By showing that you have multi-year contracts in place, you automatically indicate that you have cash flow in place to repay the loan. And, it makes you look like a savvy businessperson instead of “someone who couldn’t find a real job”.
Everybody wins in this multi-year contract scenario. The customer wins because your employees become familiar with the idiosyncrasies of the property and they come to know what is expected. Your employees win because they realize that there will be work for them next year. Your sales team wins as they no longer have to concentrate their early spring or fall sales efforts on renewals, and can solicit new business, and hopefully make a commission on the new account. The company wins because cash flows and profit projections can be solidified. You also appear (in the eyes of potential lenders) to be a better businessperson.
Another important reason for having a multi-year book of business is if you are considering selling the business at some point in the future. Companies that have multi-year snow management contracts are much more attractive to potential buyers. What you are selling is cash flows and profits. Single year contracts carry very little value in the eyes of a potential buyer because of the effort required to renew then each season. Multi-year contracts bring higher value to your business for all the reasons noted above. This is one of the most important things potential buyers of your business look for when evaluating the potential for them in your customer mix.
Assuming that you have priced out the work properly, signing snow management customers (and landscape maintenance, irrigation maintenance and snowplowing customers) to multi-year contracts is smart business.
Hiring needs are more easily recognized if you can project what your business load will be “next year”. If you know what your staffing needs will be, and if you can assure potential employees that they will, in fact, have a job next season – it makes it much easier to retain good workers. These employees will learn what the customers want, and carry that information from year to year. You should then enjoy increased productivity on customer sites since your employees already know the customers wants and needs, and will not require time to “learn” what the customers expectations might be. Customers enjoy a satisfaction level that comes with being “comfortable” with the level of service that is achieved through repetition by those familiar with the property.
If you need to obtain business financing, have multi-year contracts will assist you in sustaining your credibility with your banker or leasing company. Such foresight shows good business sense, and also shows the potential lender that you will have funds available to repay the loan. One of the biggest questions asked (even if silently) is “how will you repay us?” How you address this can make or break a loan application’s approval percentage.
No production oriented sidewalk crew member should be utilizing any type of “shovel” when moving snow from a sidewalk. This can lead to numerous, unnecessary workman’s compensation claims due to the fact that most “shoveling” requires bending and improper use of back muscles. Supply these workers with “snow pushers” that will not allow actual shoveling of snow. Snow is then “pushed” to either side of the walkway, rather than lifted off the walkway surface.
If the snow is deep and requires the use of a snowblower, provide ramps to allow the snowblower to be rolled off the truck instead of lifted. Prior to the season, have an instructional session with sidewalk snow removal personnel so that they know the proper way to direct the snow from the discharge chute. Additionally, make the operators review the owner’s manual – paying special attention to the ‘safety section’. These individuals also need to know the proper way to change shear pins, check oil, and the proper method for starting the unit (if it is not ‘electric start’).
Leading snowblower manufacturers tell us that THE number one cause of operator injury comes from trying to unplug an iced up machine without turning off the engine (and consequently the snowblower). As elementary as it may seem, you should stress that the unit be turned off, key removed and spark plug wire be disconnected prior to doing any service to the unit. Additionally, while smoking can shorten anyone’s life span, filling up the snowblower with gasoline while smoking a cigarette can shorten even more.
One drawback of small crews on large properties is they cannot complete the work fast enough. They spend too much time on-site, or do not get the job done on time. One answer to that problem is increasing the crew size. All that is needed is a crew-cab truck and a few more snow pushers. You should be able to send as many as six people to one property and “knock it out”, then move on to the next site. Large crews are fun to work with. They appeal to the social side of our nature, making it easy to build enthusiasm. Large crews make the members feel safe and secure. They feel as though there are enough of “us” to get it done.
Production managers and snow removal customers like large crews because absenteeism does not cripple the production effort. Supervisors (especially non producing supervisors) like a lot of people to look after. It makes them feel needed. Crew members like large crews. It is like being on a team. You don’t feel the pressure to produce. They have more freedom to do the things they enjoy as long as they keep busy. Property owners/managers love big crews!! They are taught in property management school that the more people running around their property the better !! They sometimes demand contractors “get more people” on the job and “get it done”!!
Crews working a specific route are often sized to fit the largest property. Crews seem to grow almost by themselves. Supervisors and production managers often add one member as ‘insurance’ against anything going wrong. This is a sign of mismanagement, not efficiency. Everyone likes large crews except the person responsible for profit. In some cases he (or she) does not know that large crews (with more than 3 people) are the problem rather than the solution. They blame people, the pricing system, or the weather for the production crisis that is reducing profits.
A production organization should be staffed and organized so the entire operation is a support system for the production workers and production units. Sidewalk snow removal should be viewed as a production oriented task. The functioning production organization should be structured so that management will not interfere with production. Production workers perform best when they are managed as team members, or athletes, rather than laborers. They need specific goals set for each production period (or snow event). The company standard (either the contractor’s standard or the customer’s standard) for performance must be demonstrated by the crew leader. The procedures leading to the standards must be taught while a snow event is taking place, thus putting even more pressure on the crew leader and production workers. Unfortunately, snow events in some areas of the country are few and far between, thus making retention of the production principles even harder.
Most people want more than a paycheck for a day’s work. Part of management’s responsibility in a production organization is to help each player on the team to build self esteem.
When it comes to sidewalk snow clearing production, we need to evaluate the importance of the production worker. It is difficult, at first, to accept the reality that the production worker in snow removal operations (often the lowest paid and generally an on-call part time employee) should be the focal point of our management systems. A production unit for sidewalk snow removal is a crew that includes labor, equipment, material, and transportation. The labor for one production unit usually consists of one crew leader (or working foreman) and one or more crew members.
The crew leader has emerged from the eighties and nineties, as the specialist of the new millennium, with an expanded role in managing the snow removal on sidewalks and ice melting on any specific site. The difficulty and expense of communication links and direct supervision of mobile service crews, coupled with the need to have an experienced, knowledgeable employee on the property at all times (as is the case with most on-site crews) has reshaped the value and job description of the traditional working foreman or crew leader. Organizations that recognize this expanded role for the crew leader will streamline their organization by eliminating the middle managers and production supervisors. They will redistribute these assets all the while upgrading the role of the modern day sidewalk crew leader.
The most efficient crew size for performing sidewalk snow removal activities has been discussed, argued, and subjected to trial and error testing. Since sidewalk snow removal emerged as a separate (or specialty) business, the issue became more important. By adding mobile crews, we discovered the importance of correct crew sizing. In today’s competitive labor environment the need for higher productivity and increased quality suggests a ‘new look’ at sizing sidewalk snow removal crews.
Let’s look back at our (non-snow related) experience with small crews. Most of us at some time in our careers have worked as a one-person crew. Remember how much you could accomplish in one long day?? Remember the first really good helper, the one who read your mind and did what you wanted him to do?? You increased your production when you added the helper — BUT you did not double it. Sidewalk snow removal (and snowplowing too, for that matter) is a series of solo, one-person tasks. Unlike landscape installation or construction, sidewalk maintenance crews do not handle heavy or awkward materials or equipment requiring more than one person to improve efficiency. This lack of synergistic benefit on a per task basis encourages us to think of our crews as combinations of one-person crews.
Be very careful in your treatment of independent service providers while they are plowing snow for you. You do not want them to be misconstrued as being “employees” as compared to actual “subcontractors”. While you can give them direction – that direction should be limited to what your customers’ expectations are as far as a finished product after the plowing is completed. You must not restrict them from plowing for themselves or other contractors (if you treat them right and pay them as promised – they won’t go elsewhere). Never put your sign on their truck or piece of subcontracted equipment. Do not pay any of their expenses. Require proper insurance coverage from all SP’s. Never pay any SP until they have filled out an IRS Form W-9 for your files. Always issue a proper IRS Form 1099 to the service provider at year-end – and make certain that the subcontractor knows that this income will be reported to the government, as is required by law.
The use of independent service providers is a tool for growth. It is not the only way to grow your snowplowing business, but it may be one of the easiest methods for growth without substantial capital investment on your part. Treat them right, and they will be loyal and productive members of “your team”.
We are all looking for ways to lower the tax bite on our business’s. The government has given us a few incentives this past year, to help spur employment. While you’re probably not looking to help the masses become employed, one “little thing” you might want to take advantage of is the “HIRE Act”. Under the “Hiring Incentives to Restore Employment (HIRE) Act”, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers who are considered, “qualified employees.”
The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.
In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52-week period, up to a maximum credit of $1,000.00.
So – basically if you hired a person that was on employment for 60 days and didn’t work for more than 40 hours during that time they may be considered a qualified employee.