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Cheap prices will get you no where.

Discussion in 'Lawn Mowing' started by AB Lawn Care, Feb 8, 2000.

  1. GeoffDiamond

    GeoffDiamond LawnSite Bronze Member
    from Maine
    Messages: 1,651

    I am not a landscaper, I am a utility contractor who plows snow, thats how i found the forum. Anyways i notice a landscaper in maine that had an ad, that stated free spring clean up with mowing contract, no written contracts required. Anyways he seams a lot like the guy AB wrote about. In 4 years he went from one used truck, to 3 brand new ones, 4 walkers, and all the other stuff you guys need. He also lives on a postage stamp lot, and the town ordered him to move his business. Last year he bid low on plowing, on a major condo complex and after two storms found you needed more than a truck to plow them. His bid 10k for the year, on two 10 a lots. I just wonder how long he is going to last. He has to have all the fancy lettering on his trucks, and all the fancy lights, and uniforms which are good but his are way to much $$. Anyways he doesn't believe in written contracts is what he told me, not even with big projects. He is also very cheap, says to make money in lawns you do it with low cost and big volume, is that correct? I don't think it is but he says he has a Business Admin degree. I just wonder how long he will last.<p>Best of luck to you guys. I read you post sometimes and have found them very interesting.<p>sorry to invade the lawncare forum,<p>Geoff<br>
  2. jrblawncare

    jrblawncare LawnSite Senior Member
    Messages: 445

    Geoff,Please don't feel like you have invaded this forum with your post sometimes another set of eyes looking in is a good thing to have even if your not doing lawns,thanks for the input!!<p>----------<br>John <br>
  3. Nilsson Associates

    Nilsson Associates LawnSite Member
    Messages: 243

    To Jay Raley,<br>Tough question, and not sure if anybody really knows where the economy is going but like you said ... how long can it last ... and if it doesn't last ... how to protect yourself from the fallout? Here are some of my thoughts ... nothing to really support them .. other than just a gut feel. I guess they fall under the category of predictions or advice.<p>1. Save more of your money, and reduce your debt to stay liquid. If the economy goes down, you'll be able to buy equipment dirt cheap (if) you have the cash. Savings will help you survive a downturn and allow you to take advantage of the &quot;bargains&quot; when cash gets tight.<p>2. If I were still in the business at this time, I'd balance my sales between 80% grounds maintenance, 20% landscape installs,<br>keep the sales base about 80% residential, and 20% commercial customers. If the economy goes down, commercial are the first to cut their maintenance budgets and look for cheaper providers.<p>3. Current pricing rates? Nobody should be<br>charging less than $35 per hour, many are at $40 to $45 per hour for the maintenance work, but the trick is to know what an hour's worth of work is. Lowballers don't last more than a year or two after they've worn out their equipment, not having gotten paid to replace it. A legitimate company has per hour costs of around $20 to $23 per hour, so how can they sell &quot;time&quot; for $20 as stated above? Not paying taxes, under the table wages, no rent payments, no insurance,<br>no workers comp, not hard to make money if you don't have any expense. <p><br>4. If you're worried about the economy, try to start replacing some of your customers now with others from very high income levels who will still be able to afford your services later on. <p>5. If the economy goes down, expect lots of competition from those who are now primarily<br>landscape install people who will &quot;rush&quot; back to the maintenance end of the business if and when housing starts decline dramatically. That happened during the last three recessions and prices really took a hit. It's hard to protect yourself against it. But one way is to start diversifying into another line (as an add on) house painting, handyman services, chimney cleaning, any services that will again become &quot;popular&quot; if and when folks have to live on less money. <p>6. My own forecast for the next five years?<br>I think the internet will provide stable or lower prices for just about any product now sold at the &quot;retail store level&quot;. Who needs a &quot;physical store presence&quot; if the item can be ordered electronically? Home delivery of just about anything will keep rising, middlemen in reail stores will continue a decline, direct factory to you sales will go way up, continue. Distributors will go way down, end product costs will remain stable, there will be &quot;room&quot; for deep discounts on many products, the shortage of labor will help stabilize the price you can get for services ... so green industry folks should make out well ... more products will be manufactured in foreign countries, many more displaced workers will enter the landscape business ... <p>My crystal ball is becoming &quot;cloudy&quot; so will stop there.<p>Phil Nilsson<p><p>
  4. mountain man

    mountain man LawnSite Member
    Messages: 141

    I think we have huge potential in the maintenance side of the business for 20-25 more years. <p>The era from 1945-1964 was the greatest boom of newborns in history. Commonly referred to as the &quot;Baby Boom&quot; generation. The oldest of this generation is now 55. This generation also has experienced the greatest rise in wealth and standard of living due to the market, technology, etc. <p>Many of these individuals now want to reap the benefits of their hard work and would rather pay someone than have to worry about mowing the lawn or blowing leaves on Saturday when they could have a 8:00 tee time.<p>I regularly have 45-60 year olds mention when I give a quote that they have been there done that in the yard and they don't want to have to do it anymore. <p>Also with this generation, I believe health will become an issue more and more in the future. Not only will individuals hire us because of surplus wealth, but because they physically cannot do the work they used to do.<p>On a macro economic level we will obviously feel the effects of downturns in the economy from time to time. This will also vary throughout different parts of the country. I think the biggest areas that will be affected will be installations (landscape, new homes, irrigation) and commercial.<p>I think a smart business man should factor this in and budget monies for short term downturns. I would suggest adding an additional line item on the books (retained earnings, rainy day fund, etc).<p>I think a goal should probably be a fund that could support the company if it were to see a 10-20% decrease in revenues. eg. A company doing $100,000 a year in revenues should probably work to keep $10,000 to $20,000 in reserves for hard times. Remember this is not the account you use to save for equipment.<p>Obviously in downturns, you can also trim costs and cut new purchases to get through the slow periods. I feel the key is to prepare for short term swings while times are good because long term we have great potential in this business.<p>Since this has become comments on economics etc, I will start a new discussion thread for additional thoughts and comments.

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