Mother Nature dropped a load of white stuff on the upper Midwest last winter, with many pockets of the EQ circulation area experiencing higher snow totals than they've seen in years
Such was the case in northern Wisconsin, where I live. For the first time in years, I got out the snowshoes and did some hiking through 3-foot drifts in the woods. And my snow blower got a good workout, too, as I enjoyed the satisfaction of piling up snow banks nearly as tall as my car. I couldn't remember the last time we had that kind of cover. It was a lot of fun for my family to have that much snow to play around in.
And it was likely a profitable winter for many Midwestern contractors who rely on snowplowing as a way to keep revenues coming in through the otherwise slow season. I'm certain many of you were happy to get out there and work your snow removal equipment to its full potential.
DOUBLE-EDGED SWORD
Let's face it, for many contractors, converting summer construction equipment and four-wheel-drive pickups for snow removal had become an exercise in futility during the recent string of mild winters. Increasingly, I'm sure you sometimes wondered if plowing was going to be a worthwhile part of your business. Some of you may have put off buying new equipment because the demand just wasn't there to justify it.
And mild winters raised questions about how many workers you'd be able to carry through the slow months in order to have those good people in place for landscaping, excavating and construction work when business ramped up again in the spring.
So last winter - while snowfall still varied somewhat by region - many of you felt a little flush as the plowing business picked up. Maybe you were able to salt a little more money away for a rainy day. Perhaps you could direct some profits toward making delayed plow equipment upgrades. That's wonderful news for your business.
But the heavy snow season of 2007-08 was a double-edged sword for the small businesses that count on plowing income. A heavy snow year can lead to increased competition for a limited number of plowing jobs the following year. And with the uncertainty of weather, the plowing business is likely more prone to booms and busts than the jobs you do in the summer.
LIKE HOG FARMING
I compare small scale residential and commercial plowing to hog farming. When the commodity price for hogs goes up, every farmer in the county wants to raise pigs. When it snows and snows one winter, every guy with a four-wheel-drive truck wonders if he should bolt on a plow and market plowing services in the neighborhood.
If you've been around agriculture, you know what happens when so many farmers start feeding out pigs. There are too many hogs going to market and the price collapses. The opportunists sell off their hogs for a loss and give up on the notion for a while. The hog farmers in it for the long haul take temporary losses, but stick it out for better days.
The same might happen to contractors who offer plowing services. This winter might spawn competition from truck owners out to make a few extra bucks. As it always happens, some of your more price-sensitive customers will take the fly-by-nighters' bait and leave you to save a few dollars.
You might not have to worry, though. Many of those customers will come back in the end, when the newcomers find out plowing is a little more complicated than they thought, and they sell the plow and stick with their day jobs.
You can't prevent this phenomenon from occurring. Entrepreneurship - even in the form of ill-conceived part-time plowing businesses - is the American Dream for many folks. Unskilled and unprepared competitors will happen. They will disrupt the market and provide poor service that may give the entire industry a bad reputation.
You can count on this.
KEEPING YOUR SLICE OF THE PIE
But you can limit the negative impact these would-be plow jockeys have on your business. Try these tips to retain existing customers, rise above low-balling competitors to grab new business and handle the eventual windfall of business when the opportunist plowers fail:
Emphasize your professionalism.
You've built your customer list by providing professional and timely snow removal service. You won't take out a residential customer's mailbox or rip up their driveways. Your untested competition might find it difficult to keep up with the demanding plowing schedule they've created by offering cut-rate pricing. They don't have years of experience operating plowing equipment. They're probably trying to plow while holding down a full-time job somewhere. Make sure customers know they will get attentive service for a fair price if they hire you.
Don't resort to deep price cuts.
Unlike the fly-by-night operators, you know how much it costs to provide good service. You have always based your prices on maintaining and upgrading quality equipment, hiring responsible and qualified drivers and ensuring a reasonable profit for your business. Dropping your prices to compete with cutthroat plow services is a losing proposition. Follow that path and your equipment will deteriorate because you won't be able to afford upgrades, you won't retain your best workers and soon you'll be working just to break even. Remember, you're in this to make a living.
Look sharp.
Just like in your summer work, attractive and efficient equipment pays for itself in reduced downtime, predictable maintenance and a positive image for your business. Newer trucks, high-functioning plow equipment and uniforms all factor into overall customer satisfaction. For many customers, a good presentation will offset a low-ball price.
Factor in higher fuel prices.
History prepares you to better deal with rising or fluctuating fuel prices. The part-time plow driver really has no or little idea of how much fuel he'll burn each time he cleans off a parking lot or driveway. As a result, he might charge a business $80 to plow out a parking lot, but find more than half of the revenue burns out through his truck exhaust. You can approach a customer knowing just how much the job costs you and can easily adjust your estimate this season for fluctuating fuel prices.
Don't ignore loyal customers.
During a competition crisis, whatever you do, don't let service to existing customers slip. Make sure you continue to respond quickly to complaints. Ask customers if they are satisfied or if there is anything you could do to provide better service. Take the time to communicate with your customers before during and after the snowplowing season. Consider sending out a customer service survey card in the spring and a pre-season reminder in the summer months. Take them for granted and the newcomer might take them away.
Be ready to react when customers come back.
It might be in December, February or next fall, but be prepared to welcome back customers who left you for a cut-rate plow service. Customers who left you for price, but want you back will likely become one of your most loyal customers. They saw what it was like without you, and appreciate your professional service all the more. Make sure you have the staff of drivers and the equipment to serve customers who are running away from a fly-by-night plow operator.
ONE CAVEAT
Don't mistake every newcomer to the plowing business as a poor or fly-by-night service provider. For every few unqualified and uneducated plow drivers that hit the streets every winter, there is a fresh-faced entrepreneur - with a good business plan in hand - whose goal is to provide quality service and be a credit to the snow removal industry. And you can't get upset with them for entering the market ... you were in the same position at some point.
Here's hoping we get a good snow dump again this year. The fluffy white stuff gets everyone in the mood for the holidays, offers great winter outdoor recreational opportunities and keeps some income rolling in for plow contractors.