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commercial accounts

Discussion in 'Business Operations' started by jsfrk, Jun 7, 2004.

  1. jsfrk

    jsfrk LawnSite Member
    from Ohio
    Posts: 126

    Wouldn't it be easy to get a commercial account with just me someone else? I these large LCO's have so much over head that they charge a lot for an account. So why couldn't you go to a commercial account and say, hey, you can pay me less because I have less over head but I can do just a good as a job.
  2. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

  3. EZTarget

    EZTarget LawnSite Senior Member
    Posts: 295

    yea he's in trouble now...
  4. jsfrk

    jsfrk LawnSite Member
    from Ohio
    Posts: 126

    I'm not low balling. I would obviously do this when everyone else is in the bidding process. I certainly would do it in season when somebody else already has an account. Sorry for the misunderstanding.
  5. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    acually this is true for smaller commercial jobs .... single restraunts, strip center or such.....but not that of say shopping Malls or Large Common grounds with say 100 homes with it ....

    The direct cost n indirect cost will be very close as far as the percentage of the pie each LCO inccurs ....the larger unit has more labor cost, equip n such ... but has the greater gross to keep the percentage up to the smaller guys .... I can pay guys $8 an hour ... but for the solo they want more than that ....but when you figure your cost per hour to do business it may be same as even a larger outfit .... as they have greater income to offset these cost .... say that for me the cost of doing business is $24-28 per hour .... this may not be true for a solo .... I'd say most solo want more than this per hour .... granted this in NOT my hourly rate .... what I charge which is over my cost of doing business is profit .... or my pay or there to invest in growth

    also what happens if the 2 guy operation .... 1 gets sick, breaks an arm or the truck blows up .... the larger unit can cover this .... many larger commercials take this into consideration .... I can send 6 guys in n do a job in say 1 day .... but 2 guys may take 2 or 3 days ..... when the PM wants it done in 1

    But its the OVERHEAD COST: expenses that support the operation of a business....Rent for facilities, utilities, advertising, property taxes, storage, insurance on buildings, office expenses and other "behind the scenes" costs that in some cases take place simply because time went by. ....Take place even when no work was done.

    HERE is where larger LCO’s get it ….. this is the cream of the pie … this is the the biggest profit gain ….. say you are an operation of 2 making $120K income … your overhead cost will take a larger percentage of that $120K …. Say you rent a space for $1K month or 12K per year that’s 10% …. Say I rent a space for $2k or $24K per year …. Yet have an income of $500K …$750K or even $1 M …. My percentage are dropping …. My yellow page ad for say $2k per year is less of a chunk to me than to the guy dropping $1k per year with less year gross …. All my cost will be a smaller percentage due to the larger year gross

    Say the smaller LCO needs a good work truck.... n get one for $10K ..... the larger LCO can get that same truck but is a smaller percentage of total yearly gross

    So that all being said ... we get back to the orginal ?? n yes a solo can do the job .... but that does not mean that they are making more $$ even at a lower rate
  6. Trevors Lawn Care

    Trevors Lawn Care LawnSite Bronze Member
    Posts: 1,180

    awesome post steve.

    You have thought about that one huh?
  7. EZTarget

    EZTarget LawnSite Senior Member
    Posts: 295

    i agree. good thoughts

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