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Pitfalls of Commercial Accoun

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  • Pitfalls of Commercial Accoun

    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?
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  • #2
    amtrucker22 said "Most of my commercial accounts pay late (about a week past the due date)."
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    • #3
      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!"
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      • #4
        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."
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        • #5
          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."
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          • #6
            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.
            Joel LaRusic
            Consultant/Author, Start & Run a Landscape Business
            www.mowboy.com

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            • #7
              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."
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              • #8
                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."
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                • #9
                  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."
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                  • #10
                    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."
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                    • #11
                      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."
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                      • #12
                        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"
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                        • #13
                          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"
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                          • #14
                            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."
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                            • #15
                              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."
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