Is Specializing in Commercial or Residential Snow Removal Right for You?

Rasevic Snow Services Front Loader

After a snow removal company grows to a certain point, the business owner often begins to think about whether the company should continue to take anybody and everybody that will sign a contract or if they should begin to specialize in handling only certain kinds of clients.

We caught up with Kevin Gilbride, Executive Director of the Accredited Snow Contractors Association (ASCA), and talked to him about the differences between commercial and residential snow removal and why the average snow removal contractor often moves toward one type or another.  ASCA is a leading association for professional snow removal companies.  Here are some of the things Gilbride shared with us.

Commercial and Residential Snow Removal are Two Different Animals

Almost every snow removal company starts the same, taking on any client who says “yes.” As the company grows into a stable company, many realize they have two entirely separate snow removal operations running at the same time.  Gilbride shares, “You end up with different kinds of route management, different kinds of equipment, different training, policies, and procedures.”

Gilbride summed it up, “You are running two different companies.”

Both residential and commercial clients want a property clean of snow for the smallest dollar amount with the job done “right,” but how you cost effectively make that happen looks very different.  Everything from obstacles and number of people on the property to how far you have to push the snow pile is different.  One or two guys might handle dozens of residential properties in a single storm.  On the other hand, a commercial property might take a dozen team members on a single property for the exact same storm in the same city.

Every year many growing snow removal companies to take a step back and ask, “do I best service my customers trying to be all things to all people?”  The answer is often “no” because of what it takes to clear a home versus what it takes to clear a larger lot.  Over the years, many snow removal companies have decided to specialize in either residential or commercial snow removal services rather than trying to be all things to all people.

What is Special About Residential Snow Removal?

For the residential providers, the name of the game getting as many clients as possible within a small service area.  Keeping clients grouped closely together eliminates time and distance between jobs which keeps employees and equipment moving snow.

You are also often limited in the equipment you can use because skid steers don’t travel fast enough between jobs and ATVs and UTVs are not always welcome traveling the streets in some cities.  Most residential snow removal companies will use a plow on a small truck, have something to quickly clear sidewalks (often transported in the back of the truck), and try to be in and out as quickly as possible.

The good news is, many residential properties can be done in mere minutes, but keep in mind that since contractors only get paid for moving snow, driving between jobs is a waste of time and money.

Another benefit of residential snow removal is residential customers don’t typically worry about slip and fall liability.  There is lower exposure to a home owner because there are less people on the property and even if someone does slip and fall on a homeowner’s property, there is less potential for a lawsuit.

The average homeowner will measure quality by looking out their window and if there is still a blanket of white on the driveway, then they give their snow removal team a call. If the driveway is clean, they go about their day happy.  No more thought is given to what it took to make the property safe.  That trickles down to less work in quoting, less work in documentation, and less risk to the business.

A final note about residential customers is that if you lose a customer, it is often easy to replace that customer with a new one.  Since all of the residential customers pay about the same, there are no “golden customers” that can make or break your business.

What is special about commercial snow removal?

For the commercial client, eliminating risk is the name of the game.  Gilbride shares the biggest concern is because, “commercial clients have the highest risk of liability.”  With more pedestrian traffic and deeper pockets, lawsuits are more likely to hit a commercial client.

 

With a commercial property, the idea is first to keep the property safe for everyone who steps foot on the property. The snow removal plan and the high level of employee training go a long way to keeping a property safe.  The next piece is to keep the snow removal contractor, the property owner, and the owner’s insurance company from getting sued which keeps costs down for everyone.

Gilbride shared that this is why commercial snow removal contractors have been pursuing the ISO/SN9001 standard.  “Everyone comes back from conferences and seminars all fired up with the great things they are going to implement, but then life happens and they never get it done.  Getting the ISO certification holds your feet to the fire to do what you know will be best for your client and your company.

The ISO SN9001 Standard

The commercial snow removal contractors who have been certified to the SN9001 standard delivers real value to their clients.  Clients win because they know the contractor is going to deliver on the plan since the contractor is audited by a third party showing the contractor does what was promised.  The contractor wins because the contractor has a quality management system in place ensuring nothing important falls through the cracks.  Everybody wins because the risk of Liability goes down.

Gilbride shared these numbers from last year:

  • Winter related slip and fall Lawsuits dismissed:
  • Industry Average = 35% dismissed
  • SN9001 Certified Companies = 70% dismissed
  • Industry Avg. Payout = over $15,000
  • SN9001 Certified Company Avg. Payout. = only $4100

Between the higher number of cases that get settled rather than dismissed as well as the higher payout, you have almost eight times the exposure using the average snow removal professional verses the SN9001 certified commercial snow removal contractor.

Risk extends beyond customers and visitors to the property because if an employee falls the client could find he or she is paying for medical bills, wages for lost time, and other expenses.  Going even further, risk extends into lost business when a potential customer goes to a competitor just because a lot or walkway is not cleared properly.

Risk can also extend to equipment.  Everyone knows the hospital needs to have a clear path for an ambulance, but any facility that has trucks arriving for shipping and receiving also needs to keep a clear path so the vehicles can safely drive on your property.  To get a truck stuck at a loading dock can be costly for the shipping firm and for the property owner.

Since the emphasis is on risk management, there is a lot more work in the quoting process and more documentation required before, during, and after snow events.  Each quote is often custom developed for every customer unlike residential jobs where a homeowner can get one of only a few different standard packages.

There are other factors to commercial snow removal as well.  You don’t have to be a rocket scientist to figure out commercial properties have a lot more snow to move and often the snow has to be pushed over longer distances.  In order to move snow fast and economically, a contractor is going to use equipment like skid steers, end loaders, and other machinery in addition to larger trucks because the different machinery can move large amounts of snow quickly.  Most commercial contractors will even dedicate equipment to your property for the season, parking the equipment on site ensuring the equipment is always ready to go.

The difference in preparation and documentation is even more striking than the difference in equipment.  A commercial property will often require a researched and documented snow removal plan ahead of time, higher levels of employee training, and even a document retention plan.  Software to quote, plan, and track crews is almost a must when it comes to commercial snow removal.

A down side of commercial snow removal is that if a client moves to a different snow removal contractor, the business can be severely hurt.  If you lose a $1 million client, you need to replace that client fast or you need to have a smaller staff the next snow season.  Equipment used to service large client can become a risk to business health if you still have a loan against the equipment.  The upshot is, if you just won new $1 million a season client, you might just get that trip to Hawaii come next spring.

In the end, there is no “better” type of client.  Many snow contractors handle just residential jobs and others handle just commercial jobs.  Both types of clients can provide you with a consistently successful business from year to year, the question may just be, which type of client do you feel more comfortable serving?