Even for veterans, challenges remain
1 Aug, 2006 By: Christine Blank Landscape ManagementSnow and ice professionals face a number of stresses that were not there when they started.
National property management firms have come into the picture, negotiating lower prices for jobs; competition from smaller companies is heating up; and higher expenses, such as fuel and bothersome litigation, are driving up costs.
Because of these challenges, many veterans (those interviewed for this story responded that they have 16 or more years in business) say their profit margins are not as strong as they used to be. At the same time, many businesses are growing year-over-year and are willing to reinvent their businesses as the industry changes.
"It can still be a profitable business if it is run properly, but it is not as profitable as it used to be," says Frank Schembre, owner of Executive Snow Control in Maspeth, NY. The 20-year-old company, which has annual 7-figure revenues, serves commercial customers in Manhattan and its surrounding boroughs.
Outside forces
National property management companies taking over commercial client accounts is one of the major factors affecting snow and ice professionals today, since snow removal companies sometimes feel compelled to stay in the game by bidding jobs lower than they did before and national firms sometimes delay paying the snow companies.
Competition from new, smaller operators that undercut on prices is another factor affecting the veterans' businesses. In Snow Business' recent State of the Industry survey, 31 percent of respondents said pricing undercutting was the "biggest trend" in the industry.
The veterans are competing with small operations that may only stay in the business a year or two, but snare some of their customers. "There are a lot of us. There are one- or two-person trucks, and some will fade away," says Mark Dean, owner of Grounds Maintenance Services Inc., Park City, UT.
Dean also faced a fairly unique situation last year that cut into his company's profits. As an Army Reservist, he was called to service from October 2004 to October 2005. He served at a U.S. base, getting troops ready to go overseas. "My three managers and wife did their best, but they faced a lot of issues. The cost of fuel doubled or tripled at one point," says Dean. Last year was his worst year for sales, he says.
While Becker Landscaping in Indianapolis has seen profits increase annually this year, the company takes some lower-paying jobs because of increased competition, says owner Todd Becker.
"Competition is not always good; we have done some work lower in price than we have in the past," Becker says.
"To get those customers back, you have to educate them about why they have to pay more for your service," Becker adds.
For example, he explains to clients that he keeps detailed records on every job, to be prepared for slip-and-fall litigation.
Lawsuits and labor
Fighting the increasing number of personal injury lawsuits is another concern for these longstanding businesses. "It takes several hours a week [to fight lawsuits]," Schembre says.
Finding reliable staff in the winter is another ongoing challenge veteran operators face.
"Finding good people is always a challenge. We have exceeded the seasonal average snowfall for four straight years," Schembre says.
Still, the longstanding companies have learned how to organize and schedule their full-time and seasonal employees. "We lose about 60 percent [of staff] in the winter. You have to be cognizant of that when you are doing sales," Becker says.
The large veterans are primarily working with commercial companies, including large retail chains and shopping centers, but some also work successfully in residential areas, including entities such as homeowners' associations.
Grounds Maintenance Services Inc., for example, contracts primarily with homeowners' associations in upscale neighborhoods, but also serves businesses and private schools.
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