Pitfalls of Commercial Accounts

Discussion in 'Business Operations' started by Team Gopher, Sep 7, 2005.

  1. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

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    For new businesses starting off into the world of servicing commercial accounts, what would you say are the biggest pitfalls they should be aware of and try to avoid?

    What do you like most or least about your commercial clients?

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  2. amtrucker22

    amtrucker22 LawnSite Member
    from Florida
    Posts: 69

    Most of my commercial accounts pay late (about a week past the due date).

    Paul
     
  3. qualitylandscaping

    qualitylandscaping LawnSite Bronze Member
    Posts: 1,581

    Most commercial clients want very high quality work at a very cheap price. Like I said, most. Not ALL, but most.

    You can also expect a very long wait to get paid with most of the larger commerical properties or properties that are leased. I have a few that haven't finished paying me for 2004-2005 plowing yet. They are very good customers $100k + per year each and do pay, but it takes 6 months to get a check..

    I guess you need to be financially stable before diving into commercial accounts. They really do expect top notch work and you better be able to deliver.

    Some of the best kicks toward you are, more business! Usually the company has a CEO, President, Vice Pres. and general employees, etc. They may need their lawns maintained or landscaping work done. You just might be the first one that comes to mind when they think of doing something, if you do a good job.

    I think in the end, a solo operator has a slight disadvantage in commercial because they do require detailed attention on a continious basis (we have one commerical property with over 35hrs of weeding per WEEK).. They take alot of work but if you find a few good ones and can hold on to them, you've struck a gold mine!
     
  4. SOONER GREEN

    SOONER GREEN LawnSite Member
    Posts: 77

    Getting paid within 30 days can be a challenge. 5 years ago we were all commercial. We've slowly moved into more residential mowing because of the slow pay problem. The 12 mo. contracts are a good thing during the winter because you get a steady check during the slow season. But you may work at a loss or a very low profit margin during the growing season. It takes more working capital to maintain comm accts.One of the good things is your crew is in one place longer, not driving from place to place.Unloading time and drive time are profit killers. Make sure you know exactly what they want included in the bid, because when they call you to start leaf cleanup and you had'nt included it in your bid there's going to be a problem. Also you may do a great job and still lose the acct the next year because they went with a lower bid leaving a big hole in your route.
     
  5. Branchland

    Branchland LawnSite Senior Member
    Posts: 354

    Loosing them. I lost a apartment complex this year due to budget cuts. The place was crappy but paid good and on time. They choose to get out of the contract early and decided to pay the maintenance guy to do it. He told me it's all he can do to try and mow it every week.

    If you do get ant commercial accounts don't go into debt thinking you'll always have that income. Luckily I didn't go into debt just incase something like this happened. It still hurts not having that income when you get used to it.
     
  6. J Hisch

    J Hisch LawnSite Senior Member
    Posts: 952

    Commercial accounts have many points to consider before heading in that direction.
    1. First only stick with ones that you can fullfill the job spec's. meaning if they require irrigation work and you dont even know how to set a timer I would stay away.

    2. Make sure your eggs are not all in their basket.( if you lose them will you be lost.)

    3. Truly find out what their needs are, refuse to do business if they say "just gives us a bid." You can just give them a bid when you can service everything their property may need. But just starting out, get what they want. Reason is if you dont put something in your bid they wanted. Then they will be disatisfied with your company.

    4. As far as late payment access late fee's, they would access them on you.

    5. Last but not least. " Dont fail"
     
  7. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    Personally, I think commercial accounts are just the same as residential accounts.

    Some pay on time, or early, some pay late.

    Some want you to do everything for them, some just want you to mow and blow.

    I've got 2 Wal-Marts, one pays in 10 days, one pays in 35 days.

    The Wal-Marts want me to do everything from mow, trim and blow, to spray the yards, to fertilize to even pick up the parking lot.

    I do a school district, they pay by the 15th.

    They just want me to mow weekly and trim every other week.

    One thing that's nicer, is that I find it's easier to get them on a set monthly fee, because they easily set up a budget, plus they only have one bill / month.

    You can have PITA commercials, you can have PITA residentials.

    Bottom line is, if you don't like who you're dealing with, find someone else, and drop the ones you don't like.
     
  8. Jason Rose

    Jason Rose LawnSite Fanatic
    Posts: 5,858

    1. They usually pay late. A month to wait for a company that's headquartered in town, many months if it's out of state...

    2. They USUALLY are after the "low bidder" and sometimes won't take more than a season long contract because they are required to get new bids every year reguardless of the quality of work.

    3. Kinda the same as above... You can bust your azz and make everything perfect but the only people you are impressing is your competition. The suit in the office could care less who's "cutting the lawn". And a lot of times they don't know good from bad from 3 states away.

    There are exceptions... Older commercial properties tend to have management that knows better. They know who's doing a good job and are willing to pay ANYTHING for it. I guess it takes a few years, just like with new homeowners, for them to realize that not just anyone can actually make a property look GOOD.
     
  9. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Possibly the biggest pitfalls from what I remember are:
    Contractors/Bid Jobs:
    - Lowest bidder gets the job... I don't like thinking I was the cheapest guy while I'm busting my tail, sorry.
    - Being new makes you more likely to underbid, most jobs are bigger than what meets the eye so you don't SEE it until it's too late.
    - 60-90 day payment delay is normal and 180 days is not unusual, so you need deeper pockets.
    - You are twice as likely to get skru'd by a business owner as when compared to a non-business owner.

    But, I have a couple comm.props on a verbal agreement and it's no prob... I get paid by the job, it wasn't a bidding deal, etc, etc... So it all depends, really.
     

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