PDA

View Full Version : Business Update - Loss Leader


Turfer
08-29-2000, 04:23 PM
I haven't been on here in a while. I'm pretty busy. Business is really picking up just from referrals from existing customers. I'm at 70% of my goal which I set for year end. I think I'll probably go over my goal by 10/15. My Ford Ranger died from exhaustion so I bought a 93 z71 with a 5.7. Great truck and what a difference in pulling power.

I stumbled over someting during my second landscaping job during the month of August. I way underbid the pine straw part of a job. I bid by square yard coverage instead of square feet coverage. (I walked it off and did not multiply by 3. When I put my wheel on it, I really felt stupid). Anyway, I charged the customer $7.50 a bail for straw but I needed 2.5 times more than I bid. I only paid $3 a bail so I broke even on the straw. The customer has asked me to do loads of other work in their golf course yard. Aerating, seeding, front and side yard landscaping, compost bin. I'll surely make up my pine straw mistake on these jobs. Does anybody use the loss leader concept to get more business ? It sure worked on these folks. Thanks.

Anybody have any ideas to "clean up" the edges of a large natural area. I'm thinking about using a mini tiller to establish a wide, deep border.

Kent Lawns
08-29-2000, 04:46 PM
Most commercial landscapers use mowing as a loss leader.

Then newbies get in the business - mowing only - charge the same as the commercial landscaper - and after 3 years wonder why they're only making wages.

Clean-up you edges with a Browne TrenchMaster bed edger.

BUSHMASTER
08-29-2000, 04:54 PM
Have to agree with kent .. i own a trench master and untill
this season i used to do it with a tiller..to long and very time consumming espesilly if its clay go rent one a try it out they rent here for $85 a dayBIG BIG BIG diference in time like hours.....i luck up and rented one and when iturned it in the man said it was for sale so i wrote a check for $600. and its allready paid for its self one of the best time saving tools i ever purchased.

Guido
08-29-2000, 05:04 PM
I agree with Kent about the lawn pricing, and especially with the "just mowin" firms out there.

Did you want to put a low maintenance boarder like wildflowers (cheap fix) or no boarder and just use a push blower to clean up debris and push it farther back in the woods.

What did you plan to do with the tiller or trencher, I'm not seeing eye to eye on that one.

parkwest
08-29-2000, 11:30 PM
A somewhat Typical scenario. Women needs lawn mowed. Our regular price $30 discount to $22. Lady loves us. Within a year we have installed a deck, water feature, wood fence, fenced in horse pasture, aerating, fertilizing. tree & shrub maint. garden rottotilling, she has also referred us to her friend who wants an addition and she has called to ask if we would build a new home for and her new husband next spring.

I think mowing almost has to be a loss leader to get your foot in the door over some of the fly by night competition out there. You need to offer more than a mow & blow if you want to make some real money otherwise what are you offering that the kid down the street can't do.

Kent Lawns
08-30-2000, 01:33 AM
Great point parkwest.

But, build a house? put on an addition?

Talk about full-service! :)

thelawnguy
08-30-2000, 10:04 PM
LOL, the biulders around here wont even mow their own lawns. You sure you arent building houses as a loss leader LOL.

Twotoros
08-30-2000, 10:25 PM
Well Mr. Parkwest I guess I have been flying by night for fifteen years . Guess it's time I get a real job like yours.

tslawn
08-30-2000, 11:05 PM
Originally posted by parkwest
I think mowing almost has to be a loss leader to get your foot in the door over some of the fly by night competition out there. You need to offer more than a mow & blow if you want to make some real money otherwise what are you offering that the kid down the street can't do. [/B]


Excuse me? I've seen some of the work the "kid down the street" can do. "He's" done some work near some of my customers. Does the kid down the street mow with lines in the yard? Does the kid trim everything that needs to be trimmed? Does the kid edge the flower beds and walkways? Does the kid mow without leaving huge gr*** clumps in the yard? Does the kid blow all the gr*** off from the walkways and driveways and flowerbeds?????? I ask you again, "What does the kid down the street" know how to do, except CUT GR***????? We, collectively, offer a service. A dependable, professional lawn service, that's what. There really is money out there in the mowing business!

Lazer
08-31-2000, 08:00 AM
There's just wages in mowing, no profits.

I did all those detail services when I was a teen. Good job, too! - I paid attention to detail and took work away from commercial cutters because I did a better job.

Had an OLD Bunton 52" (11hp Briggs!) Striped all my lawns, trimmed, edged (old McClane 2hp) pruned, blew (old Echo with the 'bowl' carbeurator).

parkwest
08-31-2000, 08:58 AM
If you think there is a high profit margin in just running a lawn mowing service you'll be amazed to see your margins in offering a full service landscape business.

I see guys running all over town going from one job to another just mowing when if they just took the time to look around they would see more opportunities to make money where they were just at. If nothing else it would be easier on your truck.

Would it not be better to provide your customer with a "1 stop shopping" type of service?

Stinger
08-31-2000, 10:37 AM
Parkwest: I'm probally going to get slammed for this but I agree with you. We offer a full service landscape business and make twice as much as those that only mow. I can cut all day and make $500. Or do special svcs. & landscape work to the tune of $1,000. Now dont get me wrong, I have many a friend that just only want to cut gr*** and theres nothing wrong with that as long as your happy. That is why I started doing landscape and lawns because it was fun to me, I really enjoy it. Now theres some days that really suck, but I dont get mad and look at someone making more money than me and become aggrevated. I chose what I do and if I don't like it I'll change it! I totally agree with the one stop service where the customer deals with one person and writes only one check. But I'd leave the new home construction to a builder, that's not in the landscape field. As for tslawn, you're awful defensive about the kid down the street. Is he a friend of yours? Did he steal some accounts or what? We all have been the kid down the street at some point in time. I still know a few of them (all grown up now) and they work in all walks of life making different incomes. There is money in cutting gr***, working at a bank, fixing cars etc. It just depends on how much you wish to make.

bondlawn
08-31-2000, 06:13 PM
Thanks to both Kent Lawns and Parkwest. When I read your comments it was like someone just turned on the light bulb over my head.

There is a landscaping contractor in town I've gotten to know who treats maintenance in a very casual way. All of a sudden, now I realize he just uses his maintenance to get the landscaping jobs.

Thinking back to the two or three small landscaping things that I have done in the past couple of years, I realize that I made a whole lot more money per hour on those jobs than I have on any lawn I've ever cut.

Thanks to both of you for your insight.

osc
08-31-2000, 08:41 PM
I don't personally like the idea of loss anything. My customers pay good money for maintenance and bigger money for landscaping but I don't lose money on any job or I wouldn't do it.
I understand the foot in the door concept but to me $500 per day profit is good money and it would be if I had millions. I mean 500 a day is 500 a day.
We do full-service lawn and landscape. Some landscape jobs we do make me wonder after I spend a couple of hours with the customer, take pictures, make a design, take them back to the customer, make changes etc., then after something is installed the customer wants me to change something so I have a call-back for free. And the change they want involves equipment and so on. You know, I've made as much as $1,000 in one day mowing gr*** and that's profit. Then still have a full week left like we didn't even make a dent.
No changes, call-backs problems etc..

Bottom line...profit is where you find it.

Chuck Sinclair
08-31-2000, 09:02 PM
Ok this may be a stupid question but i keep reading about striping your lawns. How do you do this?

Chuck
Willow Brooke Landscape
http://www.wblandscape.com

Stinger
08-31-2000, 10:54 PM
Sinclac: Just click on Erics site lots of eye candy there!

Eric ELM
08-31-2000, 11:07 PM
Striping a lawn is when you have the light dark pattern on a lawn when you are cutting the turf. If you aren't sure, click on my signiture below to see stripes.

Chuck Sinclair
08-31-2000, 11:28 PM
Thank You for the info. I learned one thing i'm not going to be doing that with my 21" Honda's all my lawns are small compared to Erics. I think i could put all of my accounts in one of Erics!

Chuck Sinclair
http://www.wblandscape.com

eslawns
08-31-2000, 11:47 PM
Why is it that every install outfit is convinced that just because maintenance guys don't want to muscle around trees and boulders every day, that we don't make a profit? What a crock. I'm not getting rich, but I make better money than I would as an engineer for the first ten years, and better than most of my clients. And I don't care what you gross, none of you spends the better part of your day on the business end of a shovel. If you are then YOU don't make any money. Here's something else to factor in: Every time you get a new install job, you spend time before the shovels come off the truck to estimate your costs and sell the job to your client. Mowing is residual. That means you keep doing it, but only sell it once. My brother in law does tree work and makes three times the money I do in a day. When he works. And when he works, he busts his hump. It's hard, hot work moving tree trunks. And, yes, it's hard to find help to do that also. As far as offering services, what does the average installer do? Most work for builders, do lousy work, cut profit to the bone (builders ALWAYS go the cheapest way) and when their plantings die, it's a real landscaper that gets a call. I don't know about the rest of you guys, but I don't do major installs for the same reason I work alone. Because I don't want the hassle. Just because you can't sell a job without buying someone's business, don't assume noone can. And the guy who cut the $30 yard for $22... Why would you do that? do whatever you do and cut the thing for $30 also. No wonder you aren't making money, you can't do arithmetic.

parkwest
09-01-2000, 10:25 AM
eslawn,
Basically, what you are trying to tell me is if there is $100.00 laying on the ground you would not pick it up because you only do grass.

What I think a good business man should do is look for all the oppurtunities to increase the bottom line for your business.

Unless you are a sole operator and wish to remain so, if you are in trenches with your workers you will need to make the transition from technician to management someday to see your business really take off. You need to ask yourself, are you running your business or is the business running you? Can you take off for a few weeks and come back and everything is running just as smoothly as you left it. These are things you can strive for as you grow your business.

As for "builders ALWAYS go the cheapest way," We build custom homes and the first step is to assemble a team of subs that do what they agreed to do, not the cheapest. Like everything else in life you generally get what you pay for.

As for our ability to do arithmetic you evidently don't understand what a loss leader is or realize what we charge to do landscape work. $8 x 32 weeks = $256 which is excellent considering we didn't have to spend any time or money to locate this customer for all the extra work.

For anyone interesting a good book for any business owner to read is "The E-Myth" I'm sorry but I don't recall the authors name.

thelawnguy
09-01-2000, 02:47 PM
I think your scenario was far from "typical". You mean you get the majority of your building clientele by mowing their lawn? Woohoo! Whats that I feel? So much sunshine being blown up my a$$ I could do a handstand and double as a floor lamp.

eslawns
09-01-2000, 11:20 PM
parkwest,

No, I don't know what you charge for install work. I just know I can't sell it at the price I can the mowing. It seems as if you assume that all maintenance people are idiots and couldn't possibly understand the complexities of a "real landscaping business." And, of course, I'd pick up a "c" note if I found one. But I wouldn't want to dig for 3 hours for one.

I find was that people are seldom willing to spend what I want to get the work done. They end up doing most of the stuff themselves. If you can do this where you work, more power to you. But I don't care what you say, there is a great deal more overhead, and a much larger margin for error in installs rather than maint.

As far as letting my business run me, sometimes it does. So does everyone else's job, so what? I also understand what a loss leader is. I just don't understand why you would want to do it. If you ever attend sales training, you know it's a technique used by poor salespeople. So you made all this other money on a client after you cut $256 from the mowing. If she decides to get someone else or mow herself, you stop making money. If she keeps you, unless you start to charge more, you start to lose money. What I'm asking is why not do both?

Now here are a couple of numbers for you. I've cut one yard 37 times. 21.35 (notice about a half week's work to make $925) total manhrs, avg time is .58 manhrs. Cut is $25. ($44.73/manhr) This is one that's close (on the money) for what I want. I have had jobs where I was making under $30/manhr. I check often to see where I am on a per hour basis with each cient. If it's under $30/manhr, they get a new price or a new grass guy. If you do 40 lawns like the one I used as an example, you can easily cut them (alone) in a week and you'd make $1,000 and work around 23 hrs plus drive time. 15 min ea is 10 more hrs.

Not profitable? I'll take profit like this every day. Sorry this is so long.

southside
09-02-2000, 01:19 AM
I'll take on any job that will make good dollars.My business
used to revolve around land clearing and slashing.Then I
bought my Walker.I'm making better money with the Walker than I ever made with the tractors.In comparison to slashers
the Walker is incredibly cheap to maintain and operate.
eg; Tractor clutch plate $2000.00 AUD or $1600.00 USD.
Tyres 14/9-28 Firestone 10 ply $800 AUD or $650 USD. You get the picture.Now I'm finding that there are other jobs that can provide me with even better dollars. We are moving into commercial cleaning,landscape maintenance,ect.

The moral of the story is NEVER TURN AN OPPORTUNITY AWAY.
Don't classify yourself as soley a grass cutter,as thats
all your business will remain as.


Just my 2 cents (AUD :) )

Karl