As the winter months approach, many entrepreneurs see an opportunity to generate income by starting a snow removal business. Providing snow and ice management services can be a lucrative venture, especially during snowy winters.
But like any business, careful planning and preparation are required before launching your snow removal operation. This article will provide an overview of the snow removal industry, current trends, and tips on starting your own successful snow plowing business.
Snow removal businesses typically offer a variety of snow and ice removal services, which may include salting, deicing, road pre-treating, shoveling, and other 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.
Launching a profitable snow removal business takes careful planning, reliable equipment, skilled labor, and excellent customer service. But for entrepreneurs willing to put in the hard work, plowing snow can pay off with significant income during the winter months. With preparation and dedication, you can clear the way to success in this seasonal industry.
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The snow removal industry is a significant sector in the service industry, particularly in areas prone to winter weather. While the work is inherently seasonal, the demand during the winter months can be intense. According to a report by IBISWorld, the snow plowing services industry in the US generates $25.6 billion in revenue annually, demonstrating the potential profitability in this field.
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, 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.
As we steer deeper into the 21st century, the industry is seeing a trend toward eco-friendly practices, including the use of sustainable materials for de-icing and efforts to reduce the carbon footprint of snow removal operations. Technological integrations such as GPS-enabled solutions for route optimization and client management software are becoming increasingly common, helping businesses operate more efficiently and offer better customer service.
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.
Checklist To Start A Snow Removal Business
Starting a snow removal business requires more than just knowing how to clear snow; it also requires understanding the market, making the business legal to operate, marketing, and more. With preparation and dedication, you can clear the way to success in this seasonal industry, and our checklist aims to help you get started.
Step 1: Research the Market
Before launching any new business, assessing whether there is sufficient demand in your local area to sustain operations is important. This is especially important for highly seasonal businesses like snow removal. While research can’t guarantee success, taking the time to evaluate the market can provide feedback on the viability of your idea. There are several cost-effective ways aspiring entrepreneurs can gauge interest before investing significant money or time into a new business. A few of these include:
Conducting online searches: Start by googling terms like “snow removal” plus your city name. Examine the sponsored ads and organic results. Numerous ads likely indicate strong demand. Also, search Yelp, HomeAdvisor, Thumbtack, and others to see existing snow removal providers and customer reviews. This establishes competition levels and customer preferences.
Analyzing existing competitors: Observing the existing competitors in your area, their service offerings, and customer reviews can offer a glimpse into the market dynamics and the gaps you can fill.
Interviewing potential customers: Reach out to nearby households and businesses to gauge their interest in outsourcing snow removal services. Inquire about their current provider, satisfaction level, pricing, and specific needs. Their candid feedback will reveal pain points to address and realistic pricing models.
Driving the neighborhood: Physically driving around your intended service area after a snowfall provides direct insight into the local market. Observe how many driveways and parking lots already have plowed snow. Also, note properties with unremoved snow that could become potential customers. Evidence of high demand is residents shoveling their own driveways or businesses with uncleared sidewalks.
Social media polls: Leveraging platforms like Facebook or Instagram to conduct polls can be a quick way to gauge interest in your potential services. It’s a space where you can get candid responses from a sizable audience.
Step 2: Write a Business Plan
If bank funding isn’t needed, a business plan can be thought of as an optional step, it may still be worth considering. A business plan can be an effective tool and serve as a roadmap to charting out the direction of your business. It helps to get the ideas out of your head and aids in refining your business ideas. For a snow removal business, the plan could help understand seasonal cash flows, identify the right equipment based on the size of operations, and establish a competitive edge by offering services that address local pain points more efficiently.
Related: How to write a business plan
Step 3: Source Funding
The next step we will cover is making sure there is enough money to start the business. It’s important to tackle this step early on, because if the funds aren’t there, the remaining tasks aren’t necessary.
A snow removal business can be a low-cost business to start, and many people may already have a suitable vehicle, which is the biggest expense. If personal funds aren’t enough, we need to look at other potential sources. The most common ones include:
Bank loans: Lenders are a common option when seeking funds to start a business. They typically require borrowers to invest at least 15% of their personal funds towards the project’s total cost. They also look at the borrower’s credit score and collateral. If a bank considers a loan too risky, they might consider offering it under an SBA loan guarantee, which can provide some security to the lender.
Vehicle loan: Getting a vehicle loan can often be more affordable and easier to secure than a general business loan. The interest rates are typically lower, making it a viable option for many startups.
Friends and family: Friends and family can also be a source of funding. They might be willing to lend money or invest in your business. It’s important to put all agreements in writing to prevent misunderstandings and protect both parties.
Microloans: Microloans are another potential source of funding, especially if the funding needs are relatively low or traditional credit isn’t available. Many microloan programs also provide business training and funding, which can benefit new entrepreneurs.
Step 4: Register the Business
Starting a snow removal business involves several legal steps to ensure it operates within the law. While the specific requirements can vary by state, here are some general steps you’ll need to take:
Choose a business structure: The first step is deciding on a business structure. The most common types include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).
- A sole proprietorship stands out for its simplicity and low setup cost. However, it doesn’t offer personal protection against business liabilities.
- A partnership is similar to a sole proprietorship but involves two or more people. Partners share profits and losses, and each partner is personally liable for the business’s debts.
- A corporation is a separate legal entity owned by shareholders, providing owners with personal liability protection. But it’s more complex and expensive to set up.
- An LLC combines the benefits of a corporation and a partnership. Owners have personal liability protection, and it’s simpler to set up and manage than a corporation.
Related: Comparison of business structures
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:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Obtain business licenses and permits: Specifically related to a snow removal company, drivers will obviously need a driver’s license but if the truck is heavy enough, a commercial driver’s license (CDL) or Department of Transportation (DOT) card will be needed.
Additionally, your business may need general local, state, and federal business registrations such as a sales tax permit and Employer Identification Number.
Step 5: Purchase Equipment
The first four steps dealt with a lot of paperwork, but now we finally get to something a little more fun where we start purchasing the equipment.
Once you’ve identified the necessary equipment, established a budget, and selected a supplier, it’s time to make the purchase. Remember to keep all receipts and documentation for tax purposes and future reference.
Step 6: Create a Marketing Plan
A well-structured marketing plan can be the driving force behind a successful snow removal business. Here are some ways that snow removal businesses reach potential customers effectively.
Claim your business on online directories: Claiming your business on online directories like Google Business Profile, Yelp, and Yellow Pages can significantly increase your online visibility. Ensure your listings include accurate information about your services, contact details, and operating hours. Encourage satisfied customers to leave positive reviews to boost your reputation.
Website: Having a nicely designed website that is optimized for search engines can help you rank higher in search results, making it easier for locals to find your services when the snow starts to fall. Think about crafting helpful blog posts or tips on winter maintenance to boost your online presence.
Social media: Using social media platforms like Facebook and Instagram can help you connect with your community, showcase your services, and share helpful snow removal tips. Regularly engaging with your audience can build trust and loyalty, turning followers into customers.
Referral marketing: One effective way to market your snow plowing service is through referral marketing. Satisfied customers can be a potent source of new business. Encourage your clients to refer your services to their friends, family, or neighbors. Offering a small discount or incentive for referrals can motivate them to spread the word. If you aren’t a competitor, you may also consider partnering with landscaping companies for referrals, as many clients want year-round property maintenance.
Yard signs and business cards: Traditional marketing methods like yard signs and business cards can still be very effective in local communities. Place yard signs in areas where you’ve provided services and distribute business cards to potential clients. These methods can increase your visibility and attract new customers.
Digital ads: Digital ads are another powerful tool for reaching potential customers. Platforms like Google Ads and Facebook Ads allow you to target specific demographics and locations, ensuring your ads reach the right audience. Remember to highlight what makes your business unique in your ads to stand out from the competition.
Step 7: Prepare to Launch!
Once the business structure is in place, funding secured, equipment purchased, and marketing strategies implemented, there are probably some important steps to complete before officially starting your snow removal business. Every business will have different needs, but here are some of the common ones:
Business insurance: Accidents can happen, and having adequate insurance coverage can protect you from potential liabilities. For snow removal businesses, common types of insurance include general liability insurance, commercial auto insurance, and workers’ compensation insurance if you have employees.
Bookkeeping: Implementing a reliable bookkeeping system is crucial for tracking income, expenses, and overall financial health. You can use software like Wave Accounting (FREE) or Quickbooks or hire a professional accountant.
Employees: If your workload requires it, you may need to hire employees. This involves creating job descriptions, interviewing candidates, and managing payroll and taxes.
Contracts: Crafting clear and detailed contracts for your clients will safeguard your business interests. Some industry-specific contracts might include clauses about service frequency, specifics of services provided, and liability waivers regarding potential damages during snow removal.
Bank account: Open a separate bank account for your business to keep personal and business finances separate. This makes bookkeeping easier, especially at tax time.
Management software: Consider investing in industry-specific management or point-of-sale software like Jobber, Yeti, or Nektyd. These tools can help with scheduling, invoicing, customer relationship management, and more.
Pricing: Setting competitive yet profitable pricing is an important aspect of your services. Conduct a thorough market analysis to determine a fair pricing strategy, taking into account your operating costs and the value you offer.
Joining industry associations: Joining industry associations like the Snow & Ice Management Association (SIMA), Accredited Snow Contractors Association (ASCA), or the National Association of Landscape Professionals (NALP) can provide networking opportunities, resources, and credibility.
Also, have backup equipment ready in case your main snowblower/plow goes down. Rentals are hard to find during storms.
Common Questions When Starting A Snow Removal Business
How much does it cost to start a snow removal business?
The total costs to start a basic snow removal service can range from $15,000 to $80,000, depending on the scale of your operations and whether you already own any equipment. The major expenses fall into several categories:
Snow removal equipment: This includes trucks, plows, snowblowers, shovels, and spreaders. Buying newer commercial-grade equipment can cost $10,000 to $50,000, but renting or buying good used equipment cuts the costs substantially.
Insurance: Snow removal requires general liability insurance at a minimum, with commercial auto insurance for any vehicles. Expect to budget $2,000 to $5,000 for the first year’s premiums. Workers’ compensation is also required if you have employees.
Business registration and licensing: Registering your business and obtaining necessary licenses might set you back by around $100 to $500, depending on the state requirements.
Fuel & Supplies: Stock up on gas, snow melt products, stabilizer, plow markers, shovels, and other supplies. Allocate $500 to $1,500 for your initial inventory and first storm preparations.
Marketing: Basic advertising like website, Google/Facebook ads, flyers, and signs will run $1,000 to $2,000 to promote your new business. This is critical for getting the word out.
Deposits: If renting equipment or shop space, the first and last month’s rent will be due upfront. Budget $1,000 to $3,000, depending on your situation.
Adding all these up, we get a ballpark figure, but be sure your exact costs will vary.
How profitable is 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, the size of its customer base, how many trucks are operational during the winter, and more.
Industry research indicates an average snow removal business generates $100 per hour when plowing or shoveling, with prices ranging from $50-$140 per hour depending on the job.
Assuming you service 10 medium commercial lots at an average of 4 hours each during a 6-inch snowstorm, that’s $4,000 in revenue (10 lots x 4 hours x $100 per hour).
Your expenses as a solo operator with 1 truck would be approximately $200 in fuel (40 gallons at $5/gallon) and $500 in salt/deicer materials.
That’s $700 in total variable expenses per 6-inch storm. By charging a per-inch rate, you will cover fixed costs over the winter season. This brings your potential profit per 6-inch snow event to $3,300 as a solo operator with 1 truck.
For a region with 25 plowable snows per year, you could earn over $82,500 in annual profits. The key factors are your hourly rate, number of clients, and inches of snowfall. Careful cost management and pricing can make snow removal a highly profitable seasonal 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, 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 the trucks will see when used as plow vehicles.
What skills are 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 operations.
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.
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.