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Large Comercial

Discussion in 'Lawn Mowing' started by James, Feb 25, 2000.

  1. James

    James LawnSite Member
    Posts: 16

    I would like to hear everyones thoughts on the following: I own a two man lawn care business in a 500,000 population city. What would be the pros and cons to landing a large contract for one commercial account and concentrating on that account year round. I'm talking the full service, snow removal, mowing, aeration, etc, etc. Anyone doing this now? All thoughts and comments appreciated. Thanks, Jim
  2. How large can one account be if it can keep two men busy 7 days a week?<p>You do have existing accounts right? Are you going to drop them?<p>What will do next year when the political winds of change bring new management to your<br>one large account next year and your history?<p>Seems like a 'retro' situation to me, sorta<br>like your going back to work for wages again<br>and be under the direct control of one<br>man/company.<p>Why not just hire more help and get even more<br>business so you would get to the point where<br>this one large account would be 50% or less<br>or your gross sales?
  3. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    Well the one BIG drawback would be, if anything went wrong and you lost the job, for whatever reason, your business would be back in the cellar.<p>Same would hold true if you suddenly had a problem collecting your money.<p>Something about baskets and eggs...<p>Bill<p>----------<br>&quot;...half my brain tied behind my back, just to make it fair.&quot; R.L.<br>
  4. James

    James LawnSite Member
    Posts: 16

    Thanks for the input so far. The one account that has expressed interest is a large hospital. They are willing to commit to a five year contract. They are not going to bid this out, just informal talks so far have raised the question as to the feasibilty. Thanks, Jim
  5. fireball

    fireball LawnSite Member
    from ne Pa
    Posts: 172

    I agree with Larry. Hire more, do more. Be aware that the typical hospital pays on 180 day cycle. Be prepared to go a least 6 months without pay. ServiceMaster the biggest in the business has recently got out of the health care industry due to this very reason. Even they can't afford to subsize hospitals.
  6. Jay Raley

    Jay Raley LawnSite Member
    Posts: 13

    James,<p>No harm in exploring options. If the price is right and they are willing to commit to a 5 year deal then by all means roll with it. That could be your cash cow to take you to bigger and better things. <p>As stated above I wouldn't lay all my eggs in one basket. This deal could be a big mover for you, though. Concentrate on this one job as a major source of income and spread out from there. With a little bit of good scheduling, budgeting and old fashioned hard work and you could set yourself up for some big things. But, hell, what do I know? I am just a lamer, or is it dolt this week, Larry?<p>----------<br>Jay Raley<br>The Good Earth Grounds Management
  7. Nilsson Associates

    Nilsson Associates LawnSite Member
    Posts: 243

    When I was in the bizz, I was 100% commercial<br>so a few suggestions, things I learned along the way ... generalizations some of it.<p>.. Better to have 3 accounts at $100,000 than one at $300,000<p>.. Bid out every year about 3 to 4 times your current gross, because musical chairs<br>is what it is. Doing $100,000 ? okay so bid out a new $300,000 as insurance.<p>.. Very little loyalty, and if another bid comes along, they'll ask you if you want to &quot;keep&quot; the account at that new lower bid price. So you have to know where your bottom price is really at .. and be ready to walk.<p>.. Get at least a 3 year contract to justify adding commercially oriented mowers etc. and stay away from condos.<p>.. Keep close tabs on your contact person because if he or she leaves ... ???<p>.. If you're residential now, try to keep your total gross around 75% residential, 25% commercial, don't take on any individual property that's more than let's say 20 acres.<p>.. Year around 12 month contracts paid monthly helps, but spring requires lots of extra hours that you'll need to finance ahead of monthly cash flow.<p>.. Insist on doing the lawn care program applications even if you have to sub out. Get from 10% to 20% off the top if you do .. you bill the customer within pymt plan, don't let the sub bill.<p>.. If you're in snow country, do it, add it, do sand & salt, in spring, do pavement sweeping get up the sand.<p>Hospitals are open 24 hours a day, 7 days a week. You need extra $$$ for snow control (3 shift changes) and you need extra $$$ for policing grounds at every mow. <p>Make sure you control the &quot;language&quot; of your people at the site because all it will take to lose it will be one remark to an employee, patient, visitor or administrator.<p>Commercial is okay, it means that you learn to live with far less certainty year to year but if you are an active bidder it helps.<p>Phil Nilsson<br>
  8. fireball

    fireball LawnSite Member
    from ne Pa
    Posts: 172

    Super advice Phil. The tabs on the contac person always worked in my favor though. They usually took me along to the next site. A good manager knows when he has a nice stable of reliable vendors. While I tend to agree with your statement on condos I also admire the contractors who are succesful with them. I think it has something to do with public relations than it does with good work or great prices.
  9. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    The danger of having 1 customer account for 10% or more of your gross sales is that you wind up doing ANYTHING to please that customer. Doing ANYTHING just to please the customer generally isn't good business.<p>Phil,<br>I've noticed that quality companies don't turnover their customers. The companies I'm trying to emulate would have no need to quote even 30% of what the currently do. They grow at 10% per year and basically get everything they bid because the customers they attract aren't price driven.<p>Certianly if you're new, or in a high-growth phase, bid all you can. But to bid 300% of what you currently do seems like a lot for an established company.<p>I figure we get about 15% of what we bid. If we bid triple of what we currently have, we'd grow by 45% per year!<p>(BTW: I'm talking maintenance only, not new installs)
  10. James

    James LawnSite Member
    Posts: 16

    Would my profit margins be better or worse on commercial accounts? Thanks for all the input thus far! Keep the advice coming! Jim

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