How to Start a Snow Removal Business

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Quick Reference

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.

Financial Overview

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.

Common startup costs for a snow removal business include:

  • Pickup truck, plow trucks and/or tractor

  • Open-top trailer if removing snow from the premesis
  • Snow removal equipment such as a skid steer, snow blower, salt sprayer / sander, shovel, etc.

  • Supplies like salt, sand, and shovels

  • Clothing including coats, gloves, and boots

  • Cash to cover payroll, fuel, insurance, etc.

 

Steps to Starting a Snow Removal Business

Step 1: Write Your 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
Free sample business plans

Step 2: Form a Business Entity

When preparing to launch your business, you’ll need to decide which type of business entity (also called a business structure or legal entity) you’ll operate under. A business entity determines how your business is legally organized and how it operates. You can choose from four main entity types, including a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons regarding liability, costs, and administrative requirements. If you’re not sure which is best for your business, consider talking to a business lawyer for advice.

Related: Comparison of Business Entities

Step 3: 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 naming a snow removal business

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 business, you will need a drivers license and if the truck is heavy enough, a commercial drivers 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 business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the 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

Step 9: Get Business Insurance

A snow removal company needs several types of insurance for full coverage:

  • General liability insurance helps to protect the business if a customer’s property is ever damaged due to the business’ work.

  • Commercial property insurance protects the business from potential damages that might occur to its garage or its equipment in an event like a fire.

  • 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.

Insurance policy cost depends on factors like the value of the business’ 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 accounting for your business

 

How Much Can You Potentially Make Owning a Snow Removal Business

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.

Things to consider before starting a snow removal business

Snow removal is a seasonal activity, so plan for busy winters. If you hope to work a day job in addition to running your snow removal business, you’ll need the scheduling flexibility 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 they can get to work. To offset the loss of income during the warm months, some snow removal business owners expand their services into other areas, like lawn care or property maintenance, to ensure year-round income.

Getting signed snow removal contracts are 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 what will you do 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.

Additional Resources
Snow Magazine
Snow & Ice Management Association
Turf Magazine