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What to do with a non (or lower than your target) profitable set of accounts?

Discussion in 'Business Operations' started by Right Touch, Nov 13, 2013.

  1. Right Touch

    Right Touch LawnSite Senior Member
    Posts: 382

    I started my business in the town where I grew up but moved to another town 10 years ago about 25 minutes away. I've maintained about 25 accounts in my home town until now but after doing the numbers, it is really not worth it to go down there anymore. The houses are small, income is much lower than where I live now, and no one ever does any additional work. The town I live in now I can and do get more money for the same work. I hate "giving up" these accounts, but every management magazine I read says you need to create a target customer and the houses in that town are certainly not our target customer anymore. My thought is to do some massive marketing to hopefully replace the income that would be lost by these accounts and then get rid of them. Of course selling them is an option but that is another story which has its own difficulties. It would also reduce my fuel bill for having to drive down there and reduce the stress of a crew being that far away if something happens and me having to drive down there to address customers concerns, which are usually minor- a weed here, not blowing off something there. There certainly are two sides to this- not giving up money but also not taking on every account "just because" and not creating a target market. I feel I could dedicate my time and resources better to our local customers by concentrating up here, which is difficult to put an actual dollar value on. Thoughts?
     
  2. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    Non profit customers? Only a fool keeps customers for years with no profit.

    The problem is not that they are 25 minutes away unless you go there everyday when you should be going there say 2 days a week.

    No problem that they only want mowing and no up sell. Work is work.

    The problem is with many Landscaper's is that they keep low profit margin customers just so they have enough work expand their business to a second route.

    Then when they down size and go back to solo the say they are making the same money without the head aches and expenses of running crews.

    The answer is to always cull out the least desirable customers before they realize that they are carrying so many bad customers.

    As to your old town small yard customers. The problem is not that they do not want up sell's. Many Landscapers make good money knocking out a bunch of small postage stamp lawns.

    I suspect that your first group of customers are priced to cheap, your equipment is not the most efficient for their sized properties, you spend too many days going there, or all of them.

    That is not their fault but yours. Raise those prices.

    I have customers that want everything done. Some a mix of things. Then those that only want mowing.

    I value my mowing only customers because they pay well and help fill my schedule.

    Without them my bottom line would be a lower.

     
  3. Right Touch

    Right Touch LawnSite Senior Member
    Posts: 382

    Thank you for the reply. After reading your reply I began to think and wonder if it is purely an emotional issue of breaking away from the customers I started with. They all seem to think I am still 15 years old (im 34, I think) and I suppose that irritates me. No matter what I do I can't seem to change their minds. They all still call me Joey and don't respect me as all my new clients in the new town. Its like the movie "Goodfellas" ~ I don't shine shoes any more! We do only go down there once a week and I still have the smaller mowers to accommodate the properties. I know if I charge more they will just cancel- there is no reason for someone to pay more money for the same service just because I moved away. Their prices are in line with what I would charge someone locally. I might be able to raise them $1 a cut to help cover the cost of the fuel for going down there perhaps.
     
  4. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,519

    I've been in that position too with theclients I started mowing for in high school. Take the emotion out of it by just looking at them as dollar bills and not clients or friends. You can't have emotion making a financial decision.
    Posted via Mobile Device
     
  5. wildstarblazer

    wildstarblazer LawnSite Senior Member
    Posts: 978

    Give them to a local lco in that area and have him pay you 10 percent each month. No work on your part and you get 10% of it. Or just sell them.
     
  6. snomaha

    snomaha LawnSite Senior Member
    from midwest
    Posts: 857

    We have fired 4 HOA's this fall. Maintained them all for 10+ years but the expectations and the price point they wanted weren't lining up. It was a substantial amount of revenue, we just couldn't make it profitable - not to mention 80% percent of complaints and problems came from these 4.
     
  7. wbw

    wbw LawnSite Fanatic
    Posts: 5,404

    Put some kid in business there.
     
  8. jccntry

    jccntry LawnSite Member
    Posts: 12

    Sounds like a Great Idea!

    Wildstarblazer said
    "Give them to a local lco in that area and have him pay you 10 percent each month. No work on your part and you get 10% of it."

    Or combine 2 Great Ideas together?:clapping:
     

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