I wish I was really giving you an expert opinion. FYI, I am currently in startup mode with my LCO. What you read in my last post is clearly my assessment based on what I've gathered thus far.
In this area there is plenty of business to go around. If you look at subdivisions which there are tons of, most of the yards are between 5,000 and 10,000 sq ft. From what I've seen, $50 per cut is a typical rate for typical rotary mowing. My services will be much different from that and will have a higher price point. Not everyone will be a potential customer for me, so I'm being very selective with my targets. Golf course neighborhoods are great because homeowners like the idea of keeping their lawn in a similar condition of the course. I think you see where I'm headed with that.
I have already considered the high cost of fuel in my expense model, so I won't have to shock existing customers with a surcharge. Since I plan to target customers within certain neighborhoods, the goal is to minimize transporation costs as much as possible. You probably don't enjoy the same type of population density there in Waycross.
When the rubber meets the road and it comes to pricing negotiations, I plan to stand very firm or just turn away the business. If I cannot make a profit there are other avenues to pursue.
I will find out soon if it sinks or swims.
I personally think this is a great industry going forward due to the increasing amount of baby boomer population who will become less interested or capable of doing their own lawn maintenance as years progress. And in the North GA area, the home construction has not slowed down which creates new potential customers every day.
I think the most important thing anyone in this business should understand is where the threshold of pain is in a price. There are such things as loss leaders, but customers in this area seem to think rates are fixed forever. If you give one guy a good deal, his neighbor will expect the same. For that reason, I'd be hard pressed to do any deal where I made less than 30% gross margin after all expenses and labor costs.
Last edited by ThreeWide; 03-26-2004 at 07:34 PM.