To contract or not to contract?

[Lee Homan]

All my customers are on a &quot;pay as you go&quot; plan but I was wondering if I offered them a 5% discount for a seasonal contract(approx.28 visits)and a 10% discount for a yearly contract(approx. 35 visits)it would be worth it. I'm trying to provide a steady flow of income and have a more precise mowing schedule instead of waiting for them to call or being wishy washy about whether it needs mowed when I show up to their house. I thought offering a discount might be an incentive to sign up for a contract. You guys that already have contracts how do you handle droughts or rain? If I give them a discount should I inform them that I still get paid even if the grass slows down and I have come up short on visits at the end of the season/year? After all, I can't go back to them and say since I didn't get the full amount of cuts in this year I'm going to have to charge you full price? <br>Thanks! Lee <br>

[MWHC]

I personally don't like to use written contracts. Contracts seem to me to be a hastle. Here is how I do it. In the spring, when the customers are signing up for weekly or bi-weekly lawn care (mowing programs) we inform them that we are there every week or every other week. We ask that if they are going to cancel, they call the night before. I will not drive around with a truck full of employees and show up at their house only to find they don't want to be mowed. They are billed for me showing up. For example: If it costs you $30.00/hr to operate the business, and you waste 20 minutes driving to their house only to find they don't want done; you have spent $10.00 and made $0.00<p>When they complain about this I explain that I reserve that time in the day for their yard. If they call the night before, I can take the extra 1 timers that call during the day and not waste time driving around needlessly. I guess in a way it's a verbal contract. I do like your idea of adding discounts for signing a year round contract.<p>

[HOMER]

Droughts or rain? <br>If you offer any discounts I would be sure I did it to those that had an irrigation system. We have had so much hot, dry weather around here that a lot f my new customers already have irrigation. If they have it then they are more than likely the type that is concerned about the appearance of their lot. <p>I cannot see how anybody makes it through the winter if they don't sign these people up on a yearly plan. The seasonal people I have will flat out cut you off at the end of October and won't call you again til' April. If I had to depend on them I would starve, and wouldn't have any equipment for tne next year!<p>Tell your new customers that you want and need to set them up on an annual plan, Level out their monthly charges by multiplying the $ amount x # of mowings and divide by 12. That is what they pay at the end of the month EVERY MONTH. Try to convert your old customers and tell them they will save money in the summer months by doing this. I don't have all of mine on a &quot;contract&quot; per say, more like a signed agreement. I detail what and when and have them check it and sign it. This is so 4 months down the road when the weather starts cooling off they don't forget what we had discussed. I don't know if it would hold up in court or not and it really isn't intended to do that, just makes an impression on them that I need it year round and so do they.<p>e-mail me if you need help wording some of this.<p>Homer<p>E-mail me if you need any help.

[Lee Homan]

Homer,<p>I didn't want them to sign any type of legal contract mostly just an agreement with maybe a clause stating that I had the means to collect any outstanding debt allowed by the law. I figure I can use your formula for seasonal customers too. That would give them the benefit of making smaller payments over 12 months instead bigger ones over 6-8 months plus give me year round income.<p><br> Lee

[Charles]

I operate like the second reply. I tell them to call me at least a day ahead of time if there yard doesn't need cutting. But this only applies during a drought period. Other wise when it is raining on a regular basis I keep to a schedule. We have too many droughts and winter for me to have contracts. After it starts back raining a couple of times I use my judgment when to come back.

[moonarrow]

I set my cust. on yearly I show up every week for eight months drought and do something just to make it look good and every two weeks the other four mths. work on beds, trim trees and sork on little small things and ask them if there somthing they want you to do, blow leaves of roof clean gutters. add all the mowings up for the year and divide by 12 and charge that rate no complaints.<p>----------<br>Dale moonarrow@hotmail.com<br>Southern lawn and Landscape

[AandB]

I personally like contracts and have never had a problem with a customer saying that he didn't want to sign one.<p>The advantages are that a written contract is enforceable, it clarifies your work duties, and, if for any reason you decide to sell your business, it will be much easier to sell written contracted customers than verbal contracted customers.<p>Has anybody ever lost a quality customer because he refused to sign a basic contract?<p><p>----------<br>A and B Lawn Services<br>

[JimLewis]

I don't like contracts for several reasons. For one it scares a lot of people off. Who wants to be bound by a contract to someone they don't have any experience with? Even if it doesn't scare them off, it sure makes them feel a little uneasy or at least cautious. I don't want any of those feelings with a new customer. <p>More importantly, most of the time CONTRACTS ARE NOT NEEDED IF YOU ARE PROVIDING GOOD SERVICE !!! (emphasis intended). I've proven that. We have over 100 full time, flat rate, year round customers who have no written contract whatsoever with us. And our service warrants their continued patronage. That's how it should be. Are there yearly contract for other home services (house cleaning, window washing, child care, etc.) ??? Not usually. Why do we need one then? My stand is that if you do well, MOST (not all) people will be more than glad to keep you around. <p>Thirdly, they are too time consuming and rarely enforcable. Don't take my word for it, ask your attorney. They can break the contract at any time and give any number of reasons why they broke it and you can't do squat about it. <p>Am I against contracts or year round agreements persay? Heck no. We've found a happy medium that works very well. I get asked about 50% of the time when I give an estimate if we make our customers sign a contract. And I always give the same answer, &quot;No, there are no written contracts. You are not obligated to stay with our service any longer than you want to. However, that being said, I do like to emphasize that our service is a full, year round service. I ask that you understand that and agree to keep us on all year, provided our good service warrants it. As long as we do a good job, I expect that you will keep us working for you all year. But if at any time you are not satisfied with our service and I can't do anything to make it up to you, you are free to go. I doubt that will happen though, John, because we have over 100 satisfied customers in this area who are happy with our program. You're gonna like this service. That's why I am so confident about it.&quot; <p>That blurb does a lot more than just reassure them that they won't have to sign a contract with some person they don't know. It also shows them that I am confident of our company and our service. People LOVE to hear that. <p>Sure. I get burned once in a while. Not on people taking the service and not paying as much as a few jerks who take advantage of the year-round service then ditch us for no reason during the winter just to save a buck. This winter I lost a good 5 customers or so that way. They just called and cancelled service at the beginning of winter for no reason. You know what? I didn't get all that upset. Because, screw 'em. I got another 100 customers who are totally stoked about our service and would never take advantage of us in that way. I WANT to weed these jerks out early. And guess what. Next spring they'll call back wanting to start up again and they'll find (politely) that we will not work for them any longer due to their lack of honor for agreements. Furthermore, they'll find they are paying a LOT more this year with another company and they'll regret not staying on our service. <p>The 100 or so who stuck around made up for the 5 who bolted. And it's sweet as pie to be making the same money in the winter as I do in the summer, even though the time we spend per month is only 1/3 of what it is in the summer. <p>I have the same program as the guy above. We mow every week for 8 months, then we stop by every 2 weeks in the winter. But unlike that guy, we don't do any extra stuff for free. We just do lawn maintenance. We mow once a month and do chemical applications the second visit. It's sweet. Our program is spelled out on our web page (below) if anyone's interested. <p>Now, on to another question above. Should you give a discount for year-round contracts. Heck yes!!! That's how I got to where we are today. Nowadays all of our new customers must sign up for the year round program. That's all we offer. But I couldn't always afford to be that choosy. So here's what I did for the first 2-3 years. I'd have our program spelled out on a typed paper and at the bottom I'd have two prices. One if they went with our seasonal service (every week for 7-8 months) and another if they went with our year-round service. My year-round rate was what my previous seasonal rate was. So I didn't go backwards. Then I'd always increase the price of the seasonal one to about 15% more, as sort of a penalty. I found that about 70% chose the year round program. The ones who didn't I would happily service on a seasonal basis and it was more profitable. Eventually, when I had enough year-round customers to keep me and another worker busy all year round I went to accepting only year round clients. That's when things start happening. It's nice to be in that position. <p>Nuff said. I've just written a chapter here. :-) <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com

[GroundKprs]

A contract is just an agreement between parties put on paper. Any party who wishes to get out of the contract can do so. A contract is not going to guarantee performance or payment. (Not my ideas, my lawyer's own words.)<p>No one has mentioned the main reason for a contract, or any other written statement. If the client dies, how do you show the executor that he requested your service? If you have a sudden boom year and need to outfit a whole new crew, will your banker just take your word that you have increased services by 50%?<p>What if something drastic happens to the individual owner? Who else knows what the agreement was with each client? How will your survivors value the client base? If you are just disabled, and wish to sell clients, it's a lot easier to show value to a prospective buyer if you have it on paper.<p>People I have worked for for 20 years still sign a contract. To save paperwork, we have a renewal option for the following year at a 5% rate increase. 90% of contracts are for 2 years.<p>Lee, to give a discount for just signing a contract is up to you. If you feel it will help to convert people, go for it. However, our flat rate contracts have a stipulation that cancellation will be reconciled by and itemized computation of services rendered to date, plus one month's service fee. We discount only for multiple services on one property and for longevity.<p>Jim

[lawrence stone]

Jim Lewis,<p>If I were you I would fire your lawyer ASAP.<p>When push comes to shove MY contracts are 100% enforcable.<p>If you don't pay me I file an action at<br>the county court of common pleas. I bypass<br>the district justice since his ruling can<br>be appealed to the county court.<p>I then obtain a judgement.<p>Then I perform a writ of execution.<br>Two constables and myself pay a visit to the<br>home in the evening hours. I notify the local police what I am doing when I arrive<br>at the residence or business as not to tip<br>off the bad debter I am coming.<p>I then proceed to remove the customers personal goods like large screen tv's, computers etc. If the tv was worth $1000<br>new this item will satisfy 10% or $100<br>of the debt. Usually the customer offers to pay me for the debt and all costs of obtaining the judgement before I have to load up my truck with their household items.<p>As for writing off bad debts I have again<br>collected 100% of my recievables for the<br>third straight year.<p>If a new customer refuses to sign a contract<br>where services are billed as when they are<br>performed you should walk away ASAP.<p>With new customers I have a 30 day termination clause covering both parties.<br>Thus they are able to try my services w/o<br>being locked into a yearly deal.<br>

[JimLewis]

Now I don't wanna start a fight here. But I feel I should respond. <p><br>&gt;Jim Lewis,<br>&gt;If I were you I would fire your lawyer ASAP.<p>My attorney rocks. But thanks for the free advise. <p>&gt; When push comes to shove MY contracts are <br>&gt; 100% enforcable.<p>Maybe. But I'd still bet that if a customer wanted to, they could get out of it. Anyway, doesn't really matter to me whether they are enforable. Who wants to go to all the trouble? <p>&gt; If you don't pay me I file an action at<br>&gt; the county court of common pleas... SNIP...<br>&gt; I then obtain a judgement. &gt; Then I perform a writ of execution.<br>&gt; Two constables and myself pay a visit to <br>&gt; the home in the evening hours. I notify the<br>&gt; local police what I am doing when I<br>&gt; ...SNIP...<br>&gt; I then proceed to remove the customers <br>&gt; personal goods like large screen <br>&gt; tv's, computers etc. ...SNIP.....<p>Wow. I am amazed. You definitely got a system there. I can't beat that one. And I don't want to. Hey, if you enjoy spending your free time chasing down a few hundred or a thousand bucks that way, cool. Don't let me stop you. As for my free time though, I prefer Sea Doos, swimming in the pool, fishing, travel, and lots of other stuff. Life's too short for me to spend my nights chasing down some low life. It aint worth it. <p>&gt; As for writing off bad debts I have again<br>&gt; collected 100% of my recievables for the<br>&gt; third straight year.<p>That's impressive. I can't say that. Nope. I didn't get all my money last year. Quickbooks tells me I still got $650 in overdue invoices from my customers. Kinda sucks. But then, that aint bad considering that's less than .5% of our revenues last year. And hey, I had one heck of a good time last year. And I don't have a stress problem. Sure, I had to call a few people and even stop by their house a 5 or 6 times to finally get them to pay. But I never had to go to court (1 COR 6), I never had to hustle some low-life, bother the police, make threats, and I spent very little time worrying about any of it. <p>&gt; If a new customer refuses to sign a <br>&gt; contract where services are billed as when<br>&gt; they are performed you should walk away <br>&gt; ASAP.<p>Well, that's one way of looking at it. I happen to disagree, and I have over 100 regular customers who have never been on contract and it seems to work out pretty well. <p>One final note, I just don't see much of a reason to have to go after customers all that much. Maybe if I had several thousands of dollars out each year or I'd reconsider but I have a hard time trying to figure out how someone could have that many bad apples. It seems to me that when we provide a good service, most people pay us. Some people pay us late. And a few pay us very late and I have to cancel their account and bother them a little to get my money. <p>But most of them pay eventually and I have never had to raise my voice, be less than professional, threaten them, hire an attorney to help me get my money, take them to court, etc. I guess we just have different ways of doing things. <p>To the other readers, I guess you can just decide how you want to live your life. If you like lawsuits, presenting judgments, calling police, going to court, etc. go with Lawrence Stone's way of doing things. If you wanna enjoy life, don't sweat the small stuff. <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com

[JimLewis]

Some more answers. Please, Jim, don't take this as me being confrontational. I think you have some very valid points. I just want to explain the other side of the story;<p>&gt; A contract is just an agreement between<br>&gt; parties put on paper. Any party<br>&gt; who wishes to get out of the contract can<br>&gt; do so. A contract is not going to<br>&gt; guarantee performance or payment. (Not my<br>&gt; ideas, my lawyer's own words.)<p>Exactly! I agree wholeheartedly. And so does my attorney. There is another valid point here as well. A contract can often have a psychological bind as well. Even while they mey not be enforcable, they can often make the customer BELIEVE that they are bound. <p>&gt; No one has mentioned the main reason for a<br>&gt; contract, or any other written<br>&gt; statement. If the client dies, how do you<br>&gt; show the executor that he<br>&gt; requested your service?<p>I've had that happen two times. One time, the wife knew me and knew our agreement. I still work for her. The second time I didn't even know the client had died. Her executor (not even a family member) called me and asked what our agreement was and wanted us to continue at that rate until the house sold. We also got a $1500 clean up job from this guy. Worked out well. But yes, there is the potential that we could have lost one month's pay. Since we charge most of our clients just over $100 a month, it wouldn't have been a big loss to me. Not worth bothering with contracts to me. Others may vary. But that is a good point. <p>&gt; If you have a sudden boom year and need to<br>&gt; outfit a whole new crew, will your banker<br>&gt; just take your word that you have<br>&gt; increased services by 50%?<p>Another good point. And would probably be valid for many people. But I pay cash for all my equipment, trucks, etc. I buy as much as I can afford and I've never taken a bank loan for my business. So again, I haven't had this concern. <p>&gt; What if something drastic happens to the<br>&gt; individual owner? Who else knows<br>&gt; what the agreement was with each client?<p>Almost all of our agreements are the same across the board. We provide the same service for almost every customer. But even if that wasn't the case, every customer is tracked in 5 ways. <p>1) in our daily notebook each customer has their own page with specifics about them and we keep a checklist of what we've done every visit for the past 3 months. <br>2) It's in my planner. Every customer has their agreement next to their name and address in my planner<br>3) It's all in my computer as well. That's where the notebook is printed from. <br>4) There are notes and records in Quickbooks that document the history and service with each client very well. <br>5) My employees know.<p>&gt; How will your survivors value the<br>&gt; client base?<p>Well, fortunately I have a lot of Life Insurance. :-) But just in case, my wife knows to go to my good friend who also owns a maintenance comapany. He'd likely be the buyer and even if not would know how to value the whole thing. If I didn't have him I don't know what she'd do. I guess that's where life insurance comes in. But my survivors would figure it out one way or another. I've left a pretty well documented and organized trail. <p>&gt; If you are just disabled, and wish to sell<br>&gt; clients, it's a lot easier<br>&gt; to show value to a prospective buyer if you<br>&gt; have it on paper.<p>I agree. These are all good points. Whether the risks of these unlikely circumstances are worth the hassle of contracts is all I quesion. And for me, again, in this situation it's no. I firmly believe I could document a very good history of revenue of our company and I could sell our company to someone without having to say &quot;And look, they're all on contract!&quot; I also firmly believe I could run this company being disable too. It's big enough now that as long as I could talk and answer a phone,I could have people do the rest. <p>Nuff said here. I am tired :-) Anyway, like I said above, these are all good points. But to me, they aren't worth the hassle. I get asked every day whether we do contracts or not. People are always refreshed to hear that we don't. I know I land a lot more accounts because of it. And my retention rate is still very high. It just doesn't seem like it's worth it. But to each his own I guess. <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com

[SLSNursery]

I agree with a lot of the points made on both sides of the discussion. In the beginning, all agreements were word of mouth. This lasted from 1980 until the early 90s. Presently only a rare few are verbal arrangements. Now we offer lawn care agreements in the spring which are signed by us and the customer. Here are a few key points:<p>1. The agreement establishes the prices and timeframe of services for the entire season. This helps avoid extra explanations at billing time. It also establishes which services the customer agrees to (i.e. Over time I have found it impossible to have all customers buy all services).<p>2. We establish our billing terms, and interest charge for delinquent accounts. Although we don't look forward to small claims court, the judge did inform my partner that with a verbal contract you may be entitled to payment but without written and signed terms, no collection costs or interest.<p>3. We offer a discount for pre-payment IN FULL before the season. The agreement is a formal way to offer the customer a discount without it sounding like a gimmick, or seeming to be short of cash in the Spring.<p>4. My experience shows that most people will acknowledge the agreement without any problems. Older customers - that I've had for 15 years don't always send it back, but they read it, and when the price goes up they are informed and the payments reflect this or at least going into the season there are no surprises.<p>5. Other trades or services - as were mentioned - usually are COD or leave a bill/work order that gets signed by a customer. This form, no matter how you slice it, is a simple contract. If you are extending terms to your lawn accounts to mow/work for a month and then invoice, I find it easier to get one time acknowledgment at the beginning of the season rather than hand or leave the customer a bill for each visit. How about Oil companies - they leave a ticket for each fill up, and usually only allow Net 10. This is a contract too!.<p>----------<br>Phil Grande - Soundview Landscape Supply - http://members.aol.com/slsnursery<br>Ivy League Landscaping - http://members.aol.com/scagrider<br>

[AB Lawn Care]

We like using contracts for our service but we like to have some extra non contract work in the summer.The pro's to contract are steady income,easy to collect unpaid bills,you don't have to be constantly asking your clients if they would like to have their lawn done this week,less billing,plus we get paid more on contract than off.Becouse we can not handel all of our clients during winter(snow removal)during the summer we have about 1/3 of our work on non contract.This year we are still batteling to get $1500 from a collage that has not paid up from the fall.They where not on contract so we are having a hard time getting our money.When we get clients like this we will not go on non contract basis.An other plus to going to contract work is that we very soon get to know if our client is cheap or not.Clients that are to cheap are often the ones that will dump you in a recession.With us we will keep a client like that,but as soon as we pick up a client the is willing to go on contract and price is not a concern with them then we will give our cheap client one last chance to go on contract.In most cases there is plenty of work out there so we think of our clients as an apple tree if you let suckers or branches that are not produceing much fruit grow on your tree in a short time you will have alot of apples but they will be small and worthless.By pruning those clients off the tree than you will have larger fruit and better results.<p>I hope this will help you out!!!<p>from:Adam<p>AB Lawn Care