superior L & L PlowSite Veteran
    from MI
    Messages: 3,041

    Sit the skid out there and lease a wheel loader for four months.Make the guy who ran your second truck in charge of the residences with a new guy and you run the big account with a new employee.

    Good people are easy to find if you pay them well. There are lots of excellent equipment operators who are out of work in the winter. pay them well and they will be calling you to find out what time they should start! Don't even waist your time on the wheel loader, get a guy who uses one all summer. They will run circles around you.

    it will be lots of work BUT lots of money. Get the wifes buy in before you bid this job, let her know what its worth to you guys!

    Happy wife happy life!!!
  12. John Mac

    John Mac Senior Member
    Messages: 374

    Paphillips, how much do think a lease is on a loader and push box for 4 months. To rent a loader it runs from $2500 to $4500 per month depending on size. Whats your thoughts on rent to own? During the summer I have operators working for me and I pay them well about $15 per hour (going rate here) and have a hard time keeping them, even when it is day work and nice and warm out. I wonder how tough it is going to be at 2am and -5 out. I could be wrong, won't be the first, whats your thoughts.
  13. Lawn Care Plus

    Lawn Care Plus Senior Member
    Messages: 135

    I have one mil or two mil in liability through Natinwide, and equip coverage, and it is over $2500 per year for me.

  14. tiestick

    tiestick Junior Member
    Messages: 8

    Thanks for all the replies. I will get snowplow insurance, I have been playing russian roulette. I have only plowed twice in two years! Only one good snowfall, last month. I got lucky. I have been dealing with my insurance company for a few years now, small town small ins. comp. great service. I feel I should be loyal to them, keep your business local, all that jazz!

    What are you guys paying for workman's comp and liabilty? How come some guys are only paying less than $1000 for landscape and snowplowing? Are they ripping me off?
  15. rjfetz1

    rjfetz1 Senior Member
    from CT.
    Messages: 640

    Tiestick - Get insurance - more than you think you need, like 2 million. Its one of those things you hate to pay but are happy you have it when you need it. Having said that getting big is a BIG headache. What contracts you get this year can be under bid next year by someone else. Sure the income is good when there is no snow... but on average this year is far below. On a great snow fall year you would make out much better with residentials - however a year like this commercial seems better. So on a good snow fall year you're spending alot of time doing work you will get paid to do if their was no snow. Commercial lots most likely need sand/salt. So if you get 3/4" of snow you have to go sand/salt with no residential income. This year in CT. I have spent $850.00 on salt when there was'nt enough snow to plow residentials. Commercial lots usually say to keep it "safe for travel at all times". 8pm,11pm or 2am does'nt matter if there is a second or third shift. I found the killer insurance cost is having an employee drive a work truck. Having said this I work alone and plan on staying this way untill I can no longer work...:dizzy: Good luck..:waving:
  16. LHK2

    LHK2 Senior Member
    Messages: 205

    What framer just said. !
    Didn't we go over the insurance thing in another thread. Been there and done that with big accounts. The bigger the account the bigger the headaches sometimes. Also you have to look into there pay schedule. Is it paid in 30, 45 or 60 days. Large corporate companies take advantage of small guys and string out there payments as far as possible. Get contracts on the resi's might be better. 50 resi's and you can do that by yourself.
  17. ppandr

    ppandr Senior Member
    Messages: 619

    Unfortunately general liability and snow insurance can be confusing by just looking a the parts not the whole package. Policy A could be 5K a year for gen. liabilty and an additional 2K for snow. Policy B could be 8K for gen. liab. and only $500 for snow. It is counterproductive to compare your rates to a larger company or others for that matter because pricing has many variables. Workers comp. is a flat percentage for specified work duties, thus saving here means putting empolyees, including yourself in the lowest rate with still having the right coverage. I would be sure that your insurance agent is an independent agent representing several companies thus they can shop your policy for you. Expect a minimum of three bids. What you pay for insurance is not nearly as imporant as the relationship with your agent. A close relationship will ensure that they are looking out for your best interest and will allow you to get the "off the record" advice that you need. I have had the same agent for 8 years and she has saved my ass so many times that I could pay double what I pay now and still be less than what it really would have cost me. Being a small company, myself and 5 employees for the first 6 years, it was common to have cash flow and organizational issues during our season. How many agents will call you the last day of your cancelation and wait for you until you get there...or recording the payment to the parent company when you didn't drop off a check until the next day. Pricing is important, but not as important as relationships.