Information For Startup Contractors, Part 4 |
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What It Takes To Get Started In The Power Sweeping Industry.Since you have chosen to continue reading to this point, you must believe that a sweeping venture could be right for you. Your next step should be to determine whether your area is right for such a service. We recommend that you now verify these items: Do You Live In A Viable Market Area?The size of your available market area is very important. If you live in a low population area, there may not be enough parking areas and other surfaced commercial lots to keep you busy. If you live in a small town, for example, what other towns are located near you? Take a look at a map of your area. If you drew a circle with a radius of 50 miles in all directions from your intended base of operations, what population would it contain? How many street miles of commercial and industrial area are there? For a part-time operation we recommend a population of 5000 or more within a 50 mile radius, and 7500 people within the same area for a full-time contractor. Although there are exceptions, of course, as a general rule this is a population density which will provide the needed support. Can You Compete In Your Area?How many sweeping contractors are already located nearby? A look at the yellow pages under Power Sweeping and/or Parking Area Maintenance will give you this information. You should certainly expect to find some competitors if your area is a viable one for running a sweeping operation. In fact, if you find none located in your locale, that may be a sign that your surrounding area is too rural to support a sweeping company. Another possibility is that a related business, such as a landscaping or striping company, is providing sweeping as a supplement to their own business. Don't worry about some competition. Actually, it is much easier to sell sweeping services in areas where many managers are familiar with the concept. That's one of the things that makes this an established business opportunity; you'll be offering something that virtually all commercial property managers have discovered they need. Also, one of the advantages to this opportunity is that the market is continually expanding as fast as the new construction we see exploding all around us. The value of looking through the yellow pages ads is to gain an idea of the quantity, location and professionalism of your potential competitors. Take a look at their ads. Where are the companies located in comparison to you? Keep in mind that the further they are traveling to service the commercial areas near you, the more difficult it will be for them to be competitive with you. By their ads, can you tell if they are large companies or small ones? Do any ads tout how long the companies have been in business? Do they offer other services, too, or do they specialize in power sweeping? Are there any other factors you see which might assist you in your decision-making? How Competitive is the Competition?You will need a standard, lined notebook for the next step in your assessment process, which is to take a closer look at your possible future competitors. First put the name and address of each company you know about at the top of its own page, leaving at least one blank page in between each. You might also find it helpful to cut out and staple each company's phone book ad onto its page so you have it for reference. Next go out for an evening or two and look for some sweepers on the job. Take along a pair of binoculars if you have them. Start at about 8 in the evening and drive around until you see a sweeper in action. Park at a good vantage point to watch as they clean, and look closely to see what you can find out about them. On your notepad, jot down answers to the following questions (and anything else which you think might prove helpful to you).
If you are serious about starting your own power sweeping company, you will want to know everything you can about the above questions. Talk to your Schwarze sales representative to help develop an analysis of this information. Give us a call toll free, from anywhere in the U.S. or Canada, at 1-800-879-7933, or send us an email message. Can You Communicate with Potential Customers?After you buy a sweeper, a significant portion of your time initially will be spent talking to potential customers, signing them up for sweeping services. We suggest that you go do that now, even before you buy your sweeper. If there isn't any potential for your business, you'd probably rather not make the investment. Now is the best time to go out and start talking with mall and other commercial property managers. Visit at least 10 potential customers: K-Mart, Wal-mart, shopping centers, industrial plants, strip malls, perhaps even where you currently work, if they have a large parking area and it won't hurt to have them know you are looking into this idea. This is the absolute best way for you to get an assessment of the market potential in your area. It will also provide you with some insight into how good a job the competition is doing. In-person contact is best, but by phone can be helpful, too. It's best if some that you see are the managers of parking lots that you saw being swept by different competitors. It's human nature to try to be helpful, and our experience is that most property managers are no exception. The approach we recommend is to simply be upfront and honest with them about what you are doing; evaluating this business opportunity and doing some investigation as to what already exists in your vicinity. Ask them if they have their parking lot swept now (if you don't already know), and if they are 100% happy with all aspects of the job; quality, frequency, price? If they don't now have it professionally cleaned, why not? This is even a great time to line yourself up some future clients. You'll find that it is actually a great advantage that you don't even have a sweeper yet. Since you are approaching them as someone seeking their help in your decision-making process, it makes you quite non-threatening to talk to. Chances are that they will be happy to answer the questions you ask: If they are totally pleased with their current level of service then it will be to save you from wasting your money. If they aren't particularly pleased with their sweeping contractor, then it's usually because they would like to see another option become available to them. Don't be afraid to ask them whatever frank and honest questions you'd like to know. Find out what is important to them to have done. How often do they have their lot swept now? What do they really like about the way it is being done now and what, if anything, do they wish was being done better or different? If you ask, most will even tell you what they now pay to have the job done. At the end of your conversation, ask what it would take for them to consider you for the job - if you enter the field. Do they think there might be room in the area for someone like you to start into business? Many contractors who have entered this business have 'pre-sold' their business venture concept and sweeping service contracts to a number of property managers even before they buy their sweeper. There is no better way to get into your business with your feet on the ground running than to have some clients lined up ahead of time. Are The Current Rates Charged In Your Area Realistic?If a helpful property manager is willing to tell you what they're paying now per sweep, you can assess whether your service can compete in price. Using the following formula, estimate how long it would take to sweep their property. In a typical mall parking area a sweeper will probably average a speed of about 5 mph, taking into account the time it takes for curb lines, curbs and sweeping conditions. See how long it takes for you to drive your car from one end of the lot to the other at that speed. Now estimate the width of the lot in feet and divide that number by eight (the width of the pickup head on most sweepers). Multiply the answer by the number of minutes it took you initially to drive full length of the lot at 5 mph. That's about how long it probably takes to sweep the lot. Finally, add on another 25% to cover the amount of time that it usually takes to clean sidewalks, etc., with a backpack blower. Now that you know the amount of time that it takes to do the job, you should be able to figure the amount of money per hour the current contractor is making. Remember that climatic conditions and seasonal changes may effect the time required to complete the job. After you have done this on several properties, talk with your Schwarze sales representative to see if this is a reasonable rate of return for the type of sweeper you are considering. (Note: Since charges vary, this can necessarily only provide you with a guideline.) Can You Afford a Competitive Sweeper?Although some people buy their sweeper outright, most sweeper sales involve financing. Actually, because of the favorable tax considerations and relative low down payment required, many choose to lease their units. Whether you choose the lease or purchase option, you will probably need to qualify for financing. Leasing companies typically require that you have reasonably good credit, and then that you make the first and last payments on the unit of your choice. We have several leasing companies which we work with on an ongoing basis. If you choose the purchase option you will usually be required to make a larger down payment. For start-up sweeping contractors this amount can be as much as 25% of the total purchase price. Typically if you plan to purchase your equipment you will need to obtain your loan through one of your local banks or credit unions. You will find their willingness to carry your sweeper loan will depend upon your income, credit rating and, perhaps, previous business experience. Your Schwarze sales representative can help you through your decision-making process between these options. Can You Subsidize Your Business Through the Start-up Phase?You will need some amount of start-up capital other than that required to purchase or lease your sweeper. We advise new start-up contractors to arrange their finances so that they can handle a few months of relatively low cash flow. As a bare minimum, you will need to be able to handle at least two truck payments, as well as be able to afford the fuel, backpack blower, shovel, broom, plastic bags, etc. that the job requires. In areas which do not allow dumping into customers' dumpsters there are also dump fees which must be paid in advance of your collecting them back from your clients. You will also need to be paying insurance on your truck and sweeper, and there will be some initial costs for your business license and any other permits required in your area. Finally, of course, you will need to be able to cover your living expenses. Because most sweeping service accounts are billed monthly, even if you have accounts already set up when you take delivery of your sweeper, you can't realistically expect an income for the first 45 days. This is because most accounts are billed monthly, and it often takes a week or two after invoicing to then receive your payment. Don't make the mistake of taking your finances down to the bare bones to enter into business. Your Schwarze sales representative can help you figure up the probable amount of the set-up costs you will incur, and help you budget the monthly fixed and variable costs you will face. What is Your Final Analysis?If you have read through and followed our ideas to this point, you should now be well-equipped to make a sensible decision. Your understanding now includes all of the basic information about what this job entails; you know what it will take to get into business, what you need to do to get customers and what you'll need to do to keep them satisfied. At this time some, people find it helpful to employ a technique first popularized by the great American inventor and statesman, Benjamin Franklin. His procedure for effective decision-making was to draw a line from top to bottom of a piece of paper. He would then start listing advantages to the decision on one side, and disadvantages on the other. He felt that by so doing - once all the pertinent information had been diligently gathered - the answer would become inescapable. If your answer points you toward entrance to our industry, Welcome! It's great to add another contractor to the list of the many we have been able to help toward creating an independent, viable lifestyle for themselves. We wish you well in your new venture, and assure you again that we'll be doing everything we can to see that your dream of financial independence becomes a reality. With your continued interest, you will be talking with a Schwarze sales representative about the equipment most suited to your needs and within your budget. This will probably include the exploration of your financing options, with your local financial institution or through one of our available leasing companies. You will find your Schwarze sales representative to be well versed in many areas which can assist you in your decision-making process. In addition to getting information about the sweepers themselves, don't hesitate to ask any questions whatsoever about any other aspects of the business. In the unlikely event that your salesperson is unable to provide you with answers to everything you'd like to know, don't hesitate to ask to speak to a member of the Schwarze Industries management team. Our goal is to make sure you are 100% satisfied in every aspect of your dealing with our company. By now we hope that we have made it clear that we take our leadership role in this industry very seriously. We want to be the only sweeper company you ever need for as long as you are involved in sweeping. You can count on Schwarze Industries - you have our good family name on it. If you haven't yet done so, you should take a look at the various models and options in our S-series sweeper line. Be assured that our salespeople will speak to you about your situation in a realistic fashion, and assist you in your decision-making in a professional manner. If you would like to investigate the price of used sweepers, take a look at the interactive online site we maintain for sweeping professionals to buy and sell used equipment. If you would like to contact us directly about any aspect of the power sweeping business or any Schwarze Industries products, call or write us at:
Schwarze Industries, Inc. |