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Starting a lawn care business. How to start a lawn mowing business, lawn care business, or landscaping business. If you are starting a lawn care business, ask your questions here.

When to accept an unprofitable job.


Starting a lawn care business.

How to start a lawn mowing business, lawn care business, or landscaping business. If you are starting a lawn care business, ask your questions here.
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  #1  
Old 12-12-2007, 03:39 AM
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While I was taking advantage of today's 78 degree weather with a bike ride, I thought about this board and concepts of bidding jobs.

Normally, if a customer does not accept a bid price, it's best for a Lawn Care Operators to walk away from the job instead of doing it for an unprofitable amount. It is okay, though, to occasionally accept jobs which will be unprofitable.

1) Cash flow - Sometimes, an LCO just needs cash flowing into his business today to cover immediate expenses. There are numerous factors which cause a job to be unprofitable. Some factors are: supply expense, advertising expense, overhead, and lawn care equipment depreciation. Equipment depreciation can often turn a profitable job into an unprofitable job especially if a company has just purchased a new commercial lawn mower. If this is the case and an LCO takes an unprofitable job he is effectively borrowing today against the future life of his equipment.

2) Employee retention - It is common for LCOs to lay off employees during winter since customers might curtail their purchases. Laid off employees often find other work during the winter and then decide not to come back to work the following year. Accepting unprofitable jobs might bring in just enough money to pay a star employee so he won't leave to find other work during slow months.

3) Reduce overstock - Seed, as an example, is expensive. To reduce cost, a lawn care operator might purchase seed in bulk. If he buys too much he will have surplus seed available toward the end of autumn. If seeding jobs are not as plentiful as he planned, it is okay for him to take unprofitable jobs in order to get rid of the excess seed. Otherwise, the seed will go to waste or it will take up valuable space being stored for next year.

4) Promise of future work or advertising - This is probably the least advisable reason for taking on unprofitable work. However, sometimes a Lawn Care Business owner knows a customer will feed him extra jobs if he will just give him a really low price on the first job. This is a dangerous proposition since that extra work often fails to appear.

An LCO that takes too many unprofitable jobs will soon find himself out of business. So, only take on these jobs for specific reasons.

Can you think of any other reasons why you might accept an unprofitable job?

Keith
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  #2  
Old 12-12-2007, 05:32 AM
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Keith this is insightful, thinking of all these reasons to accept a nonprofitable job.

I can only think of reasons not to accept a nonprofit job.
1. We are business men and women we are in this to make money not lose it.
2. Say you needed to go to the bank and ask for working capital for a large Landscape job to help pay labor and some materials until you can get a draw payment from the GC and the loan officer ask to see you P & L, and it show these job's you did but your not makeing any money your losing money so your basicly spinning your wheels. So right off there will be qusetion of doubt in his/her mind about the profitability of this so called landscape job your asking them to front money for. What do you think they will say.
3. I understand your thought process with this generation of cash flow, but is it worth it.
4. In business you do not robb peter to pay paul, if you do you will always be looking for that one job to get you out of the hole.
5. Nonprofit jobs are just that nonprofit, save yourself the headache, walk away and take a good P&L to the bank and get a line of credit for opperating for the slow times and move forward with profitible jobs.

Me personally I would never take a nonprofit job if I knew in the very beginning it wasn't a money maker. Some jobs don't turn out like you thought they would and those become losing jobs, if this is something that couldn't have been helped then you mark it for a leason learned and you go over everything in detail about that job 100 times until you find why you lost money on it, then in the future you can fix it and not make that same mistake twice. When times are tough they can get tougher by taking nonprofit jobs. If it's just labor lost then is it really a losing job? No it just means you didn't make as much as you wanted to, so in that sence if the family is getting hungry then yes I would do a job for less money if labor is all that was invalved, if I had to buy materials of any kind then no we are right back to the reasons I listed above.

Just my point of view on a good subject matter.
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Old 12-12-2007, 07:46 AM
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I had a thought on this.

You might want to take a non-profitable job if it brings you positive public relations and creates goodwill for you and your business within your community.

There might be a project in your town where you could come out looking like a hero.

For example. Some years back across from one of Donald Trumps buildings sat a dilapidated ice rink in disrepair that the city just could not get repaired. For years it sat like that.

One day Donald got tired of that and offered to fix the ice rink for free. He got the job done and it was fixed in less time than he said it would.



NOTHING RINKY-DINK ABOUT THIS OPERATION

Source: Associated Press
Champion skaters Dick Button and Aja Zanova-Steindler glide across New York's renovated Wolman Rink in Central Park yesterday. Builder Donald Trump had vowed to finish the repairs free of charge in one season after the city had spent years and millions of dollars to fix leaks in the nation's largest rink. Better than good to his word, Trump had the rink ready six weeks early with ice the skaters said was "just like velvet."

Sometimes you can make more money in the long run if you are not short sighted and can take advantage of opportunities that present themselves.

After Trump fixed the rink, people saw him as an asset to the city and the residents, along with being an amazing developer.

There is no doubt you could do something similar on a smaller scale in your town. Look for opportunities. They are all around you.
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Old 12-12-2007, 08:45 AM
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Quote:
Originally Posted by [b
Quote[/b] (Team Gopher @ Dec. 12 2007,7:46)]I had a thought on this.

You might want to take a non-profitable job if it brings you positive public relations and creates goodwill for you and your business within your community.

There might be a project in your town where you could come out looking like a hero.

For example. Some years back across from one of Donald Trumps buildings sat a dilapidated ice rink in disrepair that the city just could not get repaired. For years it sat like that.

One day Donald got tired of that and offered to fix the ice rink for free. He got the job done and it was fixed in less time than he said it would.



NOTHING RINKY-DINK ABOUT THIS OPERATION

Source: Associated Press
Champion skaters Dick Button and Aja Zanova-Steindler glide across New York's renovated Wolman Rink in Central Park yesterday. Builder Donald Trump had vowed to finish the repairs free of charge in one season after the city had spent years and millions of dollars to fix leaks in the nation's largest rink. Better than good to his word, Trump had the rink ready six weeks early with ice the skaters said was "just like velvet."

Sometimes you can make more money in the long run if you are not short sighted and can take advantage of opportunities that present themselves.

After Trump fixed the rink, people saw him as an asset to the city and the residents, along with being an amazing developer.

There is no doubt you could do something similar on a smaller scale in your town. Look for opportunities. They are all around you.
Way to think outside the box Steve.

This I would do. Even if it cost me money as a good deed for the community.

Because you would reap the benifits following your good deed.

So this brings to mind if your plan is doing a good deed to reap the monitary benfits to follow, is it still a good deed?

I waived a $75 gutter clean out last month to sell a full care annual contract to someone, is this the same? good deed or greed? HOw do you see it in this case.
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Old 12-12-2007, 09:16 AM
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Quote:
Originally Posted by [b
Quote[/b] ]I waived a $75 gutter clean out last month to sell a full care annual contract to someone, is this the same? good deed or greed? HOw do you see it in this case.
Maybe good business sense?
You will get that back through out the year with the contract.
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  #6  
Old 12-12-2007, 08:36 PM
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Quote:
Originally Posted by [b
Quote[/b] ]This I would do. Even if it cost me money as a good deed for the community.

Because you would reap the benifits following your good deed.

So this brings to mind if your plan is doing a good deed to reap the monitary benfits to follow, is it still a good deed?

I waived a $75 gutter clean out last month to sell a full care annual contract to someone, is this the same? good deed or greed? HOw do you see it in this case.
I think it all comes down to perspective. Say for instance there is a storm and I am old and broke and a tree crashes into my house. If a local tree company comes and cuts it out for free, I would be elated. I wouldn't care one bit if they got tons of media exposure for it, even if they sent out press releases on it. I just needed that tree off my roof.

From the business owner's perspective it was a way to get advertising which was deemed to be more valuable than the free service given away.

As a business owner you have to be always looking out for the health of your business, but there are times when somethings will have more long term gains than short term gains. This is actually one of the benefits of running a private business versus a public business. You can do things that over the long run will help you grow even if they don't turn immediate profits.

That's my thought at least.
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Old 12-12-2007, 11:49 PM
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Quote:
Originally Posted by [b
Quote[/b] (Team Gopher @ Dec. 12 2007,8:36)]
Quote:
Originally Posted by [b
Quote[/b] ]This I would do. Even if it cost me money as a good deed for the community.

Because you would reap the benifits following your good deed.

So this brings to mind if your plan is doing a good deed to reap the monitary benfits to follow, is it still a good deed?

I waived a $75 gutter clean out last month to sell a full care annual contract to someone, is this the same? good deed or greed? HOw do you see it in this case.
I think it all comes down to perspective. Say for instance there is a storm and I am old and broke and a tree crashes into my house. If a local tree company comes and cuts it out for free, I would be elated. I wouldn't care one bit if they got tons of media exposure for it, even if they sent out press releases on it. I just needed that tree off my roof.

From the business owner's perspective it was a way to get advertising which was deemed to be more valuable than the free service given away.

As a business owner you have to be always looking out for the health of your business, but there are times when somethings will have more long term gains than short term gains. This is actually one of the benefits of running a private business versus a public business. You can do things that over the long run will help you grow even if they don't turn immediate profits.

That's my thought at least.
Steve you have made some valid points here.
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