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.
When dealing with how you should schedule all these units moving snow, there are arguments for and against how long the schedule should take to complete. In some markets, the schedules are set up so that the plowing is completed within twelve hours of starting. Most contractors around the country work on a six to eight hour schedule to get all snow cleared in a normal snowfall. It would be irresponsible to state that ‘normal’ for Erie, PA is the same as it is in Des Moines, Iowa or Minneapolis, MN. Keep in mind that ‘normal’ accumulations also vary widely from one region of the country to another. It is also generally accepted that when an extraordinary event takes place the timetables are extended depending just how far above normal the snow event actually is.
Knowing how to react in the event of a snowfall, having a plan that can be referred to in such cases, and the comfort level knowing that some discussion has taken place in order to achieve the highest level of service for your customers is essential to success. As with most successful business’s, communication is key to that success.
As winter comes to a close, many begin to think about landscaping, power sweeping, tree care, and the like. However, think about “snow”. Think about collecting outstanding receivables, planning for next falls’ expenditures, setting sales goals for those out hitting the street looking to grow their snow business, checking margins on specific accounts, and about how our equipment performed this past winter. Think about technology and what we can do to enhance our service offering to our clients and customers. Should we pursue commercial accounts, HOA’s, residential or retail accounts for next winter. Can we get satisfied customers to give us testimonial statements we can use on websites? Do we start renewals THIS week, or NEXT week (not next summer – NOW)? What retention percentage is acceptable for those renewal efforts?
What worked last winter? And, just as importantly, what did not work? Who showed up for every event, and who slacked off? Who still owes us money and is our collection process in place? Can we execute that process to ensure timely payment of outstanding monies due to us?
So many things to reflect upon and the possibility for just one more snowfall yet this season.
And – most importantly – can we get this all done in the 7-8 months until the next snow season?
Everybody has the capability of succeeding or failing at anything they do. Knowing your costs and knowing how to utilize the financial tools that all businesses have available to them is the best way to ward off failure. If you don’t know how to read a financial statement, balance sheet or cash flow statement – learn. And soon. You will need all three in order to survive. If you are out there pushing snow simply because you love being out in the storm, then concentrate on plowing only those accounts that you can handle yourself. However, if you plan on purchasing equipment, trucks, loaders, containment plows and the like you need to know how the costs associated with such purchases affect your ability to charge adequately in order to achieve a viable profit. Once you know these basics, your whole philosophy of charging the right amounts for the services you render becomes much easier. Also, never ever price your services to “what the market will bear”. You shall then succeed in knowing how “failure” feels as you shall only succeed in driving the pricing you can charge downward. Once you enter that spiral, failure is only a matter of time. Know your costs, figure your pricing after determining your costs, and charge accordingly. Even in these tough economic times you can still get a fair price for the work that needs to be done IF you know your costs. This is a much better formula for success than shooting from the hip and hoping you are making a profit. Additionally, don’t grow too fast. I’ve been there and done that – and this too can result in disaster. Only grow as much as you can get your arms around. Or – growth too fast can lead to failure.
The entrepreneurial spirit within demands that we (as small business owners) continue growing our business’s in order fulfill the goals we set for ourselves when we started out. These growth goals demand that we plan in some form in order to assist in achieving these goals. When making the jump from operating a small ‘mom and pop’ operation to running a full blown business enterprise, projecting cash flows becomes an issue that requires attention. One way to achieve these goals is to have reoccurring business each year. Often, we run around each fall (or spring) making presentations to customers in an effort to renew them for each season.
All this effort at signing renewals could be put into soliciting new business if the customer base was such that you only had to “renew” a third of the customer base for each season. To do this, consider signing customers to multi year contracts. If presented properly, most customers will welcome the idea of keeping expenditures “firm” for two or three, or even five seasons. Their expense budgets are then locked in for a long period of time, thus negating the need to plan for increased expenses for at least a portion of their exterior maintenance budget. This also allows the savvy property manager to make themselves look good in the eyes of the owner of the property.
With multi-year contracts, the landscape maintenance/tree care/irrigation maintenance business owner can then accurately project revenues for longer periods of time. The same holds true for snow and ice management portions of our business. Even though weather is a major factor in revenue generation, being able to project “average” revenues makes the snow contactor look much better to the lending institutions we must all deal with. Such long term projections allows a more accurate budgetary process, thus allowing the business owner the luxury of being able to plan for necessary purchases and other needed expenditures. Expense forecasting can be key to achieving profitability in the long run, and having multi-year contracts in place will then assist in projecting profits for the upcoming year, or years.
Snow plow operators/employees/subcontractors should be required to view the properties they will service during plowing operations before the season begins. Finding curbs and manhole covers during a snowstorm can be dangerous to the operator as well as opening up the possibility of severely damaging the truck and/or plow. And remember, ALL plow operators must wear a seat-belt while plowing. If it is necessary to have a passenger in the plow truck – seat-belt use should be mandatory for these individuals too.
Sidewalk snow removal crews also require proper attire to work out in the elements. While they will be warm while using a snow pusher or shovel, once they stop the physical activity a chill can set in if they are not properly dressed. Heat escapes the human body more quickly f
rom the uncapped head than from any other part of the body. A wool hat with a face mask can temper this heat loss, and also ward off frostbite during windy conditions. Additionally, warm feet are very important when working on a sidewalk snow removal crew. Good, warm footwear is a “must” if workers are to be productive.
Some companies will supply sidewalk workers with proper attire – Carhartt jacket, Carhartt bibs, waterproof boots and hats. Considering how much revenue these people generate for the companies they work for – and how little they are paid per hour – this is a small investment that can pay back big time.
Don’t hide the fact that you are making a profit at providing snow management services. While it may seem like everyone is plowing snow, the fact is you are in the minority. You provide a necessary service that requires specialized equipment, special talents and tremendous dedication to your customers. Customers should be glad you are there – ready and willing to provide services under terrible, and often unsafe, conditions. Sell these benefits of dealing with your company, no matter what size fleet you run.
Most importantly, keep in mind that you are in the snow and ice management business year round. While most of our customers only think of snow just before the season, we should be thinking about snow all year long. When you are asking about the landscape maintenance business or tree care business, or sweeping services, ask about the snow business too. When you do a landscape installation (or irrigation installation, paver installation, etc.) ask who does the snow removal. Are they happy with the service they are receiving? If they say yes – then that is good for your customer. Tell them that they are lucky to have a good contractor, but if they become unsatisfied, or if the incumbent stumbles, could you please have the opportunity to secure the business? Also, if they are happy with their current contractor, ask what they are being charged. If for no other reason than to see what the competition is charging, you should always ask. It’s no threat to the incumbent as you know that your customer is satisfied. Then write down this number somewhere where it will not get lost. In a couple years, if you get a call to quote the work, you will have some idea “where the numbers are at” for that particular customer.
For those contractors that are in the plowing business to make a profit, it is a high profit center that gets considerable attention throughout the year. You probably don’t have a problem quoting new landscape business in January. You shouldn’t have a problem quoting snow business in June and July either.
Workman’s Compensation claims can put a company out of business if not taken seriously. While prevention is the preferred method of dealing with potential employee injuries, unfortunately such injuries do occur and must be dealt with in some fashion. Getting injured employees proper, timely medical care so that they can return to work quickly is a key factor in keeping workman’s compensation premiums within reason. Not paying attention to what is happening can prove disastrous in the form of increased premiums, decreased productivity in your work force, and a decided affect to your bottom line profits. Additionally, putting ones head in the sand and assuming that the insurance company will “take care of it” is archaic and implies ignorance of the facts surrounding injury management. And, make no mistake – it should be viewed as injury “management” as you can manage the process of getting an employee the proper care in an effort to return that employee to an active work capacity. This in no way implies that companies should take a callous attitude towards good medical attention for an injured employee. However, not paying attention to the proper aftercare may promote abuses to the system and therefore dramatically escalate the costs associated with such insurance coverage.