How do you Operate Your Lawn Care Business

[dpld]

Originally Posted by USA Lawn Care I will bump onto what DPLD stated right after your original post. You need to stay up on the day to day operations, just as you would if you were running the crew and doing the work. Now....as with me....your risk would be spread out across the I/C's. Then there is 'which crew can do snow removal'......'who can do cleanups, mulching, etc' questions that arise. I don't think you stated that you wanted to sit on the beach and do nothing so I will assume that you still want to run and grow the business.....which I think is a great idea. Don't throw away your work boots just yet growing a business has a lot more to it then finding client's as well as a guy useing subs will need three times the work to make what a owner operator will. my costs for payroll, taxes, insurance, equipment, fuel and etc etc eat up about 45% of what i make each month the remaining 55% is the businesses and mine free and clear with the exception of income tax. so if you or the OP are or would only be making 20% i would hope that you would be sitting on the beach. also the middleman business is losing ground in this country today and thats what being in business useing subs is. people want to know the company they hire is going to show up top do the work not some hired minnion. people are also aware that anyone who uses subs and does not do everything in house has a larger mark up. plus from a competitive point of veiw there is no way you can compete in a price war because if you got to knock off 10% to get a job it is gonna directly impact you or your sub and being your subs are allready working for a discount will they work even cheaper? and if not you will. you still have to deal with the customers and all their baggage and you make less for you trouble and have less control in telling your subs how to do their job. your liability is just as high and it may drop your initial rates from a insurance premium perspective but it raises your risk vs profit ratio and useing subs the likelyhood of a incident dramatically increases and regardless of what he does if someone wants to file a suit you can expect to be one of the names in that suit as well as crap flows downhill and being you are at the top of the chain it will hit you first. i really enjoy this topic and love to discuss subjects like these and my replies are in a point, counter point format so please don't take any of my comments the wrong way or even as a insult. i just feel when you discuss things that all angles must be considered to make a better choice as to what would be best for you in what direction you would go. the bottom line is that yes it is possible but at the same time the concept is not new and in some industries it is very lucrative way to do business but in the lawn care industry it is far too competitive to account for too much mark up and most clients want a more direct relationship with their hired contractors. thanks for reading.

[USA Lawn Care]

Lawn care business tips

Great post, Dlpd. Your points are all valid. Yes....more accounts are required subbing which is also how my business runs. Basically, less profit on each account but more volume and it all adds up nicely. But.....I have posted before trying to find different companies' profit margin. You are doing very well if you are at 55% before taxes. Congratulations. I hear a lot of 10%-25% profit margins being reported. I'm at 20% or a hair under. As for having to discount to get the job (therefore creating a very low price for my sub and having a sub that's not happy)...I do not discount. There is way too much work out there. I am right in the middle of price ranges. I also do not have to bump my price up. I have basic fair prices and my subs know that and are more than willing to accept 80%. Pricing is a delicate situation though. I have to avoid not undercutting and I have learned to just price it, stick with it and the customer will either take it or leave it. Since most customers come from referrals, they already know the price their neighbor is paying so they know what to expect. It's a numbers game getting clients. I have enough advertising out there in enough different locations that I do not have to rely on my immediate area so do not have to worry so much about if one potential customer in my area wants a lower price. Also.....our businesses are totally different so yes, there are different options. Running crews, owning equipment, all that.....it's a great way to make a living and I did it and, if I had to, could and would do it again. This time around I have simply chosen to tame a different lion. Thanks for keeping the conversation civil and looking at it from different angles.

[dpld]

have you ever tried to get any corporate settings?
it seems you got a good niche going and should target the big properties.

the pay days are bigger which in turn increases your cut but it would be far more attractive to quality subs contractors where they take care of a couple jobs and they are set for the year.

[USA Lawn Care]

staying away from commercial for now.
did them years ago but they are unpredictable year to year when new management comes in and decides to 'cut the budget'. I think I had a few businesses and a couple big churches with schools at the time.
Residentials I find are loyal but you never know.....if a commercial account comes up, maybe I'll bid on it.

[Steve]

By using sub contractors, aren't the costs increased when you combine all of them in order to perform the job?

For instance, for this to work, don't you and your subcontractor have to have liability insurance? So wouldn't that double the amount of insurance payments to perform the same work one company with one insurance payment can perform?

[USA Lawn Care]

we both already have liability insurance. It is a one time set cost per year for me as with the sub'd crew whether he's mowing his yards or mine. It's not adding anything 'extra' to the sub's cost because either way, he's working whether it's for me or himself.

I need liability anyhow because I am already out there working a little bit.

We both also own trucks and some equipment. That does not double the cost of doing business. If we both worked together on the same job for one fee, then, yes, the cost actually doubled. But it doesn't work that way.

My costs stay the same. All I am choosing to do is to make less $$ on a job. My cost did not increase due to anything (insurance, etc.) except for my fee I pay my sub...but my profit was, in fact, decreased. However, again, I make it back up in volume.

And, actually, some costs were totally eliminated. Fuel, equipment usage, salary paying an employee....all have gone out the window. The sub soaks up those costs running his business.

I have set costs for running the business that, once covered, equal profit. It would be the same for someone who has to pay all their company bills for equipment, a building, salaries, etc. and what's left over is profit.

Again, I am taking less profit per job, however it has given me a chance to gain more business outside my immediate area than I would have been able to gain unless I built another pole barn, bought more equipment and added a 2nd and 3rd and 4th physical location and hired employees for each location. I have all these accounts out there where I would have never been able to service them in the past. I turn down nothing because it is 'out of my area' and once I have a yard in an area with a reliable crew or solo op mowing it, then I am free to advertise in that particular area and therefore pick up more accounts.
It has actually snowballed my business, subs have minimum amounts of yards to cut so no one crew has a chance on stealing or destroying my business. A guy mowing 60 miles away from me only knows about the 6 that he is mowing. The key is the interview process. There are tons of honest people out there simply looking for a little extra work. I am helping them and they are helping me.
Say a particular company is making 25% after all expenses and is mowing 100 lawns and that is all they do because their area is saturated and everyone is having a hard time being undercut with lowballing.
$100,000 gross....$25,000 net.
If I'm choosing to make 15%-20% I do have to get more lawns to make what this guy is netting. However....i am not stuck in my area. I can do that in my area and 60 miles outside my area in a complete circle (where no other company around me will travel) and I have multiplied my business many times over by being able to dip into specific areas one yard at a time.

I can spend all my time now (except for a little mowing I enjoy to still do for favorite longtime customers) running the business without worrying about getting my blades sharpened for 10 mowers before the guys show up for work, without the worry of being broke into again and equipment stolen, etc. I am very very busy keeping track of everything....I have simply chosen to eliminate some of the work.

Thanks for the question.

[USA Lawn Care]

A few more points while I just thought of them:

1. Just to reiterate....I am not saying my way is better.....just different.

2. Here's another crazy thing I was able to do. A current customer was talking about her mom who lives about 1 1/2 hours away and mentioned she would be needing her grass cut last season. The current customer would be paying for her mom's yard mowing. The friend/customer described the yard to me and said "it's pretty much the exact same size as ours". I told her that I would charge her the same price she was getting for her yard as long as there was nothing crazy going on with the yard. I looked it up on Google Maps just to confirm that it was an easy, flat cut. Next morning, I ramped my mower, etc. into the back of my truck, drove the 1 1/2 hrs, got breakfast, cut the yard and took a leisurely drive back home. An easy straight forward cut. It was mid summer so knowing I had a week to 10 days at least before it was mowed again, I then found someone in her immediate area to cut it for me. The little old lady talked to me when I was down there and knows that the guy mowing it now is 'one of my guys'. Am I making a lot on that? Nope...but I'm making some that I would never have had and it is steady income that all adds up. PLus, I am now exposing my company to the possibility of picking up next door neighbors and referrals from the new client and can advertise in that area because I am already there working (sort of). Someone else's business might make a quarter off each of 4 customers ($1). I make mine by 5-6 customers giving me 18-20cents......without me having to 'hold the truck up 20 minutes because my employee is running late', or deciding if my guys will call in sick on Saturday when they know they have to work because of a wet week, or any other crap that every owner / operator deals with.

3. The nice thing also is that I get to deal with the actual owner / ops who are the guys that are busing their butt to make a living and are just like me. The employees I always would want to hire are the one's already working for themselves. In a sense.....I now get to hire them (GopherLawnForum readers). You think employees read this stuff? Nope. It's the business owners. Those are the people I'm lucky enough to work with.

4. Also what I did was find another guy to mow if something happened to my current sub. The key to this is never giving anyone too much control. I always have a back up plan and someone ready if sub#1 has an emergency come up. By limiting also the # of yards each can mow, if I have to have sub#2 cut sub#1's yards for 2 weeks....it's only another 5-6 to add to his route and shouldn't be a problem. What happens if sub#1 has 30-40 yards of mine to mow and he breaks his leg? Who's going to be able to cover that with a quick phone call? It won't work. It's all about being absolutely prepared. I just ask the subs "if need be can you handle 5 or 6 more for a couple weeks if an emergency comes up?" It's not a problem and I've confirmed that they can handle it. There is a ton of thinking and planning involved but every business should be thinking of worst case scenerio's and how to handle them without their customers knowing about it or being effected by it in anyway.

[dpld]

i forgot to ask you usa lawn care, do your subs have your name on their truck or theirs?

[USA Lawn Care]

No company markings from them or me on their trucks. And, yes, I know that can sound like a dumb idea but it is what it is and there are a ton of crews out there with no markings on their trucks that do just fine.

In a perfect world, yes, i'd love to have my name all over their trucks but it's just one of those things that's not going to happen because they are driving around the corner from my job to theirs or vice versa.

I just changed to a really nice logo so wasn't going to put something out there that I was just going to change anyhow. The new logo will soon be on everything else I own, though.

As long as they have descent equipment, clean truck, etc it is all fine I guess.

[dpld]

Originally Posted by USA Lawn Care

No company markings from them or me on their trucks. And, yes, I know that can sound like a dumb idea but it is what it is and there are a ton of crews out there with no markings on their trucks that do just fine.

In a perfect world, yes, i'd love to have my name all over their trucks but it's just one of those things that's not going to happen because they are driving around the corner from my job to theirs or vice versa.

I just changed to a really nice logo so wasn't going to put something out there that I was just going to change anyhow. The new logo will soon be on everything else I own, though.

As long as they have descent equipment, clean truck, etc it is all fine I guess.

what state do you live in?

my state nj has a law that any commercial vehicle must have a name on it as well as if the cop feels you are useing a non commercial plated vehicle for commercial purposes you can get slammed as well.


even if other guys are doing it, i don't think you should because you need to do things that seperate you from them.