growing too fast?

Discussion in 'Lawn Mowing' started by matt spinniken, Oct 15, 2006.

  1. matt spinniken

    matt spinniken LawnSite Senior Member
    Posts: 298

    Has anyone experienced growing pains to the point that they couldnt keep up with the work or finance the extra work. I have been having steady growth up to now but i am considering going for a major marketing project next spring. Looking back does anyone think that fast growth has hurt there company?
  2. Bel Air Bob

    Bel Air Bob LawnSite Member
    Posts: 84

    This is a common problem. There's a good chance you're not charging enough for your services. You need to make sure you consider all your expenses including time not billed to any particular customer such as mainainance on your equipment etc. If you're getting most of the jobs you bid on, you are definately not charging enough. This will catch up to you as you grow and could ruin your company. Make sure you're not competing simply on price but sell the quality of your service and you will grow. Good luck.
  3. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    I agree with Bob and yes, I've been in your situation many times over the past 10 years. We've grown every year and some years very rapidly.

    Growth can be a very difficult process if you don't plan it correctly. Everyone thinks it's great to be growing but I am here to tell you that there have been times when our company grew in revenues but my free time and personal income went down. Which is NOT the proper way to grow.

    First off, you have to figure out where you want to be headed. Some people don't want to own a big company. They want to keep it just them and maybe one helper. That's it. So if that's you, then what Bob said is all you need to do, really. Just raise prices until you reach the point to where you are only as busy as you (or you and your helper) want to be. The problem with this business model is you eventually get so popular (if you do good work) that lots of people want to call you but then they are disappointed to see how expensive you are, and find out that they can't afford you. So you then begin to get a reputation in town of being overpriced.

    If growing a larger company is something you strive for, then it's not simply a matter of raising prices. Raising prices is definitely part of the plan. That will be a must if you want to be able to afford to grow properly. But it's not the only facet.

    So the following advice (below) is assuming you are wanting to grow your company and don't mind getting into management and having several employees.

    First thing you need to do is raise prices. You can start by raising prices on your current maintenance customers next spring. A 10% raise in your rates would be a good starting point. You may lose a few customers, but hopefully most of them will understand. You'll also be bidding all of your new jobs at this higher rate as well. In addition to raising you regular maintenance rates you should also raise your rates for one-time jobs as well. I don't know what kind of work your company does (clean-ups? Installs?) but I assume that you do something more than just weekly lawn maintenance. And I also assume that when you give a bid you're figuring that bid based on some sort of hourly rate. You may not tell the customer that rate. But when you figure the bid for yourself, you have an hourly rate you're aiming at, right? So you need to raise that rate, right now. If it's $30 an hour, raise it to $40. If it's already $40, raise it to $50. Whatever.

    Next, you need to plan on hiring more help. And now that you have raised your rates you'll be able to afford that additional help. Now, I don't know your specific operation. But take a look at all the different things you do (bidding, working, answering phones, bookkeeping, etc.) and figure out which areas are overwhelming you the most and which areas, if you had someone else doing them, would free up more time for you. This might mean hiring a foreman or manager. This might mean hiring an estimator. This might mean hiring a receptionist who also does some light bookkeeping. Whatever.

    Some advice here; If your area is really booming so much that the calls and jobs have been pouring in more than you could possibly handle, then hire more people than you think you need. Explain to them that this is a new phase in your company and that at first they may not get too many hours but that will all change very quickly as you get into the season.

    Now you've increased your infrastructure. By this point you will have raised your rates, hired more help, and now you're going to be prepared for a lot more calls. Now it's time to think about two things; 1) Marketing and 2) Your presentation. At this point you may have to increase marketing a little so that you can keep these new workers busy. So consider new marketing methods, increasing current marketing methods, etc.

    The second part of the equation is your presentation. To be specific, you need to really concentrate on impressing new customers. You've now raised your prices fairly substantialy. And so you're going to have to be all that much more impressive in order to justify your [new] higher rates. What kinds of things make consumers want to pay more? Think about that. What makes you buy from Best Buy rather than radio shack? What makes you buy Sony over Audiovox? What makes you buy Domino's pizza over some other local pizza joint? What makes people pay more in your industry? Then focus on those things, when you make bids. It starts with things like uniforms, professionalism, company image, etc. but goes deeper to issues like dependability, references, warranty, etc. So think about those issues and how you can highlight these things. Perhaps it's a good idea to leave a paper with references or quotes from current customers with every bid you give. Perhaps including a print-out with pictures of current yards you maintain or previous clean-ups or installs you've done. Or perhaps it's pointing out a note on your estimate form that says, "Your satisfaction is guaranteed." and explain to the customer what that means. Point is, start thinking of your presentation and what new things you could do, add, focus on, or highlight that would really make your presentation stand out from your competition.

    There's more but I've said enough to give you a good start.
  4. HenryB

    HenryB LawnSite Bronze Member
    Posts: 1,828

    Well said Jim,
    IF your growing very fast your underpricing yourself.
  5. tjsquickcuts

    tjsquickcuts LawnSite Senior Member
    from Atlanta
    Posts: 943

    If that quote isn't the truth....I realized that after my first year....I was picking up accounts all over the place .... But luckly I was given some great advice and started really charging market value for each visit....I am about $20 bucks more then I was when I first started, and no where near the growth rate I experienced my first year....but my profits a sooo much higher and my stress level is at a minimun.....Although at times I still think I am growing a little too fast with some of the projects I have taken on, but some how some way I have manage to get it done.....My customer service has really gone to hell, but the detailed work keeps them happy....
  6. YardPro

    YardPro LawnSite Gold Member
    Posts: 3,563

    very good answer jim, as usual
  7. matt spinniken

    matt spinniken LawnSite Senior Member
    Posts: 298

    I really appreciate the advice, it is great to hear it from people that have already gone through it. Currently i am running one crew with two employees (I work almost every job) I tend to land around 50% of my maintenace estimates and didnt really intend to raise my prices for hourly work from $35 next year but after reading Jim's brillant post I am not sure. Anyway i am planning about 2-3 times the marketing next year and am sure i will need to add another maintenance crew. Would you mind telling me what the transition from one to two crews was like in your buisnesses?
  8. grass_cuttin_fool

    grass_cuttin_fool LawnSite Gold Member
    Posts: 3,503

    All good post so far. I know when I was part time that I was cheaper than other people. If I was loosing some my Main job would take up the slack. I was fortunate to buy and pay for equipment. My main problem was......I took any and every job that came along (mainly mowing) and I got in trouble and found the one thing I couldnt buy.......daylight. When the fall of the year came, I had people complaining and I was cutting all day on sat and sunday and still couldnt keep up. I lost alot of customers, and my stress level went wayyyyyy up.

    This was the worst thing I ever had to happen to me by growing to fast.

  9. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    That transition was pretty seemless. No problems really except that I had to come up with the money for a new truck, new trailer, 2 new mowers, trimmers, blower, fert. spreader, etc. But I don't spend a lot on our work trucks. So I wasn't out that much $. Otherwise, it was a real simple process. The nice thing was that once I had 2 crews I was able to eliminate overtime. That saves more money than you realize. My only problem now is that I should have hired a 3rd maintenance crew 1 or 2 years ago. And I never have because I've been too busy growing our design/build and irrigation business. So now both of my maintenance crews are overloaded, overworked, and get too much overtime. My first move next spring is hiring a 3rd maintenance crew.

    Anyway, no problems. With your marketing plan you may want to consider hiring a PT phone receptionist. Sounds like you're going to be very busy.

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