How to Start a Snow Removal Business

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How to Start a Snow Removal Business

A snow removal business is an essential service in cold winter climates, and harsh winters can mean that snow removal contractors see significant profits. If you are looking to make some extra cash in the winter or wanting to offset a business that is slow in the winter, like a landscaping business, this may be the business for you. When you own your business, you can identify an unmet need in your area, develop your own services and policies, and start to profit off of the winter storms the area receives. Snow removal is a seasonal activity, but with a little creativity, it can be the basis of your year-round business.

Business Overview

Snow removal businesses typically offer a variety of snow and ice removal services, which may include salting, deicing, road pre-treating, shoveling, and other complementary snow removal tasks. A business may specialize in residential clients and business accounts to clear driveways, sidewalks, walkways, streets, and parking lots. Large-scale regional businesses usually accommodate industrial plowing needs, but there’s also plenty of demand for smaller, independently owned snow removal businesses hired by homeowners, retail businesses, commercial offices and facilities, and more.

Because snow removal is seasonal, many snow removal businesses also offer property management or landscaping services during other times of the year. A business’ income will fluctuate depending on the severity of each winter and the weather that the area receives.

Industry Summary

According to IBIS World, the snowplowing services industry experienced an average growth of 0.1% from 2014 to 2019. That growth was due to factors including higher-than-average annual snowfall totals and several events that resulted in high accumulation, boosting the demand for these services. Because many retail and commercial businesses support the industry, a thriving economy also boosted spending on snow plowing services.

As of 2019, the snow removal industry was a $20 billion market. A total of 152,917 businesses employed 355,107 staff.

Because the snowplowing industry is partially dependent on the weather and the amount of snow received each winter, it’s difficult to predict the industry’s growth from 2019 to 2024. However, based on factors like the number of commercial and retail businesses available, the economy’s growth indicates that the snowplowing industry will have a growing customer base. A rise in disposable income and consumer spending also bodes well for the industry’s profits.

Industry Trends

Several trends are affecting the snowplowing industry. According to Snow Magazine, new technology is making trucks better suited for the job of plowing. Innovation with trucks equipped with light-weight components is improving these vehicles’ versatility, and electrification advancements are reducing truck idling, so that truck systems stay operational even while the engine isn’t on.

Risk Placement Services notes significant legal trends that snow removal business owners should be aware of. The number of insurance carriers willing to offer general liability coverage to businesses has declined, and premiums have increased significantly. This reluctance to offer liability coverage is partially due to an increase in claim settlements. Slip and fall claims are particularly common, so businesses that offer snow removal at locations like gas stations, convenience stores, banks with walkup ATMs, pharmacies, large grocery stores, hardware stores, and more may have a particularly hard time finding insurance coverage.

Target Market

A snow removal service’s target market will depend on that business’s specialty. A business that focuses mainly on residential services will market to residential property owners. A business that offers commercial services will market to business owners and retail property owners. Some businesses offer a combination of services and will need to market to both audiences.

Skills, experience, and education useful in running a snow removal business

Starting a snow removal business doesn’t require a business degree, but certain skills and experiences will be helpful.

Snow removal experience. Previous experience driving a plow is essential. Anyone hoping to open a snow removal business of their own might want to consider working for another business first so they can learn the ins and outs of plowing and business operation.

Background in mechanics. A background in mechanics will allow a snow removal business owner to do at least some of their machine repairs and maintenance themselves, saving money over the cost of hiring a mechanic.

Troubleshooting abilities. A creative approach to solving problems will be beneficial in this industry, whether the problem is dealing with an overbooked schedule or freeing a stuck truck.

Attention to detail. A business owner will need attention to detail in everything from ensuring quality work to managing invoices and schedules.

Customer service skills. Strong customer service skills are essential. A snow removal business owner will need to communicate with customers and effectively address customer concerns to build up a loyal customer base.

Marketing skills. Some marketing skills are beneficial since a business owner will be able to do at least some of their own marketing, saving on the cost of hiring a professional.

Checklist for Starting a Snow Removal Business

If you’re thinking about starting your own snow removal business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Write a Business Plan

Writing a business plan is an essential step to starting your snow removal business. The plan will help you get your business organized and include details like your target market, the types of services you will offer, and how you’ll profit. If you decide to apply for financing from a bank or investor, they’ll require a copy of your business plan. Multiple sources have also found that developing a business plan increases the chance of a business being successful.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for snow removal business names

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a snow removal business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select Your Location

It’s possible to run a single-truck plow business right out of your home driveway and garage, but as your business grows, you may need to rent or buy a commercial garage to store your equipment. Factors like the garage’s size, location, and available amenities will affect its rent or purchase price. Keep in mind that you’ll want a location that’s close to your client base, too.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Specifically related to a snow removal company, you will need a driver’s license and if the truck is heavy enough, a commercial driver’s license (CDL) or Department of Transportation (DOT) card.

Additionally, your business may need general local, state, and federal business registrations such as a sales tax permit and Employer Identification Number.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Starting a snow removal business can require a significant initial investment, especially if you don’t already have a truck. If you need financing to cover initial startup costs the bank will look for good credit and a personal investment of between 15-25% in the project. An auto loan may be an easier and lower-cost option to help you finance your first truck purchase.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get Your Marketing Plan in Place

A strong marketing plan will help you to build up your initial customer base and will also be important when growing your business each winter. Common marketing techniques for snow removal businesses include social media marketing on Facebook and LinkedIn, online advertising on Google, direct mail, and in-person visits to local businesses. A customer loyalty or referral program may also help to build up your customer base.

Related: Low-cost ideas to market a new business

One important task while working on the marketing is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a snow removal business. A few of these include:
– General liability insurance helps to protect the business if a customer’s property is ever damaged due to the business’ work.
– Worker’s compensation insurance helps cover expenses that could result if an employee were hurt while on the job.
– Commercial auto insurance covers any business-owned vehicles, protecting the business from expenses that could occur if the vehicles were in an accident.

The cost to insure a snow removal business varies depending on factors like the value of the business’s vehicles and how many employees are on staff. To best understand what to budget for insurance, it’s best to request quotes from multiple insurance providers. When comparing the quotes, consider how the premiums, coverage exclusions, coverage limits, and other factors differ.

Related: Types of insurance your business may need

Step 10: Hire Employees

It’s possible for a snow removal business owner to handle all of the work associated with a single-truck business, but as that business grows, it may be necessary to hire staff to keep up with the extra work. According to Zip Recruiter, snow plow drivers earn an average of $51,510 per year, though that salary can range from $27,500 to $77,000.

In addition to budgeting for staff salaries, a business will need to cover other related costs like paid time off and worker’s comp insurance.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a snow removal business?

The cost to start a snow removal business can vary depending on the business’ size and whether an owner opts to purchase new or used equipment.

Buying and outfitting a single new truck can cost upwards of $70,000, while used vehicles cost less. If a business owner is on a tight budget, then they may need to focus on starting a business with minimal machinery, then expanding their fleet based on the business’ success.

Some common startup costs for a snow removal business include:
– Pickup truck, plow trucks, and/or tractor
– Open-top trailer if removing snow from the premises
– Snow removal equipment such as a skid steer, snow blower, salt sprayer, shovel, etc.
– Supplies like salt, sand, and shovels
– Clothing including coats, gloves, and boots
– Cash to cover payroll, fuel, insurance, etc.

How much does a snow removal business owner make?

Many factors will determine a snow removal business’ profitability, including the number and severity of storms sustained each winter, the business’ service area, and size of its customer base, how many trucks are operational during the winter, and more. According to Muzi Ford, many plow businesses make $50,000 per winter per truck.

Since snow removal is a seasonal activity and you hope to continue working a day job in addition to running your snow removal business, you’ll need a job that provides scheduling flexibility during the winter months to be able to focus entirely on plowing for multiple days at a time when a storm hits. Many customers won’t be interested in waiting until you get off work to plow their driveway so this model can limit the potential of your business.

To offset the loss of income during the warm months, some snow plow business owners expand their services into other areas, like lawn care or property maintenance, to ensure year-round income.

Getting signed commercial snow removal contracts from businesses is a great way to guarantee income regardless of whether there are snowstorms or not. That said, be sure to understand the terms and conditions in the paperwork. Another consideration is do you have a backup plan if your truck breaks down and you can’t deliver on your contracts?

Plowing is hard on trucks, so it’s important to budget for maintenance and repair costs and the depreciation in value that the trucks will see when being used as plow vehicles. Consider working for an established snow removal business for at least a season to gain some insight into the nuances of running this type of business.

Are there grants to start a snow removal business?

It’s extremely rare to find a grant to start a snow removal business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a snow removal business?

The NAICS code for a snow removal business is 561730, which is classified under Landscaping Services.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours

Additional Resources
Snow Magazine
Snow & Ice Management Association
Turf Magazine

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