Originally Posted by HenryB
Commercial accounts are given to the lowest bidder. That's really it. Often they look for someone a bit dumb or desperate; willing to work for free to appear like the "big" guy. LCO's are notorious for wanting to be the big shot to our peers. I have multiple close friends and family members with very big commercial accounts. I do zero work for them and we have a great relationship. At holiday party's they often talk about how stupid we are and how we'll work for nothing even lose money weekly. PS these guys also due their homes for free.I wonder what else they would due to have "the honor" to maintain their properties. It's really sad.
I agree. Very good analysis. So many LCOs take on commercial because of the "big ticket" dollar amount and because they think it gives them more credibility. Unfortunately, they usually go into it not knowing their numbers. That's why they underbid everyone else. They are just losing money and they don't know it yet. I see companies like that come and go all the time. I have three guys working for me as crew leaders and top managers at our company who used to run such outfits and couldn't keep it profitable. They went out of business and are now working here. It's a tough business and understanding your true costs and profit is a very time consuming and difficult thing to really manage and understand. Obviously, most LCOs aren't really great financial analysts. You combine that with the big egos most of them have and it's no wonder they're underbidding stuff like this, regularly. Then they eventually go out of business. But it often takes years.
Fortunately, there are some bigger commercial companies who realize this and are more interested in a long term relationship and professionalism. So they'll go for the higher bids with more established companies. Unfortunately, these are few and far between. And I'm not interested in fighting for them.