Alternative to sub-contracting turf fert

Discussion in 'Florida Lawn Care Forum' started by Tropical Gardens, Mar 2, 2019.

  1. Tropical Gardens

    Tropical Gardens LawnSite Member
    Messages: 76

    Asked in the fert forum but since I’m in Florida, thought I’d also ask here..we are a full service only maintenance company that caters to estate sized and high end waterfront homes as well as some HOA and Luxury apartments.
    We have been sub-contracting our Turf Fertilization for about 8 years. Started with one company and somehow we now are using 3 separate companies because we outgrew the first, second dropped all of the zoysia lawns and third we use just for zoysia.
    Last week we signed on another large estate and a new HOA that now none of the stated companies want to take on more work.
    Both properties start on April 1st, and right now I’d have to hire on a 4th company that I’m not comfortable with finding the quality I need/demand.
    So here’s my question, should I try to hire a licensed tech on at part time (unless he’d be willing to do other work) and purchase a truck/permagreen/chemical/fert? If so what would a fair wage be, with opportunity for growth because I’m willing to spend heavily on marketing?
    Just can’t seem to wrap my head around why I wouldn’t bring this in house. Thoughts and suggestions are appreciated!
     
  2. dkflipse

    dkflipse LawnSite Member
    Messages: 65

    I'm following the thread eagerly. But based on the size of your operation it seem like a logical next step. Seems like you're a bit larger than me, but up to now I too have taken the same approach.

    Regarding your specific questions. I find some of the best info comes from the source itself. In other words I would start the interview process. And for each candidate ask how much they earn, as well as other interesting market research, such as how many accounts do you hit in a day, what kind of equipment do you use, etc etc.

    You could also lure a young hungry kid with the idea that "let's grow this together and I can assure you will be rewarded well".

    Yes in the first few months you'll loose bit. But...you will have total control of the quality, it will force you to grow this segment, and you can have him be the marketing assistant. And in down times just ask him to go and blow yards....being out in the field is how you get new accounts...

    Best of luck.

    DKF
     
  3. justanotherlawnguy

    justanotherlawnguy LawnSite Bronze Member
    Messages: 1,322

    I had a buddy with a lawn biz, straight residential, always hovering around 350-400 accounts . He had the bright idea to bring it in house . As you know in Florida getting an application license is difficult . So he hired a retiring bug Guy to use his license . Went out and bought a brand new isuzu spray rig and was going to make a million bucks expanding into spraying his customers.
    Long story short, it pretty much ruined his business.
    As you undoubtedly know guys in Florida either spray or do maintenance, very few to both and are successful at it.
     
  4. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 15,217

    Dude

    You’ve got four (technically) companies worth of work!!
    That’s not enough for one guy in house?

    Here’s my thoughts on trying to wrap my head around this.

    1) you don’t want to throw all your eggs in one basket with a new hire ... what if he doesn’t work out, you can’t hire a new guy and you’ve fired all your subs?
    2) all your subs are making a profit (or they wouldn’t be doing the work) presumably you still make a profit off subbing the work out
    Can’t you take their profit and convert it to payroll?

    Let me armchair for a minute because I don’t know your company volume

    If each of the subs does 40 “lawns” for you
    That’s 120 lawns
    $35 per service
    7 services per season
    That’s almost $30,000 in revenue

    If each sub does 120 lawns that’s $90,000 in revenue

    Whatever your total revenue in apps is... your payroll should be around 35% of gross (plus or minus different companies vary)
    So if you have 90 grand in apps sales you can have that guy on a $31,000 pay scale
    If your gross is only $30,000, the guy only has $10,000 in payroll

    Do you do anything like aeration or other one man operations
    Ornamental hand pruning
    Roses
    Fruit trees
    Things like that one tech could pick up more hours on?
    If not maybe part time him on sales and give him a commission for new sales for apps that he closes.

    IMO I’d keep one sub on for long enough to make sure your move to in-house was solid.
    Dump the other subs
    And you’re going to need at least $40,000 in payroll to get/keep a tech.
    Hopefully more like $50,000 relatively soon after hire (6 months? A year?)

    No question as to would you make the investment and pull it in house
    Only question is how do you make it happen and how soon
     
    Tropical Gardens likes this.
  5. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 15,217

    I think the idea is to hire a tech that has a license already?
    At least that’s what I assumed the OP was talking about
     
  6. Tropical Gardens

    Tropical Gardens LawnSite Member
    Messages: 76

    I’m working a deal to bring my original sub in and allow him to take on a management position, train a tech and we’d essentially then have it all in-house. Would work best at this point.
    Most of our accounts already have FWC included and we are able to add 10-20% to what we are invoiced from the sub. I market as full service only and generally only market to high end barrier island properties. Wouldn’t ruin our business unless wasn’t properly managed.
     
    BrandonV likes this.
  7. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 15,217

    I didn’t mean bringing it in house would ruin your business
    I meant if your in house guy didn’t work out and you pissed in all the subs Wheaties you couldn’t get your work done.

    Interesting that one of the subs wants to become an employee..
    Does he have his own work that he’s bringing with him...
    That would solve the problem of not having enough to do...

    Full service is the dream
    I’m happy to see more guys doing it.

    I never really “get” the mow only guys...
    I see it like buying a gun
    Sighting in the scope
    Scouting for animals
    Learning to track
    And then deciding not to bother hunting because you don’t have time and aren’t really interested....
     
  8. Tropical Gardens

    Tropical Gardens LawnSite Member
    Messages: 76

    Sorry I was referring to the previous post of it ruining another business.
    By bringing this business in, we would certainly have enough work for a full time tech. I wanted to initially have a part time tech be trained by the op I’m buying out and slowly bring in the other accounts. In that aspect I agree with not shooting myself in the foot. Training won’t happen overnight and cannot lose on quality.
    So this op does have a total if around 170 accounts. Also services a broader market than we currently service. His choice for this move is to get out of the chemical applications and take on a more managerial position within ours. It kills 2 birds one stone for me and allows me to take off some of the “hats” I’m currently wearing, while also simplifying a process for us on the FWC side.
    He has grown his business organically and I want to compensate him for that work. I prefer to not outlay in the purchase if I don’t have to. I’ve structured an offer that more benefits him than me financially but still works for me.
    My offer was a salary for the management position that is healthy. Plus 60-70% of the net on all FWC that is currently outside of our service area (next town over all less than hr drive). I am aware that’s an overly aggressive offer but again, it still works as I’ll be able to market heavily on that side for my current service area.
    I wanted him to have buy in to grow this side of the business and also not take too much from the salary he’s currently making.
    Any thoughts on the offer? We’ve not come to agreement as of yet but still in the works.
     
  9. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 15,217

    There’s two of me thinking about this

    One just from a “I’m a guy in the industry reading this” point of view
    And one from a “I’m a business consultant” point of view.

    So
    IMO....
    Screw the other subs
    You offered them more work and they are limiting your growth and income potential and Turing you down
    Time to say good bye.

    HIRE TWO techs to be trained under your new manager
    Where is this guys cureent employees? He’s all solo at the moment?

    DO NOT just hand over the profitability of an entire revenue stream to a new employee that’s ALSO a former competitor.

    This purchase/employment contract absolutely should have a non compete in it.

    If this guy is a solo , you don’t know scything about his training or supervisory abilities ANd He’s looking at getting out of business which puts into question his ability to be responsible for a P&L

    So don’t take off any hats just yet... you need to train this guy too.
    In that light 60-70% of net is way too generous

    Profit sharing on 30% net of new work is MORE than generous.
    I’d also offer 10% net on retained work... so customers he keeps happy and coming back he gets a little something for as well.
     
  10. Tropical Gardens

    Tropical Gardens LawnSite Member
    Messages: 76

    I like all that you’ve said..

    He is a solo operator and without taking a bit of a financial hit up front, he was not able to grow into the position that he should have a little earlier on. Hiring a tech is an expense I don’t think he was willing to take on. I even told him to buy a ride on a year ago to cut down on site time.
    This is not what he told me..it’s what I’ve gleaned from our conversations. He’s a great tech but not a business mind as far as taking on debt to take on more work to grow. Also no marketing spend whatsoever. Tough to grow with a new tech if you’re not willing to spend marketing dollars to quickly expand.

    Getting out of the field is his goal and I fully understand where he’s coming from. It took me years to do, but I also had a better strategy for doing so. I think he’d rather keep his business but this would make sense to him (and me) if the numbers make sense.

    I’m not entirely set on making a high percentage in this deal myself. I’d be happy with a 15% net on all the accounts. Our maintenance crews regularly only produce in the 10-15% range and seems to be pretty industry standard. If I am able to come into this making 25-30% I’d be ecstatic.

    Absolutely agree on the non-compete. I don’t think they hold water but nonetheless it’s peace of mind to a point. I’ve let him know I want a 3 year agreement with him adding me as a card holder so after 3 years I can sit for the licensing myself.

    I’d absolutely hire multiple techs if I thought it made sense. I think for now, through the initial training process (as I also don’t know if he’s a good trainer-I am not) it best to let one of the subs continue until we get traction with the new tech hire. Once he’s comfortable and we see he can take on more..we make the move.

    Keep in mind I am not buying the accounts at all. Absolutely no outlay of money out of pocket up front. I actually gain all of my spend with other subs back without him even getting a percentage. He only gets a percentage of accounts next county over that we do not service currently, as well as future growth in that county. So even at 70 % of net, I profit from day one with no cash outlay.

    But..this way he’d want an out. If we need to part ways I think he’d want a stipulation he can get his accounts back. I’d be left without the license again and no sub to fall back on. That’s my worry in this whole deal. How to structure that side.
     

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