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How many customers is too many?

Discussion in 'Pesticide & Herbicide Application' started by whoopassonthebluegrass, Jul 10, 2008.

  1. whoopassonthebluegrass

    whoopassonthebluegrass LawnSite Platinum Member
    Posts: 4,214

    Given the bleak promises regarding our operating costs, I have begun to reconsider my approach to fert/squirt. I have nothing to fall back on, so I need to make this work.

    My approach, up to this point, has been to grab a hold on as much market share as possible. But looking at my true profit per customer ($135 ish) - that's a helluva lot of clients needed to make a decent living.

    Now, after talking with GreenDoctor and Ric some, I'm reconsidering being more thorough and detail oriented with a select # of clients. Heaven knows that add-on sprays are the most lucrative part of this biz.

    Soooooo, what are your thoughts?

    Does it still make sense to chase the masses? Or is now the time to retool my services and cater to the truly elite who are looking for a LOT of guidance/assistance?
  2. Ric

    Ric LawnSite Fanatic
    Posts: 11,956


    It depends entirely on your life style and what makes you happy. You said you wanted a Business like Larry's with all the big equipment and thousands of customers. That can be very good for the right person. But No Thank you that is not what makes me happy. I prefer a smaller clientele. I like being part time and doing what I hope is very upscale work. I am sure my volume is no where near Larry's volume but I also know my business as small as it is, is not a House of Cards. As you increase business volume you loose quality. My ego says if it is worth doing, Do it well. I would rather be respected for my knowledge and quality of work than be rich or even liked. BTW I was a lot bigger at one time and had full service Mowing and did a lot of landscaping. I had a wholesale Nursery and was in the process of opening a retail nursery when a hurricane blew it all away. So I have chased the big dream and Mother nature told me I was better off staying small. I believe I have a lot less stress now.
  3. Mscotrid

    Mscotrid LawnSite Bronze Member
    from USA
    Posts: 1,456

    Ric makes some very vaid points. There is a mid point in growing the business where cost of operations take a huge increase. Labor and equipment cost can eat you alive. While the expenses continue, your profits will lag for awhile. If you can make past that point you will be fine.

    Just be prepared for what you ask for.
  4. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,994

    Ive seen all kinds of business plans in here.
    I guess 135$ with 1000 accounts would make you a real nice living. "that is a lot of girls to service might make you tired"
    My approch is the smaller one,My goal is 30 showcase accounts that average 40$ per week for my bread and butter. I also have a mini excavator, tractor, aerator, brown bed edger ete etc. I will use that stuff for quick money.
    Just hard to say what works for whom, Ive seen your web site and your the lowest price in your market so mabey 1000 accounts is possible?
  5. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,994

    I guess what I was trying to say is if what your doing is making you a good living why change?
  6. Ric

    Ric LawnSite Fanatic
    Posts: 11,956


    With a smaller volume of accounts you can demand a better price and a much higher margin from the expense side. Your Quality should be much higher as you only have a smaller number of account and less pressure on your time. With the big show you must push on to cover the higher volume at a lower price and less margin. To cover the lower margin you must gain more accounts and advertisement expense go up and prices keep coming down. Economist have a rule about this, it is called "The Law of Diminishing Returns". As Green Doctor has said there is a hump that has got to be crossed where the volume is high enough that the lower margin is covered. IMHO the stress is not worth the return. True happiness is only when you find the happy medium ground for you. Too many business have gone under trying to grow big.
  7. heritage

    heritage LawnSite Bronze Member
    Posts: 1,268

    Leave some x-tra days, ie. don't book up Full.

    If it's a 6 week window between apps, leave some wiggle room ( I only book 4 weeks of work) so you can keep QUALITY HIGH, and have less pressure when the weather is bad.

    This too will allow you a "Slot" to fit in a new client that is "High End".

    Slowly using this method, you will replace the lesser profitable clients with the more profitable ones, and build up a "Quality Reputation"

    At lease around these parts, it has become a niche market, with demand.

  8. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,994

    Ric I agree 100%. My motto is I dont want all the work just the GRAVEY.

    But how does bluegrass go from low price high volumn to high price less volumn?
  9. Rayholio

    Rayholio LawnSite Bronze Member
    Posts: 1,461

    I've always been a high price, high level of involvement company... I have however considered starting a 2ND MAINTENACE company, that uses the cheap products, and lower expectations, so that I can cater to every customer type, and take advantage of their profit potential accordingly.

    You know, We decide if we're going to go for high price, and high quality, or low price, and low maintenance.. That's almost backwards. The customer creates the demand for our products, and they should be the ones to dictate what they recieve. Sam Walton gave people what they wanted.. not what he thought they needed..

    Your area (and the customers in it) may have to hold the answer you seek..
  10. whoopassonthebluegrass

    whoopassonthebluegrass LawnSite Platinum Member
    Posts: 4,214

    As a point of clarification: I am NOT ANYWHERE NEAR THE CHEAPEST. That spreadsheet on my website is simply to show that by spending the extra money to go with me, the VALUE of that money leaves my competition in the dust. I have a high price tag - it's just that I include WAY more than my competitors.

    And this is the crux of the issue. I have TRIED to set myself apart as being thorough, careful, dependable... but my profit margin is no better than the Splash-And-Dash guys, in spite of my efforts. Now some of you say, "raise your prices!" I can't I'm at the upper threshold and the local agricultural economy won't bear more. The price raise for new customers I have this year has proven VERY prohibitive. I'm not securing even HALF the % bids I've given that I have in past years.

    And THIS fact leads me to the old adage, "a bird in the hand is worth two in the bush." Yes, Ric, I want Larry's success. Though I don't think I want the headache. Being a control freak and intolerant of incompetence with my name on it, I HOPE to stay solo. But with:

    1. additional clients becoming more scarce, and
    2. more clients meaning less time per client,

    I'm leaning towards focusing in on that "bird in the hand" and building my profits through the existing clients.

    With the way things are trending (and we can all HOPE it reverses, but...) the practice of weed/feed is going to become a loss leader. To keep it affordable for the masses requires capping the price somewhere. I see it coming. No, I'm already facing it.

    The add on sprays, however, are GOLDEN. No add-on spray is worth less than $35, and $30 of that is profit if I do it with an application. If I can increase add-ons to 2 each per customer, my profit margin just increased by 50%...

    I'm just thinking out loud, I suppose. But I don't believe that the status quo can be maintained beyond this season without relief coming in the way of financial pressures being lessened. And thus, perhaps I should focus on those truly wealthy clients that aren't hit hard by these issues...

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