The winter of our discontent

Winter 2012 proved to be one for the record books with its warm temperatures and lack of snow and ice events throughout much of North America. For the majority of snow contractors, it was a winter most would prefer to put behind them.

Overall, the push toward seasonal contracts – a trend from three previously strong winters – proved to be the saving grace for contractors who saw a decrease in the number of workable events, while those with a high percentage of per-push/per-event contracts in their portfolios experienced staggering losses. Some individuals reported losses that ranged from 40 to 60 percent compared to the previous winter. According to State of the Industry data, the “average” contractor experienced a drop in revenue of between 20 and 25 percent.

In general, contractors remain optimistic about Winter 2012-13 and beyond, chalking up the previous season as a freak abnormality. Nearly three quarters of contractors anticipate some sort of revenue growth for the upcoming winter season. Likewise, some contractors anticipate between a 40 percent and 50 percent increase in revenue next winter, according to Snow Magazine data. But then again, after last winter there’s only one way profits can go… and that’s up.

During the start of the second quarter of 2012, Snow Magazine surveyed snow and ice management contractors throughout the United States and Canada on benchmarks and important issues from Winter 2011-12. Through SurveyMonkey, Snow Magazine questioned 295 snow and ice management professionals – primarily business owners and top managers – from its subscription list. In addition, Snow Magazine interviewed a number of snow contractors to gain additional insight into industry trends from this past winter, as well as what they anticipate will be industry challenges heading into Winter 2012-13.

New business
Contractors are as good as the word of their customers – at least that’s what they’re banking on for new client development. Nearly 80 percent of snow fighters rely on the power of positive buzz to generate new clients. Compared to past State of the Industry research, social media as a client-acquisition method grew steadily into the top three. As a side note, contractors are becoming more mindful of marketing and branding. According to the data, those who indicated they did no marketing dropped from 7 percent ( 2011 State of the Industry) to 4 percent.

Editor’s Note: “Other” included billboards and pursuing government contracts.
Source: Snow Magazine research

Greatest challenges
The fear of a second warm winter weighs heavily on contractors’ minds. Poor weather wasn’t even a blip on most contractors’ radars in last year’s State of the Industry data. In fact, heading into Winter 2011-12, more than 60 percent of contractors anticipated normal to favorable weather conditions. However, once “weather” is factored out of the equation, the top business challenges remain consistent and practically unchanged – fuel prices, low-ball contractors and labor issues.

Editor’s Note: “Other” responses included: determining whether to remain in the snow removal business, and contractors who chose multiple factors as their greatest challenge.

Five-year outlook
Contractors supplied their best outlook for what the future holds for their snow and ice management operations. Here are some of the most revealing predictions.

The contractor profile
A snapshot of the average snow and ice management contractor

Editor’s note: “Other” included government/municipal agencies, auto repair/towing businesses and suppliers/distributors offering snow removal service.
 

Client Portfolio
The concentration of “per-push” contracts (nearly a third of the average contractor’s client portfolio) was a contributing factor in many snow fighters’ reported revenue losses. However, many contractors report a client emphasis on “seasonal” contracts, a result of three strong winters, proved to solidify profit margins regardless of event frequency. Regardless of the contract makeup, many subscribe to three-year contract cycles, where one winter favors the client, another year the weather favors the contractor and a third is a break-even winter.

66      Average Number of clients

94%   Average client-retention rate

Five-year outlook