Operations

When Snow Drifts Pile Up, Revenue Goes Down

Posted on October 9, 2013 by By John M. Greene

When you were a kid, a huge blizzard was a cool thing. You’d go sledding with your friends, traipse through seven-foot snowdrifts, build a snow fort, and maybe even enjoy a few days off from school.

But when you’re an adult and own a business, especially one that lives by driving on the roads in an industry built on being on time, a major snowstorm once considered fun is no longer a source of joy.

With winter just two months away, this is the time to prepare your fleet operations for the inevitable — if not this coming winter, then one in a later year. Remember last winter?

And no matter where in the U.S. your business is based, even in the no-freeze zones, you are susceptible to Mother Nature’s fickle whims. In the South it’s hurricanes, in California it’s fires and rain, while the Midwest is always on the lookout for tornadoes. But here in the Northeast we get lots of snow, and all the bad things that follow such as major power outages capable of plunging us into the Dark Ages and sinking our bottom lines.

A perfect example was this past February when two powerful storm fronts coming from opposite directions slammed into each other over Massachusetts (where we are located), burying the region in upwards of 30 inches of snow and darkening more than 400,000 homes from one to six days. As if this wasn’t crippling enough for our business, the Governor of Massachusetts declared a driving ban, which meant no cars on the road at all unless you were an emergency vehicle. Now, try to convince a new bride that getting to her wedding isn’t construed by the Commonwealth of Massachusetts as “an emergency.” Better yet, try telling her mother.

When the storm hit that Friday afternoon, we immediately felt a seismic shift in our business, resulting in 65 cancellations before the day was over. But the financial effects of this lost weekend were far from over. On Saturday, a major group was forced to cancel their order for 15 cars, siphoning nearly $12,000 out of our potential revenue.
As our revenue declined, our costs soared. We had to take on more chauffeurs to cover schedule changes (at least those who could get to our office), labor to shovel out 40 to 50 cars, and additional staff in our office to handle ever-changing paperwork.

After a blizzard walloped Massachusetts in February, two of Boston’s biggest chauffeured transportation companies, Harrison Global and Commonwealth Worldwide Chauffeured Transportation, had to dig out their fleets from huge snowdrifts and catch up on as many runs as they could with limited access to roads.
After a blizzard walloped Massachusetts in February, two of Boston’s biggest chauffeured transportation companies, Harrison Global and Commonwealth Worldwide Chauffeured Transportation, had to dig out their fleets from huge snowdrifts and catch up on as many runs as they could with limited access to roads.

The latter proved a challenge as without power we had to shuffle through paperwork by candlelight. I realized then that this is what it might have felt like for ground transportation companies 150 years ago, although I am pretty sure maintaining a fleet of Chrysler 300s is more expensive than housing a fleet of stagecoaches.

Still, even without electricity, technology did help save the day in many instances. In 1978 when the Great Blizzard buried New England, limousine companies still relied on landlines and fax machines for the most part, which meant when the power went out they were truly in the dark. At least in today’s business world, cell phones, iPads, driver cams and other technological marvels help keep chauffeurs and clients in communication mode. But like the guy out there trying to shovel out a 50-foot party bus, even those devices will wear down eventually.

Along with loss of revenue, there is also the potential for loss of life, so it is important that we keep our chauffeurs (and clients) safe. The aftermath of a vicious storm often results in downed trees and power lines, and treacherous road conditions. We also have seen a spate of deaths due to carbon monoxide poisoning: A car backs into a snow drift, the snow clogs the tailpipe while the engine idles, and the deadly gas seeps into the vehicle.

Every company tries to prepare when a storm is coming. You can try and contact your clients and work out a contingency plan should a flight or event be cancelled. But all you have to do is turn on three TV stations and get three different weather reports to realize how fluid the situation is and how it’s beyond your control. All you can do is try to adapt to an ever-shifting situation.

If we don’t have rubber on the road, we don’t make money, so there’s no such thing as a “good” snowstorm. However, there are better times and worse times for one to hit. Ideally, Friday and Saturday can be less painful in terms of client travel as most are already at their destinations. Conversely, Sunday and Monday are nightmares because people are traveling more and trying to make connections in and out of town.

Still, if you are based in the Northeast, the last thing you want to do is turn on the weather report and have some hysterical weatherman proclaim the coming of “Snowmageddon.” When that happens, no one is immune. I recall a few years ago during a particularly nasty snowstorm in Washington D.C. hearing that President Obama tried to keep to his busy Washington schedule during a blizzard. But even he had to ditch “the Beast” — his souped-up Cadillac limousine — for an armored, four-wheel drive Chevy Suburban capable of trudging through the snow. So what chance does your Town Car have?

Like the Pilgrims who landed in Plymouth, Mass., nearly 400 years ago and survived their first brutal New England winter, we are a hearty lot and we’ll survive each snowstorm, but not without taking our financial lumps. It is not uncommon for a major snowstorm to result in anywhere from $10,000 to $20,000 in lost revenue per storm. So you can see how facing multiple storms in one season can be a death knell to many companies in an industry already operating on a profit margin as thin as a sheet of ice.

The bottom line is this: The next time you hear someone say how great a blizzard is, they probably own a ski resort, or a hardware store, or a gas station. They certainly aren’t in the ground transportation business. And whoever wrote the 

song lyrics, “Let it snow, let it snow, let it snow,” never sat in a car at an airport for hours during a snowstorm, waiting for a flight that would never arrive.

John M. Greene is a 25-year veteran of the limousine business and President & CEO of ETS International in Randolph, Mass. Greene can be contacted at (617) 804-4801 andAfter a blizzard walloped Massachusetts in February, two of Boston’s biggest chauffeured transportation companies, Harrison Global and Commonwealth Worldwide Chauffeured Transportation, had to dig out their fleets from huge snowdrifts and catch up on as many runs as they could with limited access to roads.

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