As winter creeps closer and closer, brick-and-mortar business owners must begin to contend with the seasonal concern of snow. Snow can seriously impact a business—without removal services, you could lose customers, have to close for a day or longer, or even end up slapped with a slip and fall suit.
Weighing snow removal service cost against your business and the likelihood of snow, especially if you live in a region where large snow accumulations are rare or unlikely, can feel like a daunting task. With an understanding of opportunity cost, you can get a better idea of whether booking snow removal ahead of time is the right idea for you.
In this post, we’ll be covering:
- Factors to consider in opportunity costs
- Some examples of slip and fall suits
- The average cost of snow removal services
- Who is in charge of snow removal for a variety of businesses and residences
Opportunity Cost of Snow Removal
Finding the opportunity cost of a business venture, such as snow removal, helps you evaluate the possible risk and reward of a particular action. In simple terms, opportunity cost considers what you might miss out on by choosing one option over another. For example, if you were considering investing in one stock over another, you might use opportunity cost as a tool to compare the potential reward from investing in a higher risk stock with a higher return versus a low-risk stock with a smaller return.
Snow removal services can be considered in a similar fashion. There are many ways to think about this depending on what factors you’re evaluating when deciding whether to book snow removal or not.
Budget is a major one. Take a look at last year’s winter finances and evaluate your potential loss of revenue if you’re forced to close due to snowy weather without snow removal services. Would you be more impacted by a closure or by paying for snow and ice treatment?
Snow accumulation can also drive customers away even if your business is open. If your parking lots and sidewalks look as if they’re not maintained, people may not feel safe entering your business due to fear of slipping or getting stuck.
Also consider your employees. Not only are employees potential victims of slipping and falling, which could lead to an L&I claim, but you likely need them to keep your business running smoothly. If they are unable to make it to work due to unplowed lots, you may have to close down anyway. Further, the Fair Labor and Standards Act may require you to pay employees a day or half day’s wages if you close your business, even if they are not working. Are you prepared to pay for the closure and the lost revenue? How do those expenses compare to the cost of a snow removal contract?
Slip and fall lawsuits are a major concern for businesses at all times, but things get significantly worse in the winter. These lawsuits require proof of negligence or wrongdoing—many states have rules about natural accumulation, for example—but that means that business owners should put their best efforts into making their lots and sidewalks as clean and snow-free as they possibly can because not doing it could be construed as negligence.
A slip and fall lawsuit may include the recovery of multiple expenses, including the cost of medical treatment for injuries sustained during a fall, lost wages from time off of work, and pain and suffering.
In one notable case, a woman in New York settled for $1.5 million after slipping and falling on an icy sidewalk. This settlement is particularly high, but cases in the hundred thousands are not unusual. Some one million people are injured in falls every year, including falls on snow and ice.
It’s possible that no snow and ice will accumulate on your property, or that it may accumulate but nobody will slip and fall. However, the consequences of somebody being hurt due to improper snow and ice management are astronomical—you could pay $150,000 for a lawsuit, or some $500 per service per client for a snow and ice removal service.
That’s what makes opportunity cost such a valuable tool. Once you have these potential costs, you can weigh them against one another to figure out whether snow removal is right for your company.
Snow removal service varies in price. Most companies do not publish their rates online due to a variety of factors but can provide quotes on request.
Your contract may be “per push” or seasonal, which will impact how much you’re charged for services. Shop around for snow removal service well in advance so you have time to compare contracts and quotes to find the one best suited to your needs.
Keep in mind that snow removal is a legitimate business expense. Though you may not enjoy spending the money, it is recognized as appropriate use of business funds and may help you stay profitable throughout winter.
How to Find Opportunity Cost
Now that we have some data, we can calculate our opportunity cost to evaluate whether snow plowing services are right for you. Opportunity cost is not a strict formula—it can be tweaked and adjusted to account for a number of things. For our purposes, let’s weigh the cost of booking a snow removal service against the cost of a lawsuit.
To give an example, let’s say that a company charges $500 for snow removal and de-icing for a parking lot, you expect 25 days of service per year, and you estimate that your yearly cost will be $12,000. Though lawsuit settlements vary, let’s estimate $150,000.
One way to think about opportunity cost is what you sacrifice divided by what you gain. In this case, that would mean that we calculate the cost of a lawsuit ($150,000) / what you save on snow removal ($12,000). That returns an opportunity cost of 12.5, meaning that for every dollar you save by not hiring snow removal, you spend $12.50 on a lawsuit. Is that worth the risk?
You can plug in other values as well, such as profit loss from closing your business and cost of snow removal. Look at your opportunity costs from multiple angles to get a comprehensive image of whether snow removal is a necessary expenditure for your business.
In 2017, we provided a Best Practice Paper to a client who needed snow solutions for their 238 gas stations and convenience stores. This company’s stores were located throughout the Snow Belt, with an average snowfall of 50 to 80 inches yearly. Unfortunately, the brand was struggling with late arrivals from snow providers—they were showing up two and a half hours late, delaying customer access to the facility.
A two-hour delay may not seem like a lot at first glance. However, we ran the numbers, and found that just two hours without service equated to a potential loss of $24 million dollars every snow season. Our service cost 14 percent more than their partner at the time but guaranteed clear lots by open time and 100 percent liability on slips and falls.
In this case, the opportunity cost was in favor of hiring a different snow service, even at a higher cost. The company was protected from slip and fall suits and guaranteed timely service, which actually resulted in a decrease in snow spend and over $20 million more in revenue during the following year’s snow season.
While all of the above information can be used by owners of residential properties, including rentals, condos, and homeowner associations, there is an additional question for them—who is actually responsible for snow removal?
Who is in charge of snow removal for a property may determine liability in case of a slip and fall, so be sure to familiarize yourself with local laws, regulations, and policies.
Who is Responsible for Snow Removal in Apartment and Condo Complexes?
Laws vary. If you live in an apartment or condo, check with your lease or purchase contract to ensure you know the policies for snow removal.
If you own or manage the complex, consult local ordinances to find out if there are rules governing snow removal. Be sure to include these policies in your contracts with tenants to ensure transparency and clarity and avoid potential slip and fall suits.
Who is Responsible for Snow Removal in Neighborhoods?
Snow removal in neighborhoods can be complicated. Public roads are often city or county responsibilities, which may mean that homeowners associations—if you belong to one—may actually be unable to provide plow services.
If you’re a resident of a neighborhood with an HOA, check your bylaws to understand their policies. Some HOAs will plow entire neighborhoods, while others are only responsible for common areas or sidewalks, while still others plow nothing at all.
If you don’t belong to an HOA, the city may be responsible for plowing all streets, some streets, such as main roads, or no streets at all. You may be able to hire snow removal from a private company to plow your own residence or street, but be sure to check city laws first.
Is a Tenant or Landlord Responsible for Snow Removal?
Things can get even more complex with tenant/landlord relationships.
First, check your rental agreement, as many agreements will cover snow removal directly. If snow removal isn’t specified, contact your landlord to find out your responsibilities. State or county law may also have instructions for residential snow removal, but whether that removal is up to a tenant or landlord depends on the rental agreement, so check before it snows.
Generally speaking, landlords are responsible for maintaining common walkways, such as apartment stairwells, sidewalks, and similar areas. If you are a landlord, be sure to clearly outline these policies in your rental agreements so there is no question as to who is responsible during the winter season. Early clarity helps ensure that snow removal is a smoother process, and reduces the likelihood of slips and falls.
Book Early to Avoid Snow Removal Problems
Snow and ice removal are crucial to staying open during the cold months. Don’t let your business close down—or worse, face a lawsuit—due to not being prepared.
All numbers are provided as examples and not necessarily reflective of Transblue’s rates. Transblue’s winter service rates vary depending on lot size, snow and ice accumulation, and other factors. Please contact us for more specific estimates for your business.