small, medium, large

Discussion in 'Lawn Mowing' started by bobbygedd, Feb 28, 2005.

  1. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    i've been told by many lco owners, that the big companies, and the small companies make alot of money. the "medium" size companies don't stand a chance. do you believe this to be true?
     
  2. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    too a point yes. When you are small you have very little overhead, and you are either basically solo or have maybe one crew working for you. When you are large, you can make up for the overhead with larger volume of work. Medium is the transition phase of where there is only two ways to go, up or down. A lot of companies that are medium get discouraged with the fact that they don't make as much as they did when they were small so they go back down to being small. Or some take that leap of faith and jump into being large
     
  3. MarcSmith

    MarcSmith LawnSite Fanatic
    Posts: 7,157

    My .02....

    Smaller companies have the ability to have higher profits as a result of low overhead costs....Ie many work from Home or have a small storage shed that they work out of...Low out of pocket employee costs, Ie only a few crews working and as the Owner Operator you are more inclined not to take a salary, but live off of the profits of the business. with small amount of crews you are able to safely and reliable oversee the crews and keep your profits good.


    Large Companies have Higher overhead, but also have the ability to generate more revune to compensate for this extra overhead. IE Site Specific place of business, more equipment, more insurance, more employees. They can offer more types of services on a fairly reliable basis or have dedicated crews, IE Irrigation, Full Chem Aps, Installs, tree removal, Snow removal, Ect....Thus increase their oppurtunities where they can make money.

    The mid size companies IE 3-7 crews are in a tough spot. they have expanded beyond their "home-run type" business, but not quite up to the task of owning a business locatoin, they need to employ one or two managers to oversee the crews, plus they may need to actually draw a salary from the business, which affects the bottom line...If they decide to rent/purchase property for a business location they run the risk of overextending themselves. They need extra vehicles for managers, and they can't always do some of the extras that the larger companies can do. Many extra's can be done at Higher margins, but if you are streched thin you may not have the time/knowledge to profitably exploit those extra's while still mainting the quality of your core business

    The other reason I see, and please don't take this the wrong way, some LCO's think that if they can manage $10K of work that managing $100K or $1mill of work is just the same except with more zero's. When it gets that big you need to have some genuine business knowledge and the pride to be able to look yourself in the mirror and say "I really don't have a clue about XYZ and I need to hire some one who does" rather than trying to muddle through it and be frustrated and fail....

    So as a blanket statement I do agree smaller and large LCO companies are in better shape. The intermediate stage IMO is a tough place to transition through..If you make it through more power to ya...If you can't transition through and you end back at the small stage, you still might have issues as you have lost customers and sometimes when the customers start dropping it can snowball...

    Again, Just my Opnions.....and some of my experiences
     
  4. Mark McC

    Mark McC LawnSite Bronze Member
    Posts: 1,565

    A lot of interesting comments so far.

    I think transitional states are always inherently dangerous, whether in business or politics or what have you. When stepping into new and unfamiliar terrain, there's always the chance you'll lose your footing or step into a hole you didn't see.

    I suspect that the expansion thing is often undertaken with inadequate cash reserves or with the notion that a new unit should be profitable immediately. When the time comes for me to get a second unit, it may not make me much (if any) money the first year. I'm okay with that. Our understanding of such situations perhaps should include that idea.

    But the middle ground is also a funny place to work because one's markets are not as clear-cut as those for the low-end and high-end operators. I suspect it takes a more discerning eye to develop a market under these circumstances because you have a lot of work to do keeping your current clients while drumming up new ones. Your medium-sized operation is also likely to have a more variable customer base: some customers who want just mow-blow-go and some who want the whole deal. The low-end operation might have just mow-blow-go customers and the big company only customers who want everything. In that middle range, you have to pay attention to some of both, which complicates both marketing and administration.

    I'm not terribly experienced in operating a business, but these are some of the issues I think arise in growing a company beyond one truck.
     
  5. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Size has really nothing to do with it...key issue is in how it's managed. Period
     
  6. The landscaper

    The landscaper LawnSite Senior Member
    Posts: 845

    Exactly what I was thinking, any size company should stand the same chance. It all depends on how it is run and how effecient it is.
     
  7. MarcSmith

    MarcSmith LawnSite Fanatic
    Posts: 7,157

    Again not to sound degrading....but, just because you can mange one truck is no guarantee you can manage 5 or 10 trucks...I do belive size does matter, or at the very least is very relevant. as you get bigger you are going to stop managing work crews and you will essentially become a people manager, a manager managing other managers, which in and of itself is a whole different ballgame.

    Management of a 10K operation is wholly different than a 100K or 1 mil operation.. There are many more variables to consider as you grow. Failure to consider those variables and you will be doomed....If you manage 10K well chances are you can learn and grow to 100k and so on...but it is not as easy as it looks...I went from managing/owing my own business 100K to managing and running a 1.2 million Installation Department for TruGreen. Such a different ballgame, like Pop warner and NFL....Yeah the fundamental basics are the same, but there is so much more to wrap your arms around...

    again Just my humble opinion no offense taken, none intended...

    Dare I ask...Since you started the topic Bobby, whats your opinion....
     
  8. Mark McC

    Mark McC LawnSite Bronze Member
    Posts: 1,565

    True, but don't the management issues change with the change in scale?
     
  9. Updog

    Updog LawnSite Member
    Posts: 80

    I seem to see things differently. I am what you would call small op. I have one full time employee and two seasonal. As my cleintel grows for my target area my advertising cost becomes smaller and as a small op I'm investing what proffits we have into growing so we show very little proffit. My goal is six full time employees this should be a good # for me as an owner to keep good relations with each emp. and keep an eye on our cost and work quality. I believe if managed correctly this could be the most proffitable size. I'm alaways reading about so & so comp. that grossed over 1 million but somehow only managed to make payroll. I think management is the key. We try to sub out as much of our paper work as possible and worry about keeping our customers and employees happy and doing good work.
     
  10. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Not really Mark.

    When I was the Director of Training for Hertz for 13 years, I had a staff of 19 and an overall budget with P & L line responsibility of around 16 million dollars. I set the budget each year and was under it every year (and not because I arbitrarily set it high) either.

    Managing that department was no less different than managing my own business today. In fact, I think it was easier at Hertz simply due to the fact I had others to rely on and were well-versed and trained/educated in their respective jobs.

    The issues themselves don't change all that much with size or revenue. Scale yes, issues, very little. You still have to address the issues of sales, human resourcing, finance, marketing, pricing, training , etc. in a huge company like Hertz as you do with your own Lawn Care Operation regardless of whether your's is small, medium, or large.

    Think about it...
     

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