View Full Version : Pitfalls of Commercial Accoun
09-08-2005, 08:28 PM
For new businesses starting off into the world of servicing commercial accounts, what would you say are the biggest pitfalls they should be aware of and try to avoid?
What do you like most or least about your commercial clients?
09-09-2005, 04:01 PM
amtrucker22 said "Most of my commercial accounts pay late (about a week past the due date)."
09-09-2005, 04:01 PM
qualitylandscaping said "Most commercial clients want very high quality work at a very cheap price. Like I said, most. Not ALL, but most.
You can also expect a very long wait to get paid with most of the larger commerical properties or properties that are leased. I have a few that haven't finished paying me for 2004-2005 plowing yet. They are very good customers $100k + per year each and do pay, but it takes 6 months to get a check..
I guess you need to be financially stable before diving into commercial accounts. They really do expect top notch work and you better be able to deliver.
Some of the best kicks toward you are, more business! Usually the company has a CEO, President, Vice Pres. and general employees, etc. They may need their lawns maintained or landscaping work done. You just might be the first one that comes to mind when they think of doing something, if you do a good job.
I think in the end, a solo operator has a slight disadvantage in commercial because they do require detailed attention on a continious basis (we have one commerical property with over 35hrs of weeding per WEEK).. They take alot of work but if you find a few good ones and can hold on to them, you've struck a gold mine!"
09-09-2005, 04:03 PM
SOONER GREEN said "Getting paid within 30 days can be a challenge. 5 years ago we were all commercial. We've slowly moved into more residential mowing because of the slow pay problem. The 12 mo. contracts are a good thing during the winter because you get a steady check during the slow season. But you may work at a loss or a very low profit margin during the growing season. It takes more working capital to maintain comm accts.One of the good things is your crew is in one place longer, not driving from place to place.Unloading time and drive time are profit killers. Make sure you know exactly what they want included in the bid, because when they call you to start leaf cleanup and you had'nt included it in your bid there's going to be a problem. Also you may do a great job and still lose the acct the next year because they went with a lower bid leaving a big hole in your route."
09-09-2005, 04:04 PM
Branchland said "Loosing them. I lost a apartment complex this year due to budget cuts. The place was crappy but paid good and on time. They choose to get out of the contract early and decided to pay the maintenance guy to do it. He told me it's all he can do to try and mow it every week.
If you do get any commercial accounts don't go into debt thinking you'll always have that income. Luckily I didn't go into debt just incase something like this happened. It still hurts not having that income when you get used to it."
09-10-2005, 02:31 AM
Some really good points in this post about commercial contracts. I agree with pretty much all of them.
I think dealing with property managers is a disadvantage of commercial properties. Loyalty is non-existant for the most part. Many will drop you for a cheaper price without batting an eye. They may dangle other more lucrative contracts like carrots on a stick to get you to lower your price... but the reward is rarely given. Not to slam the whole industry as I know there are good PMs around but it can be a very dirty business complete with bribes, kickbacks and the sort. If you do find a good one it can work out well if you are given more work.
My favorite thing about commercials, as has been mentioned, are the year round contracts. Winter income is sweet especially when there is not much to do. Of course it all works out in the end.
09-14-2005, 07:30 PM
Complete Lawn Care said "The biggest problem I have with commercial accounts is having to wait so long to be paid. I have learned to expect this and plan for it."
09-14-2005, 07:30 PM
shortgut said "I have one that really drags their feet when it comes to paying usually involves a phone call before they pay hit them with a $25.00 late fee this month will see what happens."
09-14-2005, 07:31 PM
ProMo said "Putting all of your resources into one account without trying to expand almost put me out of business a few years ago. I had an account that was over half of my income for eight years then it ended."
09-14-2005, 07:31 PM
kerryb said "ProMo is right. Dont put all your eggs in one basket. I like the smaller commercials. When they are slow to pay its not going to break the bank. They tend to be more loyal and dont go around rebidding everything, all the time."
09-14-2005, 08:03 PM
Williams Services said "Avoid large property management companies. Their routine is to use a contractor until they've worn them out and then move on to the next one. They will nickel and dime you to death, too. Try to avoid picking up too much work too quickly - you will get burned out and your work quality will suffer, not to mention the debt load that you pick up growing that quickly. Insurance will kill you if you don't factor it into your costs. The best types of comm'l accounts, IMO, are office complexes & factories. I can do without the rest."
09-14-2005, 08:03 PM
maelawncare said "Expect them to not pay for you for SEVERAL months. Commericals are very much like that. Make sure that you put in the contract, that you WILL charge at least a 15% late fee. ONce you do it a couple times, their stop. I've made over $5k doing that. I dont wanna suffer their stupidy"
09-14-2005, 08:04 PM
terracare said "getting into commercial accounts is even a little more cut throat than the residential market. Most of the time, unless you are dealing directly with the company CEO or president, they dont care much about the outdoor maintenance issues. The hardest thing you are going to have to accept when you get into bidding commercial work is not backing down on your price. If you come into a bid at $875 and they say that you'll only get it if you drop to $800, stay firm. Giving in to a lower price is an immediate sign to the client that they have some kind of leverage over you, and most will use it to their advantage.
On a positive note, a properly bid commercial maintenance account can serve as a solid cashflow for your company and may open up many other opportunities for you, such as buying more equipment for bigger jobs, or having some money coming in to branch off into another area of the green industry. Just like most everything in this business, its all a give and take. Make sure your bid is priced right"
09-14-2005, 08:27 PM
shoal said "1. selling themself to cheap.
2. promosing too much then can't deliver.
3. speading yourself to thin the forgeting the word service.
4. not having enough experience or knowledge of the business your in. and not knowing your customers needs.
I like commercial because they let you do your job. they only talk to you when they need something otherwise it all business.
I dont like the slow payprocess that some seem to have even after they ask you the terms. they just ignore the term and pay you when they want to or can."
09-14-2005, 08:28 PM
jgc8fan said "The commercials we do have a few pitfalls that developed.
1. putting all your eggs in one basket. (one customer with a lot of commercials means a nice check, but screw up on one and you lose all)
2. some are cheap, and try to sneak in extras for you to do for free (with the silent threat of losing the rest of the accounts if you don't do it.)
3. avoid doing the owner of a commercial property's home. They expect more for less, and assume you'll do it to avoid losing the commercials.
If you notice the pattern in those... We got into multiple commercials, and now are in a position to lose them all due to the whims of the owner. At this point his properties make up almost half our monthly income, so he has us where he wants us so to speak. have everything in writing before you start clearly stating what your service includes, and be clear from the beginning that ANY additional services will be at extra charge, AND no matter how simple the request charge for it or you will set it in their minds to ask for more."
09-14-2005, 08:29 PM
lawncuttinfoo said "Most-
Not having to drive around from job to job.
2.Other contractors messing up the turf, painting crew brought in a JLG lift to paint high areas when the turf was soaked, got it stuck in 6 places. Well now my mower gets stuck in those ruts and i need to string trim a LOT more. The property takes 1/2 - 1 hour more every cut."
09-14-2005, 08:29 PM
That's why I really want to keep the commercial account(s) I have... 12 small apartment complexes all jgc8fan also said "within 3 blocks of each other. Only have to move the truck 5 times to get all 12. Not to mention that even though the billing goes through 6 companies it's actually one owner, and all the checks come in one envelope every month. The main reason I love the last week of each month. :-) "
09-14-2005, 08:30 PM
ahlgrenlandscaping said "I don't agree with this...You should never let your customers know how much of your income they represent. If they know that they represent 50% of your income then they can do whatever they want with you because you can't afford to lose them.
I have one truck and two trailers right now and 0 employees. For all that my commercial clients know I could be the largest contractor in the area. Always Always Always give the impression that you are successful and that any one specific job is not important. Look at lawyers they always have brand new suits and porsches whether they have the money for them or not. Watch the movie "A Civil Action" great example of this."
09-14-2005, 08:31 PM
Scaper-S2k said "I have had commercial accounts that will go with a cheaper company no matter what. Not because it's the managers decision, or you did bad work. The person higher up may look at a cheaper account and think things will be done similar, so they will switch in a second. Then the location looks bad all year. To curve this, I have made changes on who I talk to on these accounts.
Pay terms can also be very long on commercial accounts."
09-14-2005, 08:36 PM
Impact said "1.) If they are a well known company in the area, and they change management companies frequently, it may be a good idea to pass. There are a few here that like to not pay for services when they have a management change. "It was the other company's responsibilty to settle that account" and so on..
2.) Don't work for any developers that want to pay you like this: "We can cut a check for today's work next week after we get a draw from the bank"..not happening. Get paid on completion, or risk not getting paid at all.
What I like about our commercials: They use us for any eroision/ seeding needs..
Dislike: No matter how many times I've told everyone to give me 3 day lead time for spray jobs, they always call the day of or the day before needing shot, and need it yesterday....
Getting your desired rate with commercials......Priceless"
09-14-2005, 08:36 PM
Tom said "Ditto that. They want the lowest bidder, every year. They have no loyalty. They aren't interested in other services, no upselling possibilities. On top of that, it's foolish to wrap too much of your income into one or two commercial accounts that will dump you for a cheaper bid. It's beyond me why everyone wants the big accounts. You can have them, I don't want them."
09-21-2005, 09:43 PM
BCSteel said "I do only Strata (HOA) and commercial maintenance solo. The down side to strata is no one can decide how they want things done. If your working somewhere that has a spinless council president that cant make decisions, you will lose out. But, get a place with a president who can take charge and deal with all the residents and it will make your job 100 times easier. Dont do what the residents say, only listen to the president and maybe the vice pres. Make sure you explain to them that you will only deal with them and not the residents.
I love commercial, too bad I only have a few of them so far. While its true that they are somtimes slow on paying I love not having 100 different people all trying to get their 2 cents in every time I show up. They leave you to do your job and when people let you do your job and use you knowledge instead of telling you how to do it, their propertys shine above the rest."
09-28-2005, 01:59 PM
Bayfish said "Start out with smaller commercial accounts and work up to the larger ones. As your business grows and equipment accumulates, you can work into the larger ones. Don't try to be Brickman over night. Besides, doing the smaller accounts gives you valuable experience when the time comes to deal with the larger ones.
To get commercial accounts, focus your advertising toward them. Most are going to look in the yellow pages for contractors, not the local newspaper or flyers.
If you do cold calls, have business cards and some sort of info packet or brochure to give them. The more professional you look and sound, the better impression you will make.
The more services you can offer, the better chance you have. Most commercials don't want to have to deal with any more contractors than they have to.
Offer references if possible."
10-11-2005, 05:39 PM
Commercial accounts have many points to consider before heading in that direction.
1. First only stick with ones that you can fullfill the job spec's. meaning if they require irrigation work and you dont even know how to set a timer I would stay away.
2. Make sure your eggs are not all in their basket.( if you lose them will you be lost.)
3. Truly find out what their needs are, refuse to do business if they say "just gives us a bid." You can just give them a bid when you can service everything their property may need. But just starting out, get what they want. Reason is if you dont put something in your bid they wanted. Then they will be disatisfied with your company.
4. As far as late payment access late fee's, they would access them on you.
5. Last but not least. " Dont fail"
10-11-2005, 05:40 PM
Personally, I think commercial accounts are just the same as residential accounts.
Some pay on time, or early, some pay late.
Some want you to do everything for them, some just want you to mow and blow.
I've got 2 Wal-Marts, one pays in 10 days, one pays in 35 days.
The Wal-Marts want me to do everything from mow, trim and blow, to spray the yards, to fertilize to even pick up the parking lot.
I do a school district, they pay by the 15th.
They just want me to mow weekly and trim every other week.
One thing that's nicer, is that I find it's easier to get them on a set monthly fee, because they easily set up a budget, plus they only have one bill / month.
You can have PITA commercials, you can have PITA residentials.
Bottom line is, if you don't like who you're dealing with, find someone else, and drop the ones you don't like.
10-11-2005, 05:41 PM
Jason Rose said
1. They usually pay late. A month to wait for a company that's headquartered in town, many months if it's out of state...
2. They USUALLY are after the "low bidder" and sometimes won't take more than a season long contract because they are required to get new bids every year reguardless of the quality of work.
3. Kinda the same as above... You can bust your azz and make everything perfect but the only people you are impressing is your competition. The suit in the office could care less who's "cutting the lawn". And a lot of times they don't know good from bad from 3 states away.
There are exceptions... Older commercial properties tend to have management that knows better. They know who's doing a good job and are willing to pay ANYTHING for it. I guess it takes a few years, just like with new homeowners, for them to realize that not just anyone can actually make a property look GOOD.
10-11-2005, 05:41 PM
Possibly the biggest pitfalls from what I remember are:
- Lowest bidder gets the job... I don't like thinking I was the cheapest guy while I'm busting my tail, sorry.
- Being new makes you more likely to underbid, most jobs are bigger than what meets the eye so you don't SEE it until it's too late.
- 60-90 day payment delay is normal and 180 days is not unusual, so you need deeper pockets.
- You are twice as likely to get skru'd by a business owner as when compared to a non-business owner.
But, I have a couple comm.props on a verbal agreement and it's no prob... I get paid by the job, it wasn't a bidding deal, etc, etc... So it all depends, really.
11-17-2005, 04:45 PM
Most of the time in the commercial arena, it's a numbers game. Just be careful not to underbid your work. Especially do not underbid to just to get the contract. You'll lose out BIG TIME!
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