By Cheryl Higley
Editor, Snow Business Magazine
EDITOR'S NOTE: The snow and ice management landscape is in the midst of a transformation brought on by an economic failure from which we're still trying to recover. Even before the economic downturn, however, the industry began experiencing downward pressure on pricing and margins from many directions, including new entries into the market, clients cutting costs and a broad base of national service management companies. In this issue and future issues of Snow Business magazine and online at GoPlow.com, we are taking an in-depth look at the national companies' impact on the industry.
It is no secret that some snow and ice contractors have had unfortunate experiences working within the national model; but there are others—some of whom have been burned in the past—who have adapted and learned to work successfully with the national companies. Our goal in approaching this timely, and controversial, topic is not to undertake a witch hunt on what many perceive to be the inherent evil of national service management companies—but to open an honest dialogue with end users, the national companies and snow and ice management professionals, which we hope will allow all parties to become better informed and work together to strengthen the industry. Our hope is that end users and national service management companies that declined to comment for this first piece will see the benefits of taking part in future discussions to educate the readers on their challenges and successes as well.
We've taken the first steps here, with a brief look at the national model and why it works for their clients, as well as how snow and ice professionals can tailor their portfolios to make room for national work, should they choose to do so.
SIMA and Snow Business welcome the input of our readers on this topic. If you are interested in contributing to a productive discussion, please e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Where do you fit?
The free-spending days of the early and mid-2000s are but a memory, with corporate America forced by a tattered economy to tighten its belt and look for cost savings at every turn. It has been a painful and sometimes bitter realization for snow and ice management professionals who have watched customers they had serviced successfully for years shift business to lower-priced entrants into the industry or national companies who can offer mass-market retailers one-stop service shopping for less.
With this paradigm shift toward national companies being driven by the end users, it's imperative for snow and ice management professionals who want to service major national retail stores to learn to work within the model. To succeed, contractors must know their costs and capabilities, implement systems and processes to manage the abundance of reporting requirements and follow the letter of the contract in finite detail.
According to Brickman Communications Manager Margie Holly, Brickman Facility Solutions was formed in 2009 in response to the needs of its national retail customers, who were looking to maximize efficiencies and reduce costs. Through a national platform, she says, Brickman offers its clients reduced operating and administrative costs through vendor consolidation across multiple regions; bundled services (landscape maintenance, for example) with fewer vendors; and streamlined communications and management processes.
While providing consolidated, more efficient service to its clients, national service management companies also can offer qualified contractors the opportunity to open new doors to clients that otherwise might be unattainable, and take some of the costs off their shoulders.
Among the benefits, says Holly, are a reliable revenue stream with high-quality customers; the security of long-term, multi-year contracts; and streamlined administrative and sales and marketing processes. This allows contractors to focus on what they do best: snow and ice management.
"There are huge benefits to working with a national company," says North Country Snow & Ice Management CEO Michael Merrill, who despite being one of the model's toughest critics has successfully integrated national work into his portfolio. "Look at what it costs to bid a request for proposal. The marketing arm of these companies is huge. They handle the sales and the customer service. There are issues to working with this model, but if you set your business up right, it can work."
On your terms
The key is making the model fit within your overall business plan—and not putting all of your eggs in one basket.
"The private market and the national service market are dramatically different in business model and overhead," explains David Gallagher, success coach with LandOpt. "Very few contractors in any local market can support their business exclusively with a high percentage of national work. Work you sell on your own must be managed differently from the work you do with a national provider. Too often, contractors accept the contract and then try to figure out how to make it work—those are the contractors who get burned."
Merrill says it is the contractor's responsibility to be proactive and position the company to become a go-to vendor for the national companies.
"If you take price out of the equation, the only thing the national companies have to offer are efficiencies or vendors in the field that they know do a great job," he says. "I know at all times who is bidding for which contracts in my market, and have established relationships and built a reputation so these companies know I can take care of those accounts."
Like it or not, national companies are in high demand, and will continue to establish a footprint in the industry. Can you compete and work within the national market, or is it better for your company to look at other niches to make your mark?
"The companies that are going to survive and thrive are those that can adapt to a changing market, figure out innovative ways to meet the needs of the customer and improve efficiencies within their company so they can continue to be profitable," Holly says.
Working with a national service management company has its rewards, but industry professionals—both from the national companies and snow and ice contractors—urge caution and pose questions to ask to make the experience a positive one:
RESEARCH
- Evaluate the size, strength and longevity of the organizations. Do they have enough cash reserves to pay you—even if their customer doesn't pay them? – Margie Holly, communications manager, Brickman
- Know who the national companies are—before they call or you offer to bid. What clients do they serve? Do they pay, and pay promptly? What are their systems? – Michael Merrill, North Country Snow & Ice Management
- Ask whether a representative will meet you face to face to discuss the work. – Rich Arlington III, CSP, Affiliated Grounds Maintenance Group and Arlington Lawncare
- Talk to other contractors that work with the company to find out what working for them is really like on a day-to-day basis. – Holly
COMMUNICATE
- Inform the office and field staff that will be responsible for servicing and invoicing the contract of the level of service requirements. Too often, companies take on a contract but then don't put systems in place to properly perform the work. – Kevin Dent, president, Dentco
- Is there a clear chain of communication for getting assignments, and more importantly, for reporting the work and getting paid? – Holly
- Make sure you have a single point of contact that your company can deal with to answer questions and resolve any problems that may arise. – Arlington
- Discuss the scope of work with the site manager to ensure he understands what you have been hired to do. – Arlington
EDUCATE
- Know your business, your costs and your capabilities—and know when you don't know and who to ask for help. Know what you are getting into and make sure your company is set up to manage the processes that are required to get paid. – Merrill
CONTRACTS
- Evaluate the types of contracts the company is offering. Can it provide a certain amount of work on a consistent basis? Is the work high quality? – Holly
- Ensure you have a clear understanding of the scope of work. – Arlington
- Read the contract in its entirety before you start the work. Play close attention to the non-compete section of the contract. If you do not completely understand what you are signing, make sure you have someone else read it who does. NEVER sign a contract that you don't understand or has requirements you will be unable to fulfill. – Arlington
- Whenever possible, negotiate price and line items in the wording of the contract. – Arlington
REPORTING/PAPERWORK
- If there is a reporting system required, you must have staff and systems in place to ensure compliance. – Arlington
PAYMENT
- Ensure that all payment terms are in writing, and that you agree to them. – Arlington
INSURANCE
- Have your insurance company verify that they agree to the insurance terms before signing. – Arlington
Cheryl Higley is editor of Snow Business magazine. Contact her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
