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General Business Discussions

A place to talk about general business discussions.
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  #1  
Old 04-07-2006, 09:00 AM
myrlin myrlin is offline
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Hello everyone,

We are a fairly small residential lawn mowing service Co. (47 customers). We just received a call for an estimate on a small gated community (10) homes plus mowing around pond area and front entrance area. We have never submitted a bid like this before and not sure how to properly word this bid or even price it. They want a price on a yearly contract. We live in SW Florida. All our customers are on a yearly contract priced arount $70.00 per month. Any suggestions or help would be greatly appreciated.

Thanks in advance.......Myrlin
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  #2  
Old 04-07-2006, 10:36 AM
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Hi myrlin,

Before I give you my thoughts on this, could I ask you some more questions to learn a little more. What do you think of this bid? Are you excited about it? Or does it unnerve you etc?
What do you feel this bid could do for your business both good and bad?
How many employees do you have now or are you an owner operator?
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Old 04-07-2006, 11:05 AM
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Hi Team Gopher,

My husband is the sole owner. At this time we don't have any other employees. We are excited about this opportunity but at the same time a little nervous due to the fact it is only my husband. He feels he would be able to handle this account.
The good side for our business would be the income it would generate, more cash flow. The bad side could be more equipment breakdowns, down times, which would affect all our customers.
Your thoughts would be helpful.
Thanks....Myrlin
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Old 04-07-2006, 01:00 PM
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Hi myrlin,

This is my view and I do hope others will jump in here and offer their input as well.

I would say don't get involved with the commercial account. Why? First off they are notorious for paying the absolute bare minimum they need to get the service done.
Generating cash flow alone is not a good enough reason to take on such jobs. Cash flow has nothing to do with how profitable a job is. Remember, the goal is profits and not cash flow.
Because you are new to the commercial world, there is a good chance you will underbid. Then if you win the bid, you will be locked into a large account for the year. This is the type of move that knocks out many small businesses.

Slow and steady wins the race. I would suggest taking smaller more steady steps. Don't rely on one large customer. Spread out your risk with many smaller customers.

If you decide to go this direction though we do have contracts here.

What are your thoughts?
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Old 04-07-2006, 01:35 PM
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Hi Team Gopher,

Thanks for your input. I do hope others can input their thoughts also. I agree with most of your post. We probably would be safer just adding a few residential accounts here & there.
My husband was thinking whatever we would normally charge a residential account, then double the price for this new account.
Your thoughts?

Thanks....Myrlin
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Old 04-07-2006, 03:43 PM
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If you do not have the equipment or help, then I personally would not do it. Try not to over extend yourself to much. I would thank them for the opportunity to bid, and mention that perhaps you would love to submit a bid for next year instead. By then, perhaps you might have more equipment.

The worst is having too much accounts and not being able to handle them, also put into place of what if something happens to your equipment, then you are really backed up big time
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Old 04-07-2006, 03:53 PM
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It's a big jump going from 47 customers and then adding a block of 10.

Myrlin,
Tiedeman has been through a lot too. He had over expanded in the past and ran into big problems with it.

What kind of advertising have you been doing to attract new business?
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Old 04-07-2006, 07:17 PM
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Hi Team Gopher & tiedeman,

Thank you both so much for your replies. It really helped us in our decision. We really thought it over and decided it would be too much to take on at this time. You are definitely right about the possibility of not having enough equipment or help to handle it. That could really break us.
We advertise in our local community paper and it has done us well. Now that our season is starting up again, the phone keeps ringing. Just today we had 4 calls for our average residential estimates.
We are thinking about including a free fertilization for new customers in our ad.
Thanks again for your input and suggestions. You really do help alot of people on this board. Keep up the great work!
Myrlin
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Old 04-07-2006, 07:35 PM
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Hi Myrlin,

I think you made a wise decision. I am glad to help. I can't tell you how many business owners I talk with get so excited over the prospect of a big account that they jump in without looking.
Run your business for the long haul. You need not only to make a profit but build up your infrastructure as you go and grow. Part of this infrastructure is knowledge on how to run your business. That can come by reading and trial & error.
If you get too big too soon you won't have the infrastructure to deal with it and you can implode.
Read past posts on this forum and you will see stories how the largest lawn care operations in town look from the outside as going great guns but in reality they are losing money and are on their way to extinction.

How many years have you been in business? Have you run other previous businesses before this one?
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Old 04-07-2006, 07:49 PM
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We have been in this business since March 2004. Yes, we owned a laundromat from 1995-2000. The overhead was just so expensive and got tired of 13 hour days, 7 days a week. In between 2000-2004 we both worked for other employers and then decided to go into the lawn business. My husband does all the lawn work alone & I do the office work (phones, computer work, scheduling etc.) Your program is great and has saved us so much time.
Thanks...Myrlin
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