The past year was a rollercoaster ride for seal coaters everywhere. Your phone rang nonstop during spring and summer, thanks to hundreds of property owners who wanted to have their driveways and parking lots maintained. But you also encountered and overcame a lot of challenges this year and they were no joke.
The bad news is that the 3 biggest asphalt business trends (namely product shortage, labor shortage, and inflation) are going to affect us this year. But the good news is that there are things that you can do to offset their effects, and we are going to discuss them here.
So without further ado, here are the biggest challenges facing sealcoating businesses right now and some tips on how you can cope and overcome them.
The 3 Biggest Asphalt Business Trends that may Derail Your Business Plans
The past year was a lucrative one for many asphalt maintenance business owners. Sadly, though, the year was also marred with supply chain issues and product shortages.
And if you're one of those asphalt contractors who had to scour websites and stores for a piece of equipment or component right around summer, then you know what we're talking about. Paint, in particular, was extremely hard to find, and it left a lot of line striping companies unable to make money in such a crucial time.
So here's how to cope with product shortages.
Use the asphalt repair supplies that you already have. You probably have plenty of sealer or crack filler leftover from last season and they're sitting idle in your warehouse. Or maybe you ordered too much from your supplier last summer.
But it seems that ordering too much was a prudent decision because you purchased them at a lower price, making you more prepared for the coming season than your competitors.
Be smart about what you order. When ordering supplies and equipment, always prioritize what your business really needs. Sure, it's nice to have some novel stencils kits on hand, but your most popular service is sealcoating and crack repair so you should prioritize those when ordering supplies.
Work with your supplier and negotiate long-term agreements with them. One of the smartest steps you can take during this challenging time is to collaborate with your supplier(s). When you're on good terms with your supplier, you get first dibs on what's in stock, and know which supply is running out and what's completely out of stock. We recommend that you sign up for your supplier's newsletter or follow them on social media to get the latest on supplies.
Prepare for the long haul by stocking up. Hit the ground running this season by stocking up on sealcoating, line striping, and crack filling supplies as early as now. Purchasing necessary equipment can also help you start the season off with a bang.
But what if your warehouse is not large enough or you’re operating out of your home? Then we recommend that you use a storage facility to store all your sealcoating supplies and bring them out the moment spring arrives.
It pays to be agile. If you have heard of a great deal from your supplier or if the surface prep equipment you've been looking for is on sale, then act fast and grab it asap. But what if you don't have the budget for it? Then take advantage of financing offers from banks or other financial institutions that offer supply and equipment loans.
By the way, suppliers sometimes partner with financing providers so we can help our customers purchase the equipment they need. Asphalt Kingdom, for example, has partnered with Clicklease so you can purchase up to $20,000 worth of sealcoating or crack repair equipment on installment from us. Want to purchase sealcoating and crack repair supplies? Then use our other financing partner, Klarna, instead.
Related: Invest in Professional Turnkey Pavement Sealcoat Sprayers
Buy local. Most factories where we source supplies and components are located in Asia. That's why businesses all over the world really took a big hit during the height of the pandemic and this put production and shipping in limbo. As mentioned, supply chain issues like these are not going to let up any time soon so we recommend that you look into sourcing your supplies and equipment locally.
Inflation is one of the biggest challenges facing sealcoating businesses right now. A year ago, shipping a container from overseas would normally cost us $6,000. But right now, it's normal for us to fork out an eye-watering $37,000 just to ship a container from Asia to North America.
Unfortunately, it has caused a trickle effect on asphalt maintenance businesses all over the country. Suppliers like us have no choice but to pass the cost on to you, our customers, and in turn, you have to pass it on to your own customers.
So here are our recommendations to mitigate the effects of inflation on your sealcoating business.
Cut expenses and be strategic in spending. Fight inflation by cutting unnecessary business expenses, such as old-school and ineffective advertising and office supplies you don't really need. Have a business credit card? Then make sure to stay on top of the due dates and pay your bills on time.
Be strategic when it comes to raising prices. With inflation rampaging this year, you have no choice but to raise the prices of your services, too. But it can be tricky to raise prices without losing customers, so we recommend that you do it strategically.
Announce your intention to raise prices via your social media pages or email newsletter several months or weeks before you actually do to give your customers ample time to prepare their budgets. Explain why the price hike is necessary, and cushion the blow by introducing the price hikes in stages or providing discounts on some products.
If you're sending out proposals, then make sure your quotes have an expiration date and have a proposal system or CRM in place to remind clients before they expire. This is because as you start paying more for materials, you want to make sure that your end price is at the right point so that your margins are good and healthy all year long.
Also, ensure that you are building in at least a 3-5% buffer in your pricing for short-term and unforeseen inflationary expenses, like gasoline rising suddenly or shipping costs skyrocketing.
We asked asphalt maintenance business owners recently about the greatest challenges facing sealcoaters over at our Facebook page, and one of the things that stood out was worker or labor shortage.
Did you experience it last year, too? If so, then here are some suggestions on how to cope with labor shortage in the sealcoating industry.
Invest in better equipment to raise your efficiency. With the prices of asphalt repair equipment going up, buying a spray system or an RY2X2 might seem counterintuitive right now. But investing and upgrading now can help you save money in the long run compared to buying several months later when the prices are significantly higher.
Buying newer equipment can also boost your efficiency, allowing you to hire fewer people and respond to the labor shortage accordingly.
Related: Why Now's the Best Time to Reinvest in Asphalt Maintenance Equipment
The Asphalt Crack Cleaner Machine or the Bensink Rotary Broom, for example, can amp up your workers' productivity and efficiency. With these pieces of equipment, you don't have to hire several people to prep the asphalt surface when you're repairing cracks — only one person will do.
Same with our crack filling equipment. They are equipped with wheels, so you or one of your workers can seal cracks just like you're using a pushcart.
Make asphalt maintenance more appealing to potential workers. Let's face it, blue-collar jobs like asphalt repair are not the sexiest job to many people.
But you can make it more appealing to potential workers by emphasizing that the industry is very lucrative and working as an asphalt repair specialist is tremendously rewarding.
You can also make your website and social media pages pop out and appeal to all generations. Utilize online platforms including Facebook, YouTube, LinkedIn, etc. to boost your marketing strategy, and work on producing great content that appeals to workers.
Make sure to showcase your happy team on social media platforms, and show potential workers that your company is an exciting and fun place to work at. Ensure that your company culture is healthy to make it more attractive to potential workers.
Compensate your workers (both current and upcoming) properly. The past couple of years have been hard for workers, especially in the blue-collar sector. In April 2021, all that discontent over low pay and resentment over unfair treatment bubbled over and resulted in what economists call the Great Resignation.
So how do you counter that and make sure that you can hire and retain talent for your business? The solution is quite simple: all you have to do is to pay them properly. If you can afford to, we highly recommend that you go beyond the minimum and pay a living wage. You can also offer incentives, bonuses, and so on once your business becomes profitable.
Give your employees room to grow. It's important to give your employees not just security in tenure, but also room for growth. Does your new sealcoater exhibit great rapport with people and can charm the pants off of customers? Then why not let him grow beyond sealcoating and train him in sales?
Create an incentive program for your team that is designed around the performance model and reward them with a good commission whenever they hit or go beyond their quotas.
This year brings plenty of opportunities, but you have to be ready to take on the greatest challenges facing sealcoaters. We hope that this article has given you some insights and helpful strategies on how to deal with asphalt business trends so you can have a productive and lucrative year.