Competition Folds

[Steve]

I think all too often though this is over looked by the new lawn care business owner. When you are just getting started, you figure you would rather be working than not working, so as long as you are working, it's like money in the bank. But it is so very important to remember it is not. Only money in the bank is money in the bank. When you do work for someone and they don't pay you right away, it becomes a burden. You then have to spend considerable energy tracking these customers down to get paid. Sometimes you never see payment from them at all. The way you choose to handle getting paid from your customers can make the difference between your business becoming successful and it sinking.

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Lawn care business tips

Thanks Steve, this is also a good measurement of what you can expect when the money is due, I had a couple of prospects that when I asked for a credit card or to leave a cheque for example under their green bin, if they flintch or balk, I walk, no exceptions. I have learned over the years to read body language if I even get a hint there will be an issue, it will either be payment in advance or I will move on, I can't afford to run this equipment and work for free.

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Andy
Halifax, Nova Scotia

[Steve]

For the new start up lawn care businesses, which way do you feel it is best for them to go about billing for lawn care?

Should they do something similar to what we are talking about here for snow plowing?

Should they pay per cut, maybe with a credit card? Should they prepay for the upcoming month of mowing or what do you feel is best?

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Originally Posted by Steve

For the new start up lawn care businesses, which way do you feel it is best for them to go about billing for lawn care?

Should they do something similar to what we are talking about here for snow plowing?

Should they pay per cut, maybe with a credit card? Should they prepay for the upcoming month of mowing or what do you feel is best?

Expectations is a two way street, our clients tell us what they want and expect, I tell them what we can do and what we expect on payment, cheque when we are done, prepay by month on lawn care if you wish or credit card. Never had one issue this summer even taking cheques that were sometimes very large and I was a bit concerned.

Never be afraid to ask for your money, some clients can read us also and some have the attitude if they can take advantage or squeeze you they probably will, stand tall and firm, there is nothing wrong with asking for your money.

Receivables should never be over 30 days unless it's a government contract, yes those can take 90 due to their process but in this case I simply charge interest after 30 days and I get it, if the company has an issue, then hire someone else, I have only had to walk from two jobs this summer.

[Steve]

I don't know why this is something so many newer businesses miss, it might have to do with a lack of confidence that they can command such terms. Or maybe they feel that they would rather be working today and worry about getting paid tomorrow. But this has got to be one of the biggest new business killers out there.

Tracking down customers for payment will drain you of every ounce of interest you ever had in your business.

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We might be a service industry but go get your vehicle fixed, maybe the furnace in your house, washer, what about gas, groceries, insurance, try to tell these companies you can't pay for 60 or 90 days and see what happens, we have to stick by the same terms, IMHO.

This is a very interesting topic. I think part of my problem is that sometimes we tend to think that asking to get paid is a "dirty topic". Yet, when you are on the other side of the counter or mower (so to speak) you wold not think anything about it if the person were to ask you about payment. The consumer expects to have to pay for the service they are receiving. If they don't they don't need the service. Plain and simple.

Oddly enough, one of my worst paying customers is my next door neighbor. He owes me $35 and has for several months. I seldom see him now, but I used to see him all the time before.... Go figure. He is a cheap skate to begin with so I figure if he stays away I can deal with that. If he comes by and wants something I will flat out tell him I need the money from last time before we even look at anything else. And from here on out, its pay up front BEFORE I release the equipment. PERIOD.

With that said, I know this same customer is going to want to buy a used push mower this spring. No problem, I have several on hand but I will need my money before hand....

[Steve]

Oddly enough, one of my worst paying customers is my next door neighbor. He owes me $35 and has for several months.

This is a great example, can you tell us how he ended up owing you the $35? Do you think this problem just comes down to the way small businesses are operated or is this more an issue of customers feel they can take advantage of a small business owner, or in this case a neighbor who is a small business owner.

Is this a two way street or can one side clamp down and solve the problem?

The other thing I wonder is, does small business exist because they offer a flexibility in payment or is this not important at all for it to function?

Originally Posted by Steve

This is a great example, can you tell us how he ended up owing you the $35? Do you think this problem just comes down to the way small businesses are operated or is this more an issue of customers feel they can take advantage of a small business owner, or in this case a neighbor who is a small business owner.

Is this a two way street or can one side clamp down and solve the problem?

The other thing I wonder is, does small business exist because they offer a flexibility in payment or is this not important at all for it to function?

The way this happened is he needed the mower, but did not have the money. He said, I'll pay you next week. blah, blah, blah. The reason he thinks he can get away with it is because we are "friends". I think this week I will go over and tell him I need to get paid. I like the guy, like them as neighbors. They watch my place while I am gone. I don't think he is trying to get away with never paying, but simply he may be having a hard time.

I think small business can exist because they tend to still be "human". They still have that human feel to them. Because of that, we tend to feel sorry for people and give them a break or whatever it may be. I am not against giving people a break, if they deserve. I personally give my pastor a break on everything. To me, that is something that is directly between me and my pastor.

[Steve]

But it is fascinating how it all goes. Somewhere there has to be a happy median. I wish there was some kind of rule of thumb for this, like don't ever have more than X% of your income floating around out there uncollected in your accounts receivable.