Separate names with a comma.
Missed the live Ask the Expert event?
Not to worry. Check out the archived thread of the Q&A with Ken Hutcheson, President of U.S. Lawns, and the LawnSite community on the Franchising Forum.
Discussion in 'Lawn Mowing' started by PROCUT1, Feb 18, 2009.
Bump for a good read!
a lot of people dont want to believe the truth mainly, lol
Any new updates?
The real estate crash and credit crunch and its effect on a Commercial Sealcoater.
I could just imagine. I know around my area there are vacant commercial properties all over the place. Empty strip malls or 1 or 2 out of a dozen that are leased. Restaurants that are vacant and banks etc. Commercial is a mess right now.
Tell us about it, I could use a good read.
Good read I agree, and honestly, didn't read the entire thing from page 1, but I disagree with some of what was originally posted, and it's really based on economic mentality, and that is the item of expanding with debt, rather than reinvested cash from operations. A few have touched on it, but it's all based on that.
If you have a single crew and can make money off that, and decide to save, to buy your next truck, or equipment, or shop, or whatever, you can be profitable with two trucks as ten or twenty in a scaleable fashion.
If you think good business equals the flexibility to finance, or lease 5 times more shop than you need, or become more flexible with employee pay or customer payments, you are giving away money. If you wouldn't do it on a single crew, why would you do it now? Convenience? Laziness.
It is a fact, your OH will change when you get larger. But a knowing your costs, keeping a regimented business model, and not venturing too far from that can be your biggest asset. Know your customer, and do the best job you can.
Pay employees what is the market equivalent to what you NEED, not what you want. Buy what you NEED, not what you want. Get rid if idle equipment, shop space, or employees that don't make you money. Help them out like they were family, but don't coddle or overpay for what you are getting. If they can add value at a higher pay rate elsewhere, let them. Don't get into a "chase the employee" scenario.
Don't be afraid to overprice a job if it's out of your expertise, or going to cost you excess money to do it. It's ok for a customer to say NO. But if they say yes, you invested direct labor in a job that made you money, and thats why we are in business.
If you want to do good for a community, volunteer, donate to charity, but don't do that through lazy running of a business or being satisfied with mediocre work (or for that matter, sitting on Lawnsite all day, like I'm doing). That brings another point, we all have things we do that aren't profitable. Identify those things and minimize the BS where ever possible.
This is certainly a more troublesome, time intensive, aggravating, and slow road for expansion, but I'd rather have a very profitable business 10 yrs from now than a bankrupt one in the next five years. This thread is a great reminder to not spiral into debt. That has been much easier to do in years past, but I think a lot of people will back away from that model due to credit contraction and margins of safety. If not, I'll be there to pick up the targeted accounts that they lose
Have a profitable day!If you don't often feel like this guy getting hammered, you should work harder to get more profitable.
Sealcoating is insanely hard to make decent money on. You really need to be able to throw a whole package out there to make ends meat. We run with a blacktop crew, sealcoating,and stripe crew. Even then your going to be way undercut on large facilities unless you throw alot of money on expensive machines all around. The way we do it as well is goofy hours and mainly weekend work which means its tough to find decent workers. Are competition is either traveling companies with large propelled spray setups or two man pickup setups. Its very tough to hold a middle ground with sealcoating.
Ive learned to become real flexible and light on my feet.
I sold the lawn business when commercial sealcoating was taking off like crazy.
Then, the economy crashed. Stores went vacant, budgets got cut, shopping centers sit empty and the last thing the owners want to do is invest $40,000 to seal and stripe.
Ive been downsizing every year and trying to get out of doing snow.
This is my last year in the snow business and I have 2 condo complexes on set contract left. I didnt renew any of my time and material work.
Sure as hell. We have the worst winter in my history with a large snow event every 4 days or so.
Sealcoat sales were off by 70% this year which translated to very little savings going into winter. Add a record winter, payroll and expenses far exceeding the contract income, and this isnt a very pleasant time for me right now.
The good news is that I am in the process of relocating to a new market.
Ive been working on it for a few months now and the available work is exceeding my expectations.
One of my biggest problems is the cost of living here in NY.
My tiny 2 bedroom house thats about 900 square feet I bought at a "steal" for $240,000.
Property and school taxes are almost 10,000 a year
Record cold winter and fuel prices bless me with a bill of 800 a month for oil
Diesel is 3.75 a gallon now.
Everything in NY is priced at a premium compared to the rest of the country but the income is not commensurate.
Where Im relocating to is still a growing area.
Truck insurance is 60% less
$150,000 will get me a mansion compared to what I have now
Taxes are $3000 a year
Stays 40-50 on average in the winter
Much longer working season
Business insurance is 70% less than im paying now
No state income tax
And a heck of a lot of blacktop
Ive been going back and forth with property managers selling work. Have a lot of bids out and have already been awarded enough work to make it a no brainer.
Pricing is the same as NY yet all the overhead costs are SIGNIFICANTLY less and Im getting a lot more demand for services in the 2 months Ive been at it than I got all last year here.
The fortunate thing here is that I didnt make the mistakes I did in the lawn business.
I own all my trucks and equipment. I have no payments, and no debt to pay.
The major problem is the lack of work. Sealcoating has been a great business, Im good at it and its what I want to do.
With the lack of work in this area, I can either find something else to do to add to my services or relocate to where there is work.
I personally cant stand winter and constant snow, ice, and frigid temperatures.
Im using this as my excuse to finally move.
So while this has not been added to the list of "failure" its sure not fun times.
The excitement for me in business is the fast pace and growth.
You can adjust your expenses somewhat. You can make smart moves by staying out of debt. But some things you cant control.
In the lawn business you do have a little more flexibility.
You guys are dealing with lowballers but the work is still there.
Grass HAS to get cut and SOMEONE is going to cut it. You may have to deal with lower prices, figure out how to be more efficient and try and compete.
Unfortunately in my business sealcoating is one of the first things to get cut from a budget. They HAVE to get the grass cut, they HAVE to get the snow plowed, but sealcoating can wait.
Ive seen the work almost overnight drop off to next to nothing.
Its out of my control in this case. Its not that Im losing work to lowballers or competitors. Dropping price or increasing efficiency in this case wont help because the properties are electing to not do the work at all.
I dont see this area recovering any time soon in my field.
So, Im staying ahead of "really bad times" and another potential crash and Im pretty darn excited about it.
"Trying to figure out how to get rich and not leave my bed". I have an answer for you PROCUT1. Become a very expensive male gigolo. That way you make your money and never leave your bed.