From "Pro" magazine " Do You Suffer From Entrepreneurholism?

Discussion in 'Business Operations' started by xpnd, Feb 12, 2003.

  1. xpnd

    xpnd LawnSite Senior Member
    Posts: 378

    This front cover title dealt with an interesting article. The 4th subtitle in the article was, "Know your renewal rates?
    For a maintenance based business, if your renewal rate is 80% or greater raise your prices for everyone. Don't underestimate the value of a good name..........

    Comparing prices, my closest competitor (bonafide full time) is charging 10% less than I do. At the opposite extreme I am charging 30% more than some of the other companies. I am comfortable with my profit margin. Naturally I have between a 3% to 8% turnover each year depending on corporate relocates but always look at the lowest 10% performing jobs and raise their prices to acceptable levels thereby forcing an average of 5%-9% annual vacancy rate. What do you think I should do? Raise everyone's prices across the board or continue what has always been successful?
     
  2. devildog

    devildog LawnSite Senior Member
    from sc
    Posts: 270

    Why change what has been successful? Working for 10 customers @ 50. per service, is much better than having 20 customers @ 30. per service........ but, don't tell others this secret, they like doing their way! With Regards....devildog
     
  3. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Posts: 1,712

    I take that statement as meaning don't be afraid to raise your prices for fear of losing customers. So if you retain over 80% your doing most things right. It would be hard to do better than maybe 97% asa a guess because people die, move, divorce, whatever and businesses come and go and have management changes as well. Your alwasy gonna have about 1/2% soreheads that can never be pleased or reasoned with.

    I raise prices every year for nearly everything. My employees get raises, health ins goes up, all ins goes up, phone goes up, new trucks cost more etc.
     
  4. AL Inc

    AL Inc LawnSite Bronze Member
    Posts: 1,218

    I enjoyed that article, unfortunately I have suffered most of the symptoms outlined. It has gotten better every year, but lots of room for improvement. I realized only 2-3 customers drop me every year, that's only about 2-3%. I usually drop another 5-8 for various reasons. Time to raise prices. I have, along the way raised quite a few, and most went along with it. I would actually like to slow the maintenance down a bit, just keeping the best of the best. I feel like I've been doing this so long and have so much invested in it to be disrespected by some yuppie dim-wit.
     
  5. Kent Lawns

    Kent Lawns LawnSite Senior Member
    from Midwest
    Posts: 870

    One of the best written, to the point articles even written in PRO.

    Like AL, I, too have way too many symtoms, most of which I am/was aware of, this just put many of them in print.

    90% of improvement is knowing what to change and the willingness to do so.

    Thanks to PRO for the article.
     
  6. AL Inc

    AL Inc LawnSite Bronze Member
    Posts: 1,218

    Kent - that is so true, 90% percent of improvement is knowing what to change and willingness to do so. I always tell myself that it is human to make mistakes, just make sure you LEARN from them. My signature is something I read somewhere (I believe A. Einstein???) and it is so true. I always like to try new things or different ways of doing things because that is how you improve. And always try to keep learning, reading, educating yourself(Including Lawnsite:) ) Good luck, Mike
     
  7. xpnd

    xpnd LawnSite Senior Member
    Posts: 378

    I always used that as my definition of stupidity.
     
  8. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Posts: 1,712

    SprinklerGuy suggested I read Emyth by Michael Gerber. I got Emyth Revisited which is the updated version of the original, yesterday.

    Last night I sat down and started on it and was absolutly fascinated. I read much more than I figured I would as I started at 9pm. I can't wait to get back to it. It definitely is companion material for the Pro article which I also read.

    Emyth is available at Amazon or all major book retailers. Enjoy.
     
  9. devildog

    devildog LawnSite Senior Member
    from sc
    Posts: 270

    Harold,

    I know the symptom's well, the book my be one of the best kept secrets going...

    My favorite (well, one of my favorite sections is) parts are; "The Rules of the Game" - "The logic of the Game" - "Playing the Game" pages 203 thru 210.

    With Regards... devildog
     
  10. heygrassman

    heygrassman LawnSite Senior Member
    Posts: 509

    If your routes are tighter with the 20 customers you may actually be better off with 20 less profitable accounts than 10 higher margin accounts that . If you are having to drop gate more you can actually become less profitable. In this scenario to maintain the same income, you would have to increase your margin 20% on your remaining customer base to cover the lost contribution from the churned customers. :dizzy:
     

Share This Page