Sub Contracting Commercial Accounts??

Discussion in 'Lawn Mowing' started by Bluelude1, Sep 12, 2005.

  1. Bluelude1

    Bluelude1 LawnSite Member
    Posts: 70

    I have been mowing for several years now and I was thinking about establishing more commercial accounts and sub contracting the work. I could basically use the guys in my area I know do the quality of work I am looking for but, lack the sales ability. Then pull a percentage off of the job without having to maintain a crew or equipment. Similar to something like a facilities management company. Any thoughts on this?

    Thanks in advance,
  2. Brianslawn

    Brianslawn LawnSite Silver Member
    Posts: 2,004

    they might try to steal it from you for less. some will, some wont. ive posted ideas like this before but got nada from the ls community. my thoughts... bunch of small lco consolidate to one big company. more equip to use, less overhead vs individual combined total. one biz lic., insurance policy, yellow page ad, etc. everyone take seperate section of town. spend day within couple blocks. use half as much gas and do twice as many yards. thats how all the big companies around here make so much $$$, crews dont spend day driving around town. time your yards and your loading and drive time. how many more yards a day could you do if truck stayed parked in one neighborhood all day. how much $$$ would you save on gas driving between yards? do the math.

    everyone wants their own biz which is awsome, but so many go broke and quit because they can only charge $20 cause theres 500 other guys in town doing it. less competition = higher prices for the yards and even more $$$ for everyone. this is not an attempt to monopolize and it is not one of bobbys unions... it is a consolidated effort amongst fellow lcos.

    any other comments???
  3. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Yeah, I mean...

    If you get a %, where does the % come from?
    Either they have to eat it, or the customer does, right?

    That would be like me 'subbing' you to Merchant's Tire & Auto where it normally would cost 500 dollars to put 4 tires on your truck, but either you pay 550 total, or Merchant's only gets 450 and I get 10%, see.

    I don't see this type of relationship working out, and for myself don't look kindly on anyone calls me with this stuff but..

    I do have a guy calls me about twice/year to do some work as he does lawncare part-time: I quote him the same price I would charge a customer, he agrees and I do the work and he pays me and I am done. Whether he gets a little extra out of it or not from the customer, that I do not know and I do NOT want to know. I do my job and I get paid, that's the end of it and what he does after that, that's entirely up to him.

    Also from time to time there comes a job I can not do (like tree work), this I refer to someone I know BUT there's no % in it - My customer calls the guy, he goes out and estimates business as usual, does the job and the customer pays him. I don't get anything for it because if I did, he'd have to raise his prices and then my customer(s) would feel ripped off ESPECIALLY if they found out they paid EXTRA just so I could get my %. Meanwhile I am sure he is not about to take a cut to give me my %, either. But the guy is reliable, does a great job, is on time, I have no problems with him and never hear another word about it (unless it's positive), which is why I send him my tree work (I don't do trees). I still get something out of it, my customer is happy the job is done and I'm glad it is done, too.

    That's my thoughts on it.
  4. Metro Lawn

    Metro Lawn LawnSite Silver Member
    Posts: 2,112

    What I think he is trying to do is this:

    Use his salesmanship to land a large account.

    Let's say it pays $500 per cut.

    He finds someone to cut it for $400. (not a tough thing to do)

    He pockets $100.

    The other cutter is only dealing with him, so they won't know what it pays. He pays the sub and collects from the client. The problem is that the sub could screw up causing him to lose money or the contract, or the customer could make contact with the sub and give them the work direct. There are many other things that could happen as well, just pointing out a few.
  5. Bluelude1

    Bluelude1 LawnSite Member
    Posts: 70

    I know alot of what you guys are saying is a possibility but, how is this thought process really any different than a general contractor in the construction industry or a property management firm for that matter. Does everyone think lawn companys are as greedy and as underhanded as they are made out to be? Lets face it we all know that some people like to sell and have a better success rate then others that would prefer to be on the mower.

    -Just as an example on an annual contract provided it is bid PROPERLY if the job was a $150 a week job an I paid someone $135 to do it would that be too far out of whack? Thats one more $135 they can add to their account weekly that they dont have to handle dealing with the customers or making sure the check comes in or even getting the job.
  6. Metro Lawn

    Metro Lawn LawnSite Silver Member
    Posts: 2,112

    There is a big difference in this and a regular general contractor. First thing is that we are talking lawn maintenance. The same guy you hire can do the entire job without you. A gen/con will hire for each segment.. ie: brick masons, drywallers, electricians, plumbers, ect. None of these guys alone can do the entire job. Are you following me so far? It may work, but using your example, is it worth it?
  7. SWD

    SWD LawnSite Senior Member
    Posts: 989

    Your idea is a sound one - don't worry about the negative replies.
    I have been subbing work and have subbed work for many years.
    It all boils down to your comfort level with the sub's work and the payment amount and time already arranged.
    Insurances and licenses are state specific, that you will have to get your self.
    If you act as the main contractor, actually selling the work, you may or may not have to have insurances.
    What I have done is typically hold a certain percentage of the contract amount as insurance for the un-insured sub wherein then I cover him on my insurance- workers comp/commercial - you get the idea.
    What numbers you use to base this relationship upon is heavily dependent on your overhead/size of that particular contract. That being said, using a rough figure of 15% for insurances might get you started.
    A for example:
    I was the sub on a large acreage fertilization and fire ant bait application. My gross after materials was over $1500 for six hours of work. I got the work as I was available, professional, the main contractor knew of my company and the work me and my employees do, and I had the necessary licensing/insurances.
    I have subbed work, and have had to watch the sub contractor, however I didn't loose any money on the work. I still have the clients as well.
    Essentially, subbing or being the main contractor, is a great, economical manner in which to effect an economy of scale operations wherein you are not capitalizing the whole venture. Done correctly, you should be okay.
  8. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Answers First question: Yes.

    I just don't think it would work when for 2k/year I plop an ad in the phonebook, make payments at my discretion, and use MY salesmanship:
    - Answer the call, ask what is needed, get address, go give the estimate and take it or leave it and thank you. Ain't no haggling or 'selling' involved here, I ain't trying to push things on nobody, either yes or no, simple... Now if you were to 'sell' for me, ok whatever, but in the end it's just like I tell my friends when they get all excited (they do) it's all the same thing so it goes like this:
    - Now you need to tell your customer that they need to call me so I can go out and give them the estimate.
    Of course then comes the crap about it's all setup and all I gotta do is go do the work but Hoooold your horses talleyho, I been burned one too many times before because they do NOT know my prices, this is NOT their business to run, AND the customers do NOT belong to them if *I* have to do the work. I am the boss here and I don't do third-party setups, it's not their business to run, they're out estimating MY labor with MY equipment, none of which belongs to them so there is NO way they can know what is involved. It's just another example of how some people like to take turns at the rudder of someone else's boat because it's all good when it doesn't belong to them, if something happens nobody but me pays the price. Hence this is not their boat to drive and nowadays nobody drives my boat, I done been down below bailing water enough times after someone who thought they knew what was going on did the dirty and I ain't bailing after someone else no more.
    However, if the customer calls me and it all turns out okay after I price the job, and they turn into a good customer in the end, then I'll gladly consider writing out a check to my friend for 40 dollars, which is my cost of acquiring a regular customer. Yeah because it's 40 dollars/customer whether it's a one-time small thing or a big long-term contract it's always 40 dollars but I don't make that distinction, rather I let THOSE things fall into place on their own BUT don't assume it doesn't matter because it does... So no, a whole slew of trailer park lots won't land you 40 dollars/each, either... It has to average out, and the only way I find it does this is with an ad that covers about, oh, a million households or so.
  9. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Let me give you another example:

    Even WHEN a friend refers work to me AND I get to give the estimate, there are no guarantees but of course, them being the great salesperson, they ASSURED the customer it could be done (this *SUCKS*).
    So now I get to go look at a yard for Core Aeration in JUNE (the window for aerating has been closed for over a month but see my friends 'forget' these 'trivial' details) and the soil is dry and hard as a rock and even when it isn't, the new seed will NOT grow into adult grass by the time it gets really HOT (jul-aug) and these people will WASTE their money hiring me but since my friend was so SURE it could be done now the customer is CONVINCED that I'm the best there ever was and if anyone can do it then I can but guess what? If I don't do the job, they're disappointed, and if I DO do the job, they WILL be disappointed as well, minus some cash.
    What a f*k. I did a few jobs like this until I finally asked them not to send me no more work and now they don't talk to me because they think I'm mad at them or I'm ungrateful and don't appreciate EVERYTHING they done for me.
    Man, FTS lol, we never even got into the %'s...

    And yes, my friend did lawnwork for 15 years, you'd THINK he knows but he's into treework and always did all KINDS of different jobs whereas I specialize in certain things AND I will NOT do the work if I expect the results to be less than average where he runs his business his way.

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