Commercial or not???

Discussion in 'Business Operations' started by Coumbe, Sep 11, 2002.

  1. Coumbe

    Coumbe LawnSite Senior Member
    Posts: 270

    This is my first year to do lawns full time. I have picked up 30 residential customers in a short period of time. I use myself and 1 helper to get them done. I want to sign up a few commercial accounts but don't know where to start. Calling companies and asking who I need to talk to? Looking for bid proposals in a paper or something? Any help would be much appreciated.
     
  2. Guido

    Guido LawnSite Silver Member
    Posts: 2,085

    Before you move into commercial accounts, make sure your all legal....tax id # workers comp, insurance, etc.

    Once your straight (and I'm not saying you aren't) Go out and look for them. Make a little map of your normal route and check out what business' in that area YOU would like to service. Go after them!

    You can call them and ask to tak about their maintenance plan (cold calling)

    You could bring a flyer by and then follow up with a cold call...

    You can go inside and ask if they bid out the contract yearly, and if so, when is it up and how do you get on the list to bid.

    You can call and ask if they mind if you look around the property and drop off an estimate for maintenance.

    There's a million ways. Just think of the ways people get you to buy something from them! They tell you why you need to buy from them. Put yourself out there the same way.

    Personally, I like face to face, but some people don't always have time for that.

    Good Luck, and if I didn't answer your question, keep throwing them out here!
     
  3. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,830

    I don't know how it is in your area, but here where I live commercial work pays (on average) 50-60% of what I make doing residential lawns.

    For instance, I bid an appartment complex. They told me right up front that price was the key determining factor. I also asked for some more information and they told me that the current company sends 4 men out for an entire day, once per week, year-round. They also told me the lowest bid so far was $1800.00 / month. I would have to beat that price in order to compete. And this is just one example. I've run into this time and time again.

    I'd have to dedicate 4 men for one day per week, just to earn $1800 that month. Whereas, with residential work, I split those same 4 guys into 2 seperate crews. Each crew does about 20 res. lawns per day. Total monthly income from the 40 houses = $4,400.

    As you can see, I would be seriously stupid to take on commercial work at those rates. It's less than 50% of what I make now. This was one of the worst cases I had run into. But like I said, generally, the rates are about 50-60% of what I can make staying with residential.

    Residential clients are more loyal, pay on time better, and are easier to keep happy. The only downside to staying residential is that you will grow your company (in terms of gross revenue) slower.

    The only benefit I've ever seen with doing commercial is that you can grow your company (again, in terms of gross revenue) very quickly. You could be doing a million a year with just a handful of commercial accounts. But the profit margin is less and the chance of losing a big chunk of your business is more. So I personally stay away from Commercial work for those reasons.
     
  4. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    well said Jim .... n so true ....basement shopping on many commercial ........ good resi's will almost always produce higher returns on per per cuts or monthly income ... removing extras for other services (provided they even ask for or get thoses extras from you) .... commercial can give higher #'s ....altough not necessary higher profit per man hr's.... one must find a comfortable balance between the 2 or shoot only for 1

    for us the mix is 55% resi n bout 45% commercial ...the $$ comming in is flip side of that .... but I like large commercial work to help with cash flow n keep the guys busy in winter so I don't have to find n train new help each spring .... helps cover lean times (drought or such) as they pay the same each monthly ...year round ... yet fore us in FL this is true for resi's also ...everyone is on monthly billing

    to Coumbe ??? .... give it time .... settle in strong on your present work .... time will produce introductions ....which will give small centers ...or stand alone units ... I've found cold calling & flyers are a waste on commercial ... what works is the yellow pages ....good references ....great image .... clean workers & equipment ..... training n last but not least .....good work ..... spring n fall letters to property managers or units managers (well not so great but hey send 2-300 get maybe 5 calls n land 1 .... could be a start) ... I wish you luck .... but give it time ... they will come ....when they do .....don't drop the ball ....this is the same for resi's too ;->
     
  5. Hodge

    Hodge LawnSite Senior Member
    Posts: 261

    Coumbe,

    Where at in TX?:alien:
     
  6. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Posts: 1,743

    Its the opposite....here when I can get $35.00 per cut on residential half acre...I can get $85.00 per cut on commercial half acre ! take location into consideration also.
     
  7. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,830

    Bunton Guy makes a good point. I suppose one of the reasons that Residential is so profitable in my area vs. commercial is because most all residential lots here are very small. It may be a $500K or $1Mil home, but the lawn will still be 2000 sq. ft. Only takes a few minutes to mow. So we get $35 per cut for something that takes us maybe 15 -20 minutes.

    The larger the lots, the less money per hour. It's the same way here. There are a few homes around here that have a half acre of turf. And even though they are 10 times the size of one of my typical lawns, there is no way I can charge 10x as much. So the hourly rate is way less on these larger lots sometimes.
     
  8. Bunton Guy

    Bunton Guy LawnSite Bronze Member
    Posts: 1,743

    And not to mention most of the commercial clients understand that due to it being a commercial property we cary 1 million+ liabilty insurance just for them....so in that case prices go up. All markets are different you just have to have a open mind and I dont think you can just say wether or not commercial or residential is better....its also a opinion I personally dont like putting up with the bickering of the older residential customers....and I also dont like the complaining of the tenents in the appartment complexes that come complaining to the manager that a blade of wet grass has dried on there white paint....then I get a call ! so all in all both markets have there ups and downs. :dizzy:
     
  9. TurfGuyTX

    TurfGuyTX LawnSite Senior Member
    from DFW
    Posts: 648

    He's around The Woodlands. Houston area.
     
  10. hlgmoney

    hlgmoney LawnSite Member
    Posts: 57

    I have had nothing but bad experiences with residentials. I stil do a few but all my concentration is on commercial. Residentials don't pay well with me and they're almost always PITAs.
     

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