Is there a moat with Commercial?

Discussion in 'Lawn Mowing' started by DFW Area Landscaper, Jun 27, 2004.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    I've been thinking about this for a long time.

    With residential, anyone can compete as long as they own a 21" lawn mower, a line trimmer and broom. They may not be able to do a nice a job with the cheapest equipment, but they are able to take market share.

    But, when I look at some of these apartment complexes and large office parks, I would think there would exist a moat.

    First of all, you've got to have larger equipment than a 21" mower.

    Secondly, you've got to be serious about the business because all of these properties will require that the LCO carry general liability insurance.

    Lastly, and I really think this is the big one, they're not going to allow just any start up to take over the account. The properties have to look excellent at all times. And most of them do. Not just any clown can install seasonal color and have the plants do well. Overseeding bermuda with rye isn't something that just anyone can do and do right. I see plenty of examples of horrible looking seasonal color and winter rye all over town.

    As for myself, there's been a barrier to entry on these accounts that's prevented me from competing. My largest mower is a 32" Ferris...too small to compete effectively on properties that large. Secondly, I have no experience overseeding bermuda with winter rye. Lastly, because I am spending all my time during business hours working "in" my business (ie pushing a mower), I don't have time to call on these high end accounts during regular business hours.

    So, I know there is nothing in terms of a barrier to entry with residential. And I know there is a barrier to entry with high end commercial...several.

    But here's where I get confused...I've read and heard from many other landscapers that there simply isn't any more money in commercial properties than there is with residential. It just goes against common sense that there's no more money in commercial because of all the barriers to entry that exist.

    Anyone else care to chime in on this? I keep thinking I should buy a second pick-up, hire a second employee and use my time during business hours to cold call commercial accounts.

    Later,
    DFW Area Landscaper
     
  2. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    DFW -

    You're either onto something, or on something. :)

    What you're describing is the EXACT reason that I went to all commercial accounts 5 years ago and got RID of all my employees.

    I've notched out a niche of medium sized commercial accounts (Wal-Mart, Home Depot) that I can maintain myself, but yet are small enough where I can do a better job quality control wise than a company that has 2-3-4-5 guys on a crew that don't care because they're just collecting a check.

    Usually you know the money is guaranteed, just has to take 30 days to get a check. This is the reason that I send out an invoice at the beginning of the month (June 1st) for that month's share of the contract. That way by June 30th, I've got my check and don't have to wait an additional 30 days.
     
  3. EastProLawn

    EastProLawn LawnSite Bronze Member
    Posts: 1,110

    DFW, you definitley found something, but the bad news is that commercial props are the toughest to compete for and there is very little loyalty on the part of the Business Owners.
     
  4. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    East -

    I have COMPLETE loyalty, now, after 16 years. It's like with any other property, you'll have homeowners that always shop around to save that .50. It's just the decimal point is in a different spot.

    I have not lost an account for 7 years now, and each year have the accounts renewed for the next year before the current year is over.
     
  5. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    ++++the bad news is that commercial props are the toughest to compete for and there is very little loyalty on the part of the Business Owners++++

    I'm not seeing a whole heck of a lot in terms of loyalty from home owners as it is now. And I would imagine that as soon as I start sending out a crew of employees (that doesn't include me), that existing loyalty will deteriorate even more.

    I would also think that with a commercial property, the loyalty issue would be more than made up for with the simple fact that you wouldn't be competing with "I'll do that part myself" on all the extras, like shrub trimming, weed/feed, bed weed control, mulching beds, seasonal color, sprinkler repair, etc.

    I mean, with commercial properties, in most cases, 100% of the landscape maintenance is going to be done by the LCO. Mowing the lawn is only a portion of maintaining a landscape.

    Later,
    DFW Area Landscaper
     
  6. RedWingsDet

    RedWingsDet LawnSite Gold Member
    from Detroit
    Posts: 3,556

    i want to get into commerical. i have everything needed, lisence, insurance, all the equipment to handle it. so next year, when i want to cut a lowes or homedepot and what not, how do i go about doing it? who do i call, what do i do?

    im only on my first year, next year will be my second, and hopefully alot more income because i shouldnt have to spend it on equipment like this year.

    this is my first year, i started with 2 21"s and worked my way up the latter, PRETTY DARN FAST!
     
  7. BCSteel

    BCSteel LawnSite Senior Member
    Posts: 876

    Build your name up and go in with good references, pics too because I can guarentee that there are a lot of schmoes out there trying to get in on the commercials too.

    Dont be afraid to turn them down though either. I have turned away many large props because I knew that I couldn't handle them. I told this to the prop manager straight up and they apreciated the honesty. So much so that when smaller props come up, they refer them to me because they know that I am looking to do a good job instead of taking on to much work and over extending myself.
     
  8. Camelot Gardens Uk

    Camelot Gardens Uk LawnSite Member
    Posts: 108

    How about a moat on a domestic property? just kidding!

    I also do commercial....

    moat5.jpg
     
  9. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    I find the loyalty of residential to be 100 times the loyalty of commercial......For most commercial properties you are a line item on a budget in an office. When they get the bids, they see whose under that budget number and they get the job. You would be suprised how many commercial properties prefer a mediocre job cheap than a great jub at significantly more
     
  10. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    "You would be suprised how many commercial properties prefer a mediocre job cheap than a great jub at significantly more" - PROCUT!

    I would agree. However, that commercial job, paying cheap and can be done cheaper, may have a better profit margin and less headaches than the PITA highend paying customer that you have to spend 3 hours to get $100 for.

    I would much rather do a commercial job where they expect mediocre performance than a PITA residential customer. Usually they are going to pay about the same when you break it all down.

    Less headaches, plus it's easier to satisfy a property manager that's got 5-10-15-25 properties he/she's in charge of, rather than the guy that's got a job that he hates, a house payment too large and 15 blades of grass that you missed in the far back corner of the yard under the flowering crab tree that you have to get on your knees to trim under because he doesn't think the tree needs to be trimmed.

    Not to mention when you get a commercial property and satisfy the manager, you work yourself up the chain of command and start getting other properties in the same company, or the guy's house and his neighbors house or something.
     

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