Looking Back at 2020 and Forward to 2021

This has been a year of rapid changes, to grossly understate the events of 2020. By the end of the first quarter, the emergent coronavirus pandemic had triggered a global economic shutdown, which devastated consumer markets and much of the B2B services subsector. The national health and economic disaster has impacted small, medium-sized, and larger businesses, including causing significant losses for many commercial power sweeping companies across the United States. On the upside, many other sweeping businesses, especially industrial, construction sites, and municipal street sweeping services have remained relatively unaffected, and some report very strong performance throughout 2020 to-date.
Looking back at 2020 and the unusual challenges the coronavirus imposed on the industry, and looking forward to 2021, North American Sweeper magazine has reached out to power sweeping equipment manufacturers and financial services providers that support entrepreneurs in the industry and sweeper service business owners for their insights gained from the events of 2020 and their expectations for 2021.

2020 Gains, Losses, and Lessons, and 2021 Predictions

In March of this year, the COVID-19 virus emerged, causing retail businesses, manufacturing, services, academic facilities, and any other entities with operations involving face-to-face human interaction to shut down. Businesses in their supply chains shut down in the domino effect that ensued.
(October 29, 2020) But, the economy has returned to a large extent over recent months. The Wall Street Journal reports that the national economy grew at a record rate of 7.4 percent in Q3 over Q2 this year, and has been growing at an annual rate of 33.1 percent. According to the WSJ report, the U.S. has regained around two-thirds of this year’s earlier losses caused by the pandemic.
Although GDP has risen sharply from the early period of the shutdown, the economy is around 3.5% smaller at this point than it was at the end of 2019 (when adjusted for inflation). But, the U.S. Department of the Treasury reports (October 16, 2020) that retails sales hit a new record high in September, over 200 percent higher than predicted and 5.4 percent higher than the same month in 2019.
Fortunately, even during the worst of the economic shutdown period, power sweeping businesses in many areas, due to being deemed as essential services, experienced very little if any reduction in revenues. One company reports having its best year in construction sweeping services in the company’s long history. But, many others experienced deep losses during the early months of the shutdown.
However, many have been forced to make major adaptations, to sustain operations through the continuing crisis. Some report that they have been encountering even more extreme challenges in hiring than usual, as jobless workers are receiving greatly increased weekly benefits that are having the effect of motivating people not to seek employment at this time.
Reflecting on the lessons of the emergent 2020 crisis, some owners report shifts in their strategic growth plans for 2021 and beyond. Some are altering their business models to open or expand revenue channels in construction and/or industrial service and move away from their current percentage of dependence on commercial parking lot service.
Some sweeping company owners have announced that they are already undertaking to complete the transition, purchasing construction-grade sweeper trucks, redirecting their sales focus to the construction market, developing new relationships, providing driver training for sites.

2020 – 2021 Insights from Industry Experts and Entrepreneurs

As in every other year for nearly a decade, NAS has interviewed numerous owners of power sweeping companies and industry suppliers in 2020. It’s eye-opening to learn how vendors, peer sweeping businesses, and their employees have been doing since the onset of the virus early this year and how it has collectively affected operations and growth rates across the industry.
While sweeping companies have been altering their plans for 2021 in many cases, suppliers have been forced to change their service models rapidly during 2020, to accommodate customers and prospects during the continuing quarantine and social distancing period of the pandemic.
Here are some shared impressions about the state of the power sweeping industry at this time and outlooks offered by industry experts for the coming year and beyond:

David Heigl, VP Sales, Marketing, and Product Management, Schwarze Industries, Inc., Huntsville, AL
With all things considered Schwarze and its employees have fared well since the onset of COVID-19. We’ve had only 2 cases among our 180 employees. Before Alabama state guidelines being announced, Schwarze implemented social distancing and wearing masks at our plant in Huntsville.
Since then we have taken extra measures to ensure safety including the installation of temperature monitoring devices for employees entering the plant, hand sanitizer stations throughout the plant and offices, and foot pulls for doors. New processes like virtual meetings from offices have also been implemented. As an extra precaution each evening the plant and offices are sanitized using a backpack fogger. These measures have enabled us to safely continue operations.
In terms of growth, we have seen a freeze in some municipal budgets, but no cancellations. Our contractor markets slowed during March and April, but have returned to pre-COVID levels. The delay in municipal orders enabled us to focus on warehouse and plant expansions, allowing us to start up an additional assembly line.
For 2021, we are currently taking a conservative approach to the budget numbers in terms of expected revenue in the municipal sector. This may change after the election. We have also reevaluated our strengths and weaknesses and made corrections in terms of strategic sales and marketing. The market can expect to see exciting new products and market expansion from Schwarze in 2021.
Just like we re-evaluated our strategy, we are seeing many contractors and municipalities do the same. There will be new methods of financing, contracts renegotiated, new business strategies implemented, and new services offered by contractors. If there is one lesson here it is to never be complacent. Reevaluate your business and the market. Build on your strengths, fix your weaknesses, and look for new services and opportunities that enable you to diversify your business.

Jim Peach, Vice President of Sales and Marketing, Oakmont Capital Services, LLC

After an initial dip in funding volume in April, we have seen our numbers climb back to mirror month over month from 2019. Although COVID has certainly caused management to lower our growth expectations for the 4th quarter, we are happy with how our business has performed during the pandemic. When it comes to employees, we have had to be flexible about work schedules along with accommodating employees working remotely. Many of our employees have children in school who have to work around distance learning and hybrid schedules. This can make things difficult but we have dedicated employees who are willing to do what it takes to make sure our customer service doesn’t miss a beat.
Our operations have not been affected that much. The majority of our customer base work in industries that operate outside (construction, landscaping, sweeping, ETC) and were never forced to stop working. Although COVID held our growth rates flat year over year, we did not lose any ground and OCS hired 4 new employees since April to prepare for anticipated growth.
We have not altered our strategic plans for 2021 at the moment. Due to some recent vendor partnerships, we are still planning on healthy growth in 2021. We will however watch things very closely and be prepared to adjust growth goals and funding expectations accordingly.
We have a positive outlook for the power sweeping industry at this time and we have not seen a significant decrease in contractors applying for financing on new sweepers other than the typical slowdown that comes around the fall and winter months.
The virus has led to more and more people getting their consumer goods from online sources such as Amazon, which could lead to a negative impact on brick and mortar stores. It is yet to be seen what impact if any this will have on the power sweeping industry in the years to come, however, we are projecting an increase in activity in 2021.

Power Sweeping Businesses Report Impacts and Adaptations Due to COVID-19

Early on, the pandemic had not yet caused enough effect to be a topic of discussion in interviews with power sweeping business owners during March and April 2020. But, as early as May, the economic shutdown had already seized the U.S. business sector and severely impacted the growth and strategic plans of many businesses throughout the commercial pavement sweeping industry.

David Ross, Founder and CEO, Millennium Maintenance & Power Sweeping, Medford, MA
Millennium is an over $20 million self-performing facilities maintenance and construction company that specializes in power sweeping.

(May 2020) We were breaking records before this historic crisis our country is facing with COVID 19. All the municipal work we would currently be doing has been postponed, due to the coronavirus pandemic. Except for customers that have a grocery store as an anchor, pavement sweeping work has been canceled or significantly reduced.
But, when one door closes, another opens. We’ve always been a cleaning and disinfecting company. With the virus coming, we had a feeling we might not be able to get hydrostatic-electrostatic sprayers. So, we converted to disinfecting services. That opened up another revenue stream for us.
With this service, our customers and their employees have peace of mind, and our construction customers can meet the mandated local and state guidelines and keep their projects moving forward. By anticipating customers’ needs, we could see they’d need a solution, which also created an opportunity for growth. In the changing business landscape, you have to change to grow.

Leroy Stotler, Jr., President, Three Rivers Power Sweep, Inc., Pittsburg, PA
Three Rivers is a 22-year-old business, of which Stotler became the second-generation sole owner in 2007. Construction and industrial power sweeping account for 30-40 percent of the company’s total annual revenues.

(July 2020) At this point, we’re just trying to get back where we were. The good news is that we were considered an essential business. The bad news is that we dropped a huge amount of business in just a 3- to 4-week period. We had lost 30 to 45 percent of our business within just those few weeks, including losing our largest client. But, we’re lucky to have more stuff coming online. We’ve now added about 8 new properties as well as some additional industrial sweeping. A lot of the new business we’ve acquired over recent weeks, including a couple of grocery store chains, were switching vendors and we were fortunate to be the one who picked up the work.
We didn’t’ have to lay anyone off. We were running lean anyway, so everyone had been working lots of overtime. It was a hit for the hours they were getting, but we were able to keep everyone working at least 3 days a week.
It helps that it has always been my policy to refurbish trucks after they’ve taken some wear, instead of always financing new ones. We’ll do a conversion of a chassis to a new sweeper system, to have full capacity. We keep everything as fresh as possible. Last year we added two new vehicles. But, we try to do it conservatively and smartly, so we don’t have ourselves hanging out there too much.

Jim Blackerby III, Owner, Louisville Pavement Sweep, Louisville, KY
LPS currently has 10 employees and normally sweeps about 500 properties per week. They also provide pressure washing, landscaping, and haul-off services, and they subcontract other types of exterior maintenance and repair work.

(August 2020) When I started this business, I said I’m not going to not do something because I’m afraid to do it. Still, when you see the price tag on those construction sweeping trucks, and it’s $200,000, that’s scary. But, with the Covid-19 pandemic, it was the perfect time to do it, so, I bought a Tymco 435. Right now, we have a lot of one-time things to do in construction and neighborhood development. We’ll be working on building up our business in construction now.

Lee Miller, President and CEO, Pacific Sweeping, San Diego, CA

Pacific Sweeping provides services to more than 30 cities across five counties in southern California, cleaning over 350,000 miles of roadways and 15,000 parking lots each year. Pacific’s clients include Cal Trans, multiple counties and utility providers, the City of San Diego, the State of California, the U.S. Navy Shipyards, the U.S. Marine Corps, and others.
Lee Miller, President, and CEO of Pacific Sweeping, is currently a Board Member of NAPSA, and he has served as an Advisory Board Member for California State University (Dominguez Hills), and Cal State Fullerton and he served on the board of the local MSA (Maintenance Superintendent’s Association for many years. (September 2020) With the pandemic, we have relaxed many of our policies a little bit, in order for employees to maintain their work status here. Some of it has been directly related to COVID-testing. Fortunately, those instances were all negative results, false alarms. Some of it is now related to childcare during distance learning for their children. It’s hard to be at work when you have to be at home acting as your child’s teacher.

Mathew Andrew, Owner, West Michigan Sweeper, Rockford, MI
Michigan and serving the greater Grand Rapids area. We went from one truck to ten, including sweepers and pickup trucks too. The company’s homepage tagline is “We Do It All.” Their services include trashcan services, line striping, event cleanup, etc.

(October 2020) Since COVID started, we’re fortunate that most of our work has stayed on. Right now, we have two people who do portering full-time and we’re short right now. So, some night time drivers will do that work for the customers.

Mike Oetting, Summit Sweeping and Services, Inc., Fort Wayne IN
Founded in 1993, Summit is a full-service power sweeping company, servicing industrial sites, road construction, commercial development sites, shopping mall parking lots, subdivisions, municipal streets, and special events. Summit stocks around $30,000 in Tymco and other parts and supplies peer businesses when they need parts quickly

(November 2020) Fortunately, we were deemed an essential business, so we’ve been able to keep operating during the pandemic. I printed the paperwork identifying us as an essential business and put it in the trucks. Beginning in mid-March, we lost approximately 50 percent of our shopping center work when the customers put us on hold. Most jobs went from six days per week down to one. But, for construction work, this has been the best year in the history of the company.
Overall, we’re back up to about 98 percent of our total volume. But I’m expecting another slowdown. Nobody wears a mask, and a lot of people think it’s a hoax. My wife works in the medical field, so I know it’s not a hoax. I am very concerned we will be dealing with this for a very long time.

Looking Toward 2021

Through the strange and unsettling months of 2020, particular business circumstances have been found to vary widely, depending upon which sweeping submarket types businesses serve. Power sweeping providers whose volume is in commercial parking lot sweeping have experienced deep losses in monthly revenues due to the shutdown of retail stores, restaurants, and other commercial businesses in 2020. Sweeping businesses focused on service to construction and industrial sites have fared much better, many with little to no negative impact on revenues, or even realizing growth.
Among power sweeping business owners whose route schedules have been reduced by as much as 90% in the commercial parking lot revenue channel, some are turning their sights toward the construction site sweeping market.
For those still undecided about a course of action, there are several opportunities for shifting or adding to the business model that may make sense at this stage. Of course, acquiring suitable equipment for servicing construction accounts can be a stumbling block for small sweeping businesses. Pursuing municipal street sweeping and state highway contracts may offer additional new possibilities, particularly for owners with skills in crafting government service contract proposals.
Subcontracting in other exterior maintenance and repair services, like pavement repair, power washing, storm drain cleanout, parking lot striping, weed abatement, expanded portering services, exterior signage repair, snow plowing, and other roadway and property maintenance and repairs. Some may even look toward including more comprehensive commercial and multi-family residential property investment maintenance and repair work, such as unit cleanouts, drywall repair, painting, and other chores. Such consolidated contracting can lighten the load for busy property managers who prefer to work through a single trusted contractor, to simplify bidding, communications, management, billing, etc..
So, the retrospective of 2020 is a mixed bag at this point in early November. Some power sweeping business owners are satisfied with the year they’ve had, pandemic notwithstanding. Others are positioning to face an uncertain future going into 2021, following the shocking setback of losing a staggering percentage of their business volume all within a matter of two to three weeks in the spring of this year, and spending the rest of this year recovering from those spring and early summer setbacks.
One thing becomes very clear now, for power sweeping companies operating in the wake of the 2020 national economic and health disaster. There’s no longer room to leave initiatives for the development of more agile operations on the back burner. Many have found their organizations to be past due in adopting more rapidly adaptive skills needed for updating systems and processes to conform with new agile policies and practices that need to be implemented sooner rather than later.
Overall, with the country signaling fatigue with quarantining, much of the economy has reopened. There’s great optimism for 2021, and, of course, all hope it will usher in the end of the pandemic. However, in late October there were new record high numbers of COVID outbreaks throughout much of the country. So, it is too early to make any confident guesses at what the foremost public health experts will find and how they will advise businesses, or how the federal and state governments to guide businesses to proceed going into 2021.
Overall, it would seem that the message of early Q4 is to review concepts in expanding business models, adapting operating modes, and moving toward routinely functioning in a condition of strong preparedness for unexpected changes of any kind that may emerge with the potential to seriously impact revenues and/or operating processes. Congratulations to those who are already taking actions in that direction, and best wishes to all for a healthy and prosperous 2021.

https://home.treasury.gov/Comeback
https://www.wsj.com/articles/us-gdp-third-quarter-2020-11603908566

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