How to fail in the lawn business by someone who did it.

[coolluv]

I understand that there are numerous cost involved with running that big of an operation. But, everyone doesn't need a new truck. The office guy doesn't need a new truck or a truck at all. The supervisor doesn't need a new truck or a truck at all. The back up truck doesn't need to be new either. Several dump trucks, Why? Mowing crews don't need a dump truck.

What I'm getting at is, I see alot of wasted money. Which can apply to any business. I think this is a great thread and topic. Too many guys come on here and try to get as many customers as they can working cheap and then realize that its a business like any other business. Having 500 $30 lawns means nothing. Having good paying lawns where you are making a profit is what matters.

I'm not knocking you, I appreciate your story. It makes you think and realize that there's no point in running around busting your a$$ for nothing. The next time some of these guys go out to give an estimate maybe they will think twice about lowering there price just to get the job.

Dave...

[bobw]

Originally Posted by coolluv

Ive got a question. How did your overhead get so high? Could you explain?

Dave...

How does your overhead get so high? It goes like this:

You start out small... you run off your cell phone or maybe have a seperate line in your house. You store your equipment in your garage. Your overhead is very small...

You grow... you have enough work to START up a second crew.. so.. you buy another truck and some more equipment. But that's a lot of cash.. so you finance some of it. Your overhead just went up.

Well.. two trucks, two trailers and a bunch of equipment. Can't store all of that in your garage... now you need to rent some storage space. Your overhead just went up again.

But things are looking good... lots of contracts, the phone keeps ringing, you sit back and think that maybe you should think about a third crew. So you get yet another truck, trailer, a bunch more equipment, hire a few more guys. Your overhead is getting pretty big now, but no worries, three crews running generates a lot of cash flow.

So you're sitting there with three crews, a bunch of payments on equipment and trucks and storage. Pretty scary, except that the phone just keeps ringing. How on earth can you work and answer the phone all the time? So you promote a guy to run your original crew and you become the boss man that runs things. Not bad... you got a bunch of guys running around making you money. The phone keeps ringing so there's more work out there. But.. when you gave your truck up to the original crew to get around... so off you go to the dealer and buy yourself a nice shiny truck to drive around in so you can do estimates, schmooze customers and check up on your workers. Your overhead just went up again.

So... how does your overhead get so high?

[12Valve]

very good article

[JohnnyRoyale]

Is it possible you were doing too much of the wrong type of work (resi) for your setup?

[topsites]

Originally Posted by delphied

If someone invests the time and money into a business and cant afford to buy a new truck if they want it. Maybe its time for another line of work?

The question folks like that should be asking themselves, is how do we consider a loan something anybody can afford?
Do folks just look at the monthly payment and figure that's not so bad?

How do they justify 50 thousand dollars for a vehicle they won't drive for 10 years?
Even if they did drive it for 10 years we're talking 5 thousand a YEAR!
And they won't have it 10 years because folks like that, 3-4 years and they get another.

Then they need FULL coverage insurance for a vehicle that's in hock, yes, the bank requires it.

We haven't touched on maintenance.

[delphied]

Originally Posted by topsites

The question folks like that should be asking themselves, is how do we consider a loan something anybody can afford?
Do folks just look at the monthly payment and figure that's not so bad?

How do they justify 50 thousand dollars for a vehicle they won't drive for 10 years?
Even if they did drive it for 10 years we're talking 5 thousand a YEAR!
And they won't have it 10 years because folks like that, 3-4 years and they get another.

Then they need FULL coverage insurance for a vehicle that's in hock, yes, the bank requires it.

We haven't touched on maintenance.

You dont have to buy a 50000 dollar truck. Mine cost 21000 and its plenty good enough for me.

[topsites]

Oh there's one more thing:
Folks can't sell a truck in hock, not saying folks don't try it, but who is going to buy that crap?

I sure don't want it, go pay that joker off first, then we talk.
I want the title free and clear already, why should I deal with their bank?
When I buy a car I have cash in hand, all of it, but I want the car and the title and the keys and no BS.
Because I'm not giving them the down payment so they can go make their final payment.

Lots of folks up to a whole lot of wishful thinking, they dream and here some guys come along and ruin their buzz.

But...
If they can't afford the car in and of itself, what else is wrong with it?
No sir, a car that ain't paid for is almost as bad as if it were stolen,
there ain't no telling what maintenance didn't get done.

Why would anyone buy anything they can't pay for at the time of the sale?
And folks wonder why customers sometimes don't pay.

[Junior M]

Originally Posted by larryinalabama

As far as all the renting goes, if you use something even occasionally BUY IT. You can buy a good useable skid steer for 12K, why rent and spent 5k for a year.

I'll tell you why, because we cant afford it, but its sort of our own fault because we didnt save, atleast not for a skid, we got enough to get the tools, trailers and thing we needed, but we didnt save the leftover, another reason is we didnt get very profitable jobs this year, we had no choice, we cant charge an ass load to make more money, we have to charge just as much as our competition around us or we wont get the work..

[PROCUT1]

Originally Posted by JohnnyRoyale

Is it possible you were doing too much of the wrong type of work (resi) for your setup?

Yes.

I was very heavy in the residential market.

There are many different directions you can go in this business that will provide different outcomes.

I tried to be a large mow and go operation. In my opinion, unless you have very very strict cost controls, and very large volume, its not a sustainable business.

If you target a smaller number of customers, provide "full service" to all of them, you can follow a different path.

You can target only commercial.

I did the same with sealcoating.

I could have focused on residential. Or a mix of residential and small commercial.

None of those fit into my plan of where I want to be. I decided to focus on very large commercial.

Though I could have done the others and been successful as well with what I know now.

I think more of my point is that while most guys on here are growing their residential business and many are talking about getting into the 100+ account range with multiple crews, that business model is probably the most difficult of all.

Though high volume mow and go is the simplest service you can offer, its the most difficult to manage.

[Junior M]

Originally Posted by PROCUT1

Yes.

I was very heavy in the residential market.

There are many different directions you can go in this business that will provide different outcomes.

I tried to be a large mow and go operation. In my opinion, unless you have very very strict cost controls, and very large volume, its not a sustainable business.

If you target a smaller number of customers, provide "full service" to all of them, you can follow a different path.

You can target only commercial.

I did the same with sealcoating.

I could have focused on residential. Or a mix of residential and small commercial.

None of those fit into my plan of where I want to be. I decided to focus on very large commercial.

Though I could have done the others and been successful as well with what I know now.

I think more of my point is that while most guys on here are growing their residential business and many are talking about getting into the 100+ account range with multiple crews, that business model is probably the most difficult of all.

Though high volume mow and go is the simplest service you can offer, its the most difficult to manage.

Your plan of focusing on large commercial account only is a great plan, thats how many companies have gotten where they are, how do you think the paving company doin the interstate in town got where they are? Because they focused on large commercial jobs and didnt bother with driveways, and things of that nature...