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Discussion in 'Landscape Architecture and Design' started by hudsonhawk, Jun 23, 2014.
Yes you are
Cash flow. Never get rid of maintenance
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You are right on about my employees efficiency. I have one good one and have gotten rid of others I had this year due yo just being physically slow and slow to Learn. So I'm trying to now (as of this week) do it all with 1 guy and myself. Just seems like there should be a healthy ratio of mowing/landscape. I'm thinking mowing 30%-landscape 70%??? What do you guys think?
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First of all, you should never drop your maintenance accounts. As long as you are making money on that side of the business, keep them and keep the maintenance side growing. It's your bread and butter. It's what keeps the bills paid regular and is a great source of reliable, guaranteed cash flow every month. Maintenance accounts are also a great source of customers to feed INTO your landscaping design/build business. A lot of people prefer to use a company they are already familiar with - already using. We get a good 15-20% of our landscape design/build jobs each year from our maintenance customers. That's over $200,000-$280,000 a year in jobs we wouldn't have if we didn't do the maintenance for them. It's also much easier to land a landscape job from an existing client than it is from someone who hasn't used your company before.
The maintenance accounts are also a good source of publicity for your company, if you do it right. We have 5 maintenance crews and 2 enhancement crews out doing mowing and other light landscape work each day who are also advertising for our company everywhere they go. Big enclosed trailers become basically a billboard for our company. And with 7 of them out there rolling around every day (in addition to our design/build crews, irrigation techs, and manager's trucks) that's a lot more advertising and impressions we're putting out there every day. It makes a huge difference.
Yes, the design/build part of this business is the more profitable side. You're right and I'm always surprised how many lawn guys on Lawnsite never figure that out. I guess most of them go out of business before they ever get a chance to figure it out anyway. But yes, it's very profitable and that's because of perceived skill and craftsmanship. The more difficult and skillful people perceive something is, the more they are willing to pay for it. Most lawn care operators don't have the experience and skillset to do this kind of work. And customers realize that. So for those of us who can, they're willing to pay a lot more.
Incidentally, having a lot of really nice photos of beautiful design/build jobs will allow you to also charge more for your maintenance too. There is a belief that if you do landscape installations very well than you also must be one of the better maintenance companies as well.
What you should do is consider maintenance and design/build two separate divisions of your company. Continue to built both divisions but each division has separate crews, separate trucks & trailers, separate equipment and often even individual advertising/marketing methods. Obviously, one of the businesses will be a little more up and down and more seasonal. And if you don't have enough design/build jobs to keep a crew doing it all day every day you may have to improvise and have them do smaller side-jobs or something sometimes. But the goal should be to have two separate divisions.
We essentially have 3 separate divisions. The maintenance division which handles maintenance crews and enhancement crews. The construction division which handles design/build jobs. And the irrigation service division, which is where our sprinkler service techs work. They're all totally separate from one another in terms of managers, trucks, trailers, equipment, etc. But it's the construction side of the company I like most. That's where I spend most of my time. Love that kind of work and as you've noticed, it pays a lot better.
Jim, Thanks for the good info. I guess truthfully my big problem is cash flow. My maintenance work does make money, no doubt. I just always get stuck April-June being inundated with mowing and landscape jobs and there is never enough $. The business pays for itself but pays me nothing until the mowing invoices start paying out. Customers usually take 30 days. I do collect 50% up front for landscaping but this year there was somehow barely enough $ to keep the business above water until invoices started getting paid in June. I know I need more $ to start the season in March and April but this has eluded me to this point. I do collect prepays for fertilizer and a few mowing prepays. I only run 1 crew. Myself and 1 to 3 other guys depending on the work. Not exactly sure what the right formula is to go through an entire year being able to pay the business bills and also pay myself(many months I cant pay myself). Thinking I should sit down with a consultant. The way its happening now is way too stressful!!
Yah, I know how you feel. Been there before. But there is hope. There are ways to solve these problems.
Tell me a little more about your business. When the season starts, how long the mowing season lasts, how you bill most of your customers, etc. Also, can you guys do anything in the winter months or is it just totally shut down there?
Our mowing season starts sometime in April and usually ends in October. Have about 40 lawns. Fall cleanups go until mid December. I bill mowing on the first of each month. We can do a little landscaping through the winter if we are lucky enough to not have a lot of freezing weather or snow on the ground. I do plow snow so it helps a little but is very unreliable. I've considered getting a job during winter months.
Well, that certainly makes things a lot more difficult to only have a 7-8 month work season. Here we are able to work 12 months out of the year. All our maintenance customers pay us the same flat rate, all year long. It would be tough to have to just shut down operations for 4-5 months.
But I do have a few ideas. These are things I'd do if I were in your position:
1) Get your clients on autopay. You need to have a reliable, predictable source of income. It's not that difficult to do but it does take some time to get all your customers on board with autopay. I have it down pat. We've been doing it for over 10 years now. Now we never get a late payer and we always know exactly how much money from maintenance is coming in every week. Furthermore, we never have to mail invoices. PM me with your email address and we can discuss it more via email. But this will help solve a lot of your cash-flow problems.
2) Offer a 5% discount on the entire season if the client pre-pays for the whole season by a certain date (say, April 1st) And you send those letters out Feb. 28th. So they arrive in their mailbox March 1st. This will help get the season started a little better. We find about 5% of our customers choose to pre-pay. In your case, that would only equate to 2 customers. But still, that's an influx of money that would help.
3) Get into sprinkler system blow-outs. Every state differs on what kid of license is required to do sprinkler work. But if you can get licensed to do irrigation work (if a license is even needed) doing winterizations/blow-outs can be BIG money. It can help you make a ton of money right before winter. It takes several years to build up a lot of customers for this. But these days we bring in about $50,000 in one month in just winterization income. I know guys that bring in 10x that amount.
4) Figure out a way to make more money during the winter months with snow plowing. Rather than just getting the occasional call for snow plowing, get contracts! Spend some time in the snow plow forum and figure out how those guys do it. We don't get much snow these parts. So it's not an option for me. But if we did, I'd be all over it. If you're set up right, you can make some really good money and be working 24 hours a day (between you and your other workers) plowing snow.
5) Consider advertising/marketing more so that you can charge more. That way you can capitalize on the growing season even better. Most people think the amount you charge is totally dependent on what the going rate is from your competitors. That's not really true. That's only part of the equation. What your price really depends on is supply and demand. The more people who are demanding your services, the more you can charge. Let's say you're getting 20 new calls every week. And let's say you raise your rates 25% over what they are now. You may turn off 80% of those you give a bid to with those kind of rates. But if the other 20% say yes, now you're making 25% more money! With the increase in income you can afford the additional advertising/marketing plus save more money for the winter.
I also fully agree with Jim.
I currently have two days of mowing per week and I do the mowing alone and then we hustle landscaping the remaining 2-3 days per week. Generally it's me + 2-3 guys on the landscape/hardscape installs. I finally am at the point where I have the right guys that can almost do the installs on their own which would allow me to focus on sales, growth, & managing but I don't have the full backlog to allow for that. That is the goal for next year, 1 crew of both maintenance & installation. This past month (Aug) has been my best month since I started my company in 2011 for both revenue & profit. Mostly thanks to hardscape installs but I can never let maintenance go away because 1. I have all the equipment for maintenance & 2. it's solid, ever present cash flow as long as you get paid. Jim did mention autopay, I think what I will do next year is require everyone to have their CC on file for maintenance and price accordingly with the fees. I have some clients that would most likely shy away from it and they have been with my company since my first year in business and have always paid so I may not push as hard as I will for new clients.
I think some of you are mistaking landscaping for easy money. You have to be reeeeealy organised to profit on scaping. It's a little different for me cause I'm solo but just about every time I do a landscape job a bunch of little time killers come up and at the end of the day, I could have done x amount of easy lawns and made the same money.
First the time it takes to come up with a design plan, making sure they like it etc.. getting the plants and hoping nursery has the plants you want and that they are nice. Coordinating delivery for soil mulch etc. getting to the job and realizing you forgot something and have to go back to Home Depot.
Oops you broke a sprinkler line, or worse. Back the store and a million other little snags that come up. Not to mention the clients not wanting to pay the price you should be getting for all your work depending on the clientele in your part of the country.
Bottom line, having an install crew and a maintenance crew in my opinion is the only way it will be productive without burning out and losing money.
I will have to agree with Jim. NEVER EVER get rid of the maintenance side of your business. Thats where I get 50% of my landscaping. I haven't been in business for as long as some guys (I'm only 24) but that is just my 2 cents. Also had a landscaper tell me that who has been in business for 20-25 years.