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Business is bad! What am I doing wrong?

MowinginEureka

LawnSite Member
Location
Eureka, CA
Ok, so I bought this business two years ago. I have stayed at about the same size, until this winter. I lost 20% of my clients, which is 10. Problem is, I have been losing my larger, more profitable clients over the last year as well. In turn, I have been acquiring smaller accounts. Also, all small landscape jobs (read: under 500$), have pretty much disappeared into thin air. I have lost 3 out of the 4 commercial accounts I had. When I lose work, its because someone moved, or they found a guy for cheaper, but no one ever lets me go because of the quality of my work. Most of my clientele/demographic is over 50, retired, and owns their own home.
I have a large business loan(2k a month), credit cards up the ying yang and a baby on the way. I get most of my business from word of mouth, people seeing my work, and my double-size phone book ad. My work is among the best in the county, my yards are almost all green, weed free, and trimmed. I charge a rate that is in the middle for my area, 37.50, an uninsured mow and blow guy charges 30 an hour, and the large guys here charge 50.00 an hour. I am fully insured and all that, have my spray license, but no contractors license(not doing large jobs). I had to let go my part timer and I am picking up the work load with one guy that is part to full time depending on the work load. I am getting exhausted working 10-14 hour days, sometimes 7 days a week. 90% of my money has come from maintenance, I spend 3-3.5 days a week mowing. I have been just scraping by to pay my monthly expenses, but I have been having to pay some bills with credit cards. They are NOT going down. I have amassed 16,000 dollars in credit card/line of credit bills to my business side. I have absolutely zero money saved for when I owe money on my taxes this year. I am still paying off my gas bills from a year ago's winter, 3k dollars in 4 months, my income hit the ground, and gas went through the roof. My draw is just over 2500$ a month and a lot of that goes to cover expenses that are partial business related (rent at my house(1275$), electricity, cell phone,etc..)I just do not know where to go but stay where I am. Can someone give me some advice?
 
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Kickin Your Grass

LawnSite Senior Member
Location
North Texas
Ok, so I bought this business two years ago. I have stayed at about the same size, until this winter. I lost 20% of my clients, which is 10. Problem is, I have been losing my larger, more profitable clients over the last year as well. In turn, I have been acquiring smaller accounts. Also, all small landscape jobs (read: under 500$), have pretty much disappeared into thin air. I have lost 3 out of the 4 commercial accounts I had. When I lose work, its because someone moved, or they found a guy for cheaper, but no one ever lets me go because of the quality of my work. Most of my clientele/demographic is over 50, retired, and owns their own home.
I have a large business loan(2k a month), credit cards up the ying yang and a baby on the way. I get most of my business from word of mouth, people seeing my work, and my double-size phone book ad. My work is among the best in the county, my yards are almost all green, weed free, and trimmed. I charge a rate that is in the middle for my area, 37.50, an uninsured mow and blow guy charges 30 an hour, and the large guys here charge 50.00 an hour. I am fully insured and all that, have my spray license, but no contractors license(not doing large jobs). I had to let go my part timer and I am picking up the work load with one guy that is part to full time depending on the work load. I am getting exhausted working 10-14 hour days, sometimes 7 days a week. 90% of my money has come from maintenance, I spend 3-3.5 days a week mowing. I have been just scraping by to pay my monthly expenses, but I have been having to pay some bills with credit cards. They are NOT going down. I have amassed 16,000 dollars in credit card/line of credit bills to my business side. I have absolutely zero money saved for when I owe money on my taxes this year. I am still paying off my gas bills from a year ago's winter, 3k dollars in 4 months, my income hit the ground, and gas went through the roof. My draw is just over 2500$ a month and a lot of that goes to cover expenses that are partial business related (rent at my house(1275$), electricity, cell phone,etc..)I just do not know where to go but stay where I am. Can someone give me some advice?

One major thing that I can see that you did wrong is by getting into debt. I have been there and done that and don't plan on going back! Don't buy it unless you have available cash to spend. I suggest you get into Dave Ramsey's Financial Peace University through a local organization in your community or online.

I think all business will go through some hard times. Everyone is going to lose customers at some point in time. Maybe your percentage is high right now and I would suggest getting to the heart of the problem. Are they leaving because someone comes by and offers them a lower price? Are they leaving because your quality lacks? Are they leaving because your not on time and don't do what your say your going to do? If you are not 100% sure why they are leaving, I would suggest sending the customers that have canceled a letter out. A letter saying that your sorry that they have canceled services and that you would like to know what went wrong so you can figure out how to better serve your customers in the future. Make it easy and send an addressed envelop with a stamp on it so they can return it at no cost to them.
 

jc1

LawnSite Silver Member
I am not familar with your season as far as cuts per year etc. Are you saying that you cut 50 lawns a week in 3.5 days alone or with a helper? I think that you could cut the phone book ad as soon as possible to cut that expense. 50 accounts should be pretty easy for a one man show to take care of alone. Since its 40 now it should be even easier. I would cut your last employee so that you can save that payroll and associated costs. (WC fed, state taxes) I think focusing on all the small, less then $500 jobs probably has very little profit margin if you were using 2 guys with you to complete those tasks. Just assuming that you could service 40 lawns weekly at 37.50 each would barely cover your draw and loan payments if you worked alone. Having one or two employees would bring your expenses higher then your gross income and that pretty much puts you were you cant pay down the dept. Does your large add generate so many calls that you spend alot of time tryng to meet customers and estimate these $500 dollar jobs that have little profit?
 

QualityLawnCare4u

LawnSite Gold Member
Mowing Eureka, I could have wrote this post word for word awhile back about me, actually I thought you had copied my old post:laugh: When I have some extra time today and can write a long reply will shoot you a PM.
 

LB1234

LawnSite Gold Member
Location
Central Jersey
what are you doing (advertising/marketing) to get the lost clients/new clients back? I wouldn't simply rely on the yellowpages ad to drum up business. You need to come up with a plan to right the ship. Start looking into every possible area to save costs...insurance (liability, workers comp, commercial auto), if possible reduce your payroll costs (lower salary, switch payroll companies), start selling unused or little used equipment and rent if you need it down the road. If fuel is killing you make sure everything is running at top efficiency....clean air filters, drive under 60mph, etc. If I take my truck down to 60 instead of 65-70 then I can get between another 1 to 1.5 mpg. May not seem like a lot but it will add up.

good luck:waving:
 

SeedPro

LawnSite Bronze Member
Location
Michigan
Some good advice already in this thread. But cut expenses, do the lawns yourself with no helper, and advertise with some fliers to regain the accounts you could not or did not retain. You will always lose some accounts and need to always be concerned about adding more to compensate and or grow.
 

JDUtah

LawnSite Silver Member
Location
UT
Trying to find out what to change is a great step. In my opinion, when we feel like we are burning out it isn't because we are out of energy, it is because we don't know where to spend our energy and thus is just vanishes. As soon as we develope a plan of attack our energy returns. Instantly.

Having said that you need to develope a plan. Only you know your exact situation but I would suggest, like Kickin said, get on Dave Ramsey's program. It takes commitment and discipline but it is worth it in the end.

I don't know how vulnerable you want to get publically, but a detailed list of expenses and income would help you get better cashflow advice. But remember you get what you pay for.

Maybe the answer is working 2 more hours a day for a year, but at the end of the year you have no debt. Maybe it is selling all of your extra equipment and running on just what you need to. (like the equipe you need for the $500 jobs). Maybe it is letting go of your employee's. Maybe it is promoting them so you can get a job... Maybe... Maybe...

What you do NOT need to do is get into more debt. Do NOT use that credit card.

DO buy Dave Ramsay's book "The Total Money Makeover" and read it twice. Then start on baby step 1. If I were you I would buy it and start reading it today. Go to your local bookstore, they will have it. It may guide you to a path that empowers you. You can do it! You just have to do what you are doing here in this thread... figure out how. Good job!
 
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OP
M

MowinginEureka

LawnSite Member
Location
Eureka, CA
It is not possible here this time of the year for me to run my business without an employee. We receive 36 inches of rain here annually, and most winter months we only get 2 days a week that its not raining. So, in order to get the lawns done in time, I have to have a helper. In the Spring to Fall, I work about 70hrs a week myself plus my guy will probably be full time. I cant do that anymore, that's not including the paperwork I have to do at home and phone calls etc... I have switched insurance companies last month, saved myself 1500 a year total. I do most of my own maintenance on my equipment, my truck gets about 8.6-9.3 mpg pulling my trailer. The speed limit from my house to most of my clients is a 50 zone, in CA you legally cant go over 55 with a trailer anyhow. Most of the debt was from starting the business. We had to go from an apt to a house. That was almost 3k in deposits. I had to buy a bench, grinder, air compressor, tools, random little things at sears , that was another 1000.00 to start. Then immediately after I bought my business that September, the economy just sank, especially with Winter. We were putting expenses on the line of credit, like rent, gas, etc...I bought my equipment only when pieces broke down to the point where it was not economical to fix them, and I did actually pay cash for my new lawn equipment. The phone book ad generates for me about 25-30 phone calls a year here, most of which I bid, I have about a 50% close ratio. When my clients cancel service, 99% of the time, they tell me in person. The only thing i ever hear is they have sold the house and moving, or they cant afford yard service anymore. My average cut is about 35 a week. I have about 10 larger accounts that generate 50 a cut, and one large account that generates 150 a cut. I do a let of trimming, but this time of the year, that doesn't generate much. I like your ideas, keep them coming if you can.

I like the idea of sending out anonymous little letters, self addressed, postage paid letters asking why they canceled service.
The fliers are a good idea, but not sure they would work here very well.
 
OP
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MowinginEureka

LawnSite Member
Location
Eureka, CA
I have to get to work here, but I will type another short sentence or two. I saw the post about that book, I have seen a lot of books, but I am always afraid to buy one and waste money. I hear a lot of those are crocks. I will go give it a look over soon. Its supposed to be pouring rain here for the next two days at least. That will give me some time ;)
 
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