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View Full Version : 1/2 Of A Business Gone in One Call


Sean Adams
08-04-2002, 09:10 PM
I was talking to a guy on Saturday. He has been in business for 7 years now. Sounds like he has a nice operation (or should I say, had a nice operation). He was 5-7 employees deep and was primarily focusing on residential maintenance. This spring he was approached by a large industrial park. Mammoth in size and larger than he had ever tackled.

To make a long story short, he bid on the property (over $100,000) and won the bid. His idea was to keep his residential accounts and hire more employees and purchase more equipment for this new account to be able to service it. He had difficulty doing this, so he dumped 1/2 of his residential accounts to be able to focus on this industrial park.

He received a phone call last week. They were making budgetary cut backs for a new management company to come in and take over the property. In the process, this new management company brings along their own indoor/outdoor maintenance people. He lost the account.

So now he is without his big "bread and butter commercial" account and he got rid of his loyal, well paying residentials. He said he might have to go out of business just like that.

ProMo
08-04-2002, 09:27 PM
i know a guy who dropped most of his resis to take on a gas station chain and hes history couldnt have happened to a nicer guy

bubble boy
08-04-2002, 09:28 PM
we lost our biggest acc. last week. lawn has been dormant since the begining of june. was not that big a deal, as we do smaller places. not sure how big it was, but def. no more than 5 acres. still dissapointed. can't wait until they call when the lawn comes back. can you say price increase?

come to think of it, last year we lost our biggest account (he moved). hope this doesn't become habit.

i'm always leary of, as they say, having too many eggs in one basket.

gogetter
08-04-2002, 09:32 PM
Wow!. That just plain sucks!
How much notice did they give him I wonder?
Since he still has half of the residentials, could he cut back on employees (as bad as he might feel for having to do so), and just retain enough help to cover the remaining workload? At least until he can pick up some new work, and maybe not have to close up shop.

Dennis E.
08-04-2002, 09:36 PM
The phrase "Never put all of your eggs in one basket" always comes to mind when I read about these mis-fortunes.
Sorry he got hurt.I hope he can rebound and keep the biz going.

Sean Adams
08-04-2002, 09:50 PM
As far as notice....none was given. They were not obligated to do so because....and this hurts.....I feel bad for this guy....he never had them sign a contract. He submitted a proposal and thought it was sufficient.

He never used contracts because he had always worked with residential clients. I explained to him that a proposal is nothing more than that - work proposed to be performed. A contract is necessary to protect yourself and guarantee payment, cancellation rights, default, etc...

I felt bad, because it was too little too late, but I told him to buy the maintenance contract at our site.

I think he will bounce back - an expensive lesson, but now that he has a contract, he won't experience these kinds of things again.

As soon as I get in touch with Chuck, the contract template will be offered here at LawnSite.com - which goes perfect with the Proposal Template already offered here.

heygrassman
08-04-2002, 10:06 PM
Moral of the story... contract.. contract.. contract...

Sean, thanks for the case study. Hope this saves someones rear sometime..

jf

m&m
08-05-2002, 12:02 AM
sean, what did you mean by buying the contract at ur site? do ya have a contractual agreement already made up and all that is needed is to fill in blanks?

Fantasy Lawns
08-05-2002, 12:16 AM
How would a contract prevented the loss of account ?? ... at best he would have recieved 30 days notice .... or is there a contract which guarantees income over the length of contract term .... don't get me wrong contracts are a MUST ....but would not secure the account ....you can have the best written paper on the net ....n all they have to say is the work was not up to aggreement

We lost a good size job this March due to a new management company ..... the job was 15% of yearly gross for 2001 ... part of the business .... we had to lay off 2 guys ....cut back a truck/trailer ....business goes on ....we are almost back up to the lost gross only 6 months later

KirbysLawn
08-05-2002, 12:56 AM
I agree with Steve. The lawn guy is the last to get paid in these instances.

I think the morale to the story is don't put too many eggs in one basket.

heygrassman
08-05-2002, 01:02 AM
Fantasy, you are correct in that a contract is not a guarantee but here is my retionale... A contract is typcially (depending upon state) binding for anything that "resonable" (legal and scrupulous) and agreed upon by both parties and provides an offer, acceptance as well as terms. Of course this is not a guarantee, but should be minimal security in a situation where someone would structure a 100K job that is going to force me to completely restructure a company. In this situation where he had to add so much overhead or reduce customer base to meet this future project, he should have required a contract length be for the entire season to do his best to ensure the revenues to cover the expenes. In the worst case scenario, it could have given him the opportunity downsize accordingly or work to secure new customers to backfill the excess capacity.

If you are going to put your eggs in one basket, better lock um down a best you can.

Sean Adams
08-05-2002, 03:49 AM
All points are valid in this case. Putting all your eggs in one basket is dangerous if there is no back-up alternative in place. A contract provides more protection than most people think - if you are willing to stand behind your agreement. Often times, contracts will deter the client from making a decision like was made here. If the contract covers severability, cancellation, default, etc... you are in good shape...

M&M...yes, we offer them on our site right now, and should be soon offering them here at LawnSite. If you do decide to order at our site (www.lawncaresuccess.com), make sure you e-mail me and let me know you saw it here so I can properly credit Chuck and LawnSite.com.

JimLewis
08-05-2002, 03:55 AM
I agree. Moral is; Don't put all your eggs in one basket.

I personally don't even like Commercial maintenance. I love working the residential side. And this is one of the reasons why. If I lose a residential client, or five, it doesn't really hurt that bad.

But if for some reason I decided to take on another commercial account, I'd never take one on that required me to give up any of my residentials. And I'd probably never take one on if it equaled more than 10-20% of my current income. That's too many eggs in one basket for me.

Sean Adams
08-05-2002, 03:58 AM
I definitely agree with you Jim.

JimLewis
08-05-2002, 04:06 AM
And you're right about the contract. That was a rookie mistake. I would NEVER do any work for a commercial property without a signed contract. It may not have helped him about losing the account (generally, you have to put something in there about a 30 day cancellation anyway). But it's still an absolute necessity on the commercial side for many other reasons.

AztlanLC
08-05-2002, 02:15 PM
Sometimes is hard for me to undesrtand how a guy who's got a business of this magnitud could go out bid and not make a contract, all of the commercial places that I know requiere you to make a contract, not just to protect you but to protect themselfs also.

Not that I don't think it wouldn't happen but I hope people who post here sets aside their personal intereses and finds a better way to advertise.

This site had a great man before, you know who? Eric of course, he's posts and answers were always truht, he gave a lot of his knowledge to all of us for free.

We're not childrens anymore don't tell us a scary movie so we run to your arms.

Sean Adams
08-05-2002, 02:39 PM
I see what you are saying. But never my intention. I was even telling LawnGodFather last night that I don't always feel comfortable talking about offering things. He told me I need to be more proactive because it is valuable information. He even joked with me and said "I push your stuff more than you do." Chuck, the owner and creator of LawnSite, and I have discussed this as well. When something is sold here it benefits him, which benefits the site. But I do apologize if you took my mentioning of the contract the wrong way.

It depends on what your definition of "business of this magnitude" really is in regard to the story I posted. A $200,000 a year business isn't too bad, but like I posted, he always did residential, so the large commercial contract was new to him AND he thought the proposal served as the agreement.

If you take a minute to look at my site, LawnCareSuccess.com, you will see that the entire site is free. There is a free monthly newsletter and I answer questions via e-mail all day long for free. I help any way I can. And trust me, I learn a lot from LawnSite as well.I love seeing a group of people come together like this and help oneantoher. Eric and I spoke on a daily basis as well. In fact, if you look in the search, you will see Eric himself on several occasions promoted the things I (with Chuck) offered here at LawnSite.

But I respect your opinon and again, I do apologize if it was taken the wrong way...

Fantasy Lawns
08-05-2002, 05:26 PM
This is a very good thread for both old n new to the business .... how true to point out these basic facts that ....

A contract (especially on commercial) is a must .... as I do agree it does create a time frame, legal spec's n does help maintain a professional atmosphere for both business n client

Many are to agree that commercial can be scary when a large account comes our way n more so when we have em not to try n lose em ... these opportunites can be made of gold ..... as well as turn out to become coal

We replaced our lost revenue with resi's ....which I too tend to like more so than commercial ..... but for the long run a solid commercial base points to the big numbers

We're bidding on a gated community this week ....we had this job 3 years ago ... since than they have had 3 others hack at it (price shopping) ....n low n behold the VP calls us back .... she knows that "you get what you pay fore" ..... this becomes real ....I will NOT be droping ANY accounts .....even thou it means 100 homes n common grounds ....as I know not to depend on a large single account .... I'll get another trailer on the road .... promote that crew leader ...hire 2 extra's n work it with them till winter

Sean your site has a lot of good stuff in it

Sean Adams
08-05-2002, 06:09 PM
Steve...

You are exactly right. Commercial can eventually lead to big numbers. It is considerably more difficult to develop a strong lasting rleationship due to the consistent "price shopping" mentality of the commercial property managers. But once you get your foot in that door....and work as hard as you can to let them know you care as much about their property's appearance as they do...you have a shot...and then comes the multi-year contract request.

Sometimes commercial clients will tell you it is not in their policy to sign a multi-year deal. If you know your numbers, recognize what you truly can profit, get the right people in the right equipment, you can legitimately offer a multi-year agreement with no price increase. That is the catch phrase that gets attention - multi year agreement with no price increase.

I'm not suggesting anyone sign a 10 year agreement with little or no price increase, but it works if you are established, have the right employees in place, and always look for ways to not only improve your service, but make it more efficient in the process.

Jim Lewsi for example seems to have a great business operating and he seems to only service residentials. My guess is, this guy knows his numbers, services high end accounts and is always looking for ways to improve. That is why residential can be just as lucrative as commercial. Customer service makes a difference.

Ultimately, whether you are residential or commercial, a contract is a good idea. If you are servicing only residential, you may not feel the need for a contract. Often times you can get by without - if you have the right relationship and always do what you say you are going to do. That is the case for a lot of people here on this site.

But commercial....get them to sign on the dotted line...no matter how enticing it appears.....sign here please...

SouthernGardening
08-05-2002, 09:03 PM
Except at Lawnsite.com, education is expensive.:)

m&m
08-05-2002, 11:31 PM
well this is for shawn postiing his contract......i really dont see nuttin wrong with it.....i mean afterall we are here for one another, right?
i know, the rules say this and that but it was an honest slip up i think.......it more of offering help and advice.......just my two cents worth