When does the law of diminishing returns apply?
Law of diminishing returns refers to profits or benefit per unit of output. This will inevitably decline, profits are defined as total revenue minus costs $\pi=TR-TC$ are thought to be increasing with production but at declining rate, this can be both due to the revenue and cost part.

Costs can in principle be increasing, constant or decreasing with scale. In the first case one source of diminishing returns would be already increasing costs. In the latter case we need to examine the revenue part, but note that most economists think that even if some businesses have constant or decreasing costs along a large part of cost curve these should eventually start increasing as eventually the demand of firm for inputs would be so great to lead to higher and higher increases in the price of those inputs. If you already hired all snow collectors you need to start hiring doctors, programmers etc. to pick snow. So at some point every cost curve should be increasing due to scarcity of inputs.

Now when it comes to the total revenue part that will also be increasing in quantity but at declining rate. The reason for this is that the market price of your good is not set in stone. Increase supply and the price will drop. All people have declining marginal utility of consumption so at some point if you supply too many units to the market the price will drop. Even if you would have constant costs or decreasing costs over the whole cost curve eventually the negative change of price due to larger quantity will be larger than any cost reduction due to decreasing costs.

So in short the law of diminishing returns for firms works both because the more you consume of something the less you desire it so demand is downward sloping and because costs should increase with production at some point along the cost curve.