Contracts and Non-Contracts

Discussion in 'Starting a Lawn Care Business' started by mattxb, Sep 5, 2008.

  1. mattxb

    mattxb LawnSite Member
    Messages: 39

    Hey guys,

    As you may know, Im new around here and new to the biz.

    I have my biz set up now.

    I'm strictly a Part Timer, and plan to stay that way.

    Right now, Im only getting people willing to do Bi-Weekly non-contracted services.

    When I push them to contract with me, listing out how many services they will get and when they will be, and even after showing them how it will save them money each month by spreading the amounts out over 12 months they still dont want anything to do with it and in fact I believe it has completely run one of my highest paying customers off now which sucks.

    I want Contracted work because its more stable, but I have yet to get anyone to agree with it, and I am a decent salesman if I must say so.

    So I'm wandering if you guys can help shed some light on this for me.

    Is this typical for a start up company to experience?

    Could it be because its so late in the season that these types of clients (non-contractural) are all thats left out in the market right now?

    How many contracts and non-contract clients do you have?
  2. woodie08

    woodie08 LawnSite Member
    Messages: 53

    I tend to get 30 days to cancel service contracts. as longs as you do a good job thats job security
  3. mattxb

    mattxb LawnSite Member
    Messages: 39

    So your saying you operate solely without signed contracts with clients yet you still tend to get one months notice to cancelation of service from the client?
  4. hackitdown

    hackitdown LawnSite Silver Member
    Messages: 2,653

    My maintenance customers are not on contract. Some cancel, some come back, some don't.

    Most LCO's will tell you how they have all their customers on "contract", but then they admit that the customer can cancel at any time, on short notice. So in my opinion, these contracts have no more value than signed proposals.

    As a former salesman myself, I always find a way to take the customer's money. Demanding a contract from a customer that tells you that they will not sign a contract will result in them keeping their money.

    Maybe if you provided a business incentive for the customer, they would have a good reason to sign. Talk to a customer and ask them what it would take.
  5. shade tree landscaping

    shade tree landscaping LawnSite Senior Member
    Messages: 915

    I have contracts, with credit card numbers, so I know that I am getting my money. In my contract I have a clause that either party may cancel at any time for any reason with 2 week written notice. I have not had any one cancel on me yet, hope I didnt just jinx myself! I also have an auto renew clause in it stating that every year the contract automatically renews.

    Alot of customers don't like the word contract, so I have learned to word it as a "seasonal agreemnt" and this puts most people to ease. I have learned that people that don't wanna sign contracts, usually are not good customers!
  6. Manicured

    Manicured LawnSite Member
    Messages: 18


    I have been in business for over 10 years and I have no residential contracts. I have never seeked them nor will I except them. I do not understand why you would sell your services at a lower cost with your expenses spread over an extended amount of time. I bill my customers for work completed during the previous month.

    Four years ago I got a new client primarily just because they no longer wanted to be "locked into" a monthly contract. It was in the "country club" area of the city. That account has led to many others.

    The reason why I never liked contracts is it often makes the customer feel trapped (reguardless of an escape clause). I always like to make the client feel like they are in control. If I always do good work then I will always have job security. Inaddition, what happens if your contract starts in September and you aerate, seed, fertilize and lime that property. Then in January your customer gets laid off, fired, leaves his wife or suddenly moves to avoid forclosure? Don't put your business at risk.

    Many of the people who get out of lawncare say that it is too seasonal. To make it in lawn care a person has to work as hard as possible for 10 months (here in NC) knowing all the while that he will have bills for 12 months. Please don't discount your work forcing your customers to pay you less in an effort to assist you in managing your money.

    Lastly, if you still want to get yearly contracts you might need to ask what kind of image am I and/or my business projecting? "I'm strictly a part timer, and plan to stay that way." Most of the yearly contract customers that you seek would be far more likely to sign up with an established full time business. Please don't take this wrong because I don't know what you drive, your equipment, the quality of your work, if you wear a uniform, if you have a spray license, pay state and federal taxes, or If you have more than 5 teeth. However, keep in mind that many of your potential customers might reguard a part timer as a short timer.

    Please also keep in mind that as a part timer that you will have a difficult time attracting high paying customers. The bi-weekly customers don't put their lawns in high priority or simply can't afford anything else. The bi-weekly types (and don't get me wrong, I've still got them to this day) just want something green, not mud (otherwise their dog will track it into their house) and mowed as short as a PGA golf green. Often times a business has to change it's image in order to change it's clients.

    Good luck Mattxb! I hope that this helped a little.
  7. Roger

    Roger LawnSite Fanatic
    Messages: 5,943

    What do you mean by "more stable?" People have justified needing a contract "to protect themselves." Nobody has ever answered the question "protection from what?" Some have said in other recent threads on this topic that they have a two week cancellation notice, so the customer doesn't feel like they are locked into anything. As my question in another thread, if neither party is bound by anything, why bother with a contract?

    Maybe we are not understanding what you mean by contracted vs. non-contracted work. All work is contracted by implication of agreeing to do some scope of work for some amount of payment. Whether the agreement is on paper, or verbal, it still is a form of contract.

    I agree with the last post. In eleven seasons of this work, I have never had a formal contract (as in a signed document) with any residential customer. They would laugh if I showed up at the door with one. My work is primarily grass mowing, for relatively small amounts of money. The scope of work is pretty easily defined, and rarely are any costs of materials involved. In other words, the service is a very simple one, without ambiguity and payment schemes are very simple as well. For commercial accounts, and work scopes that are much more detailed, then the matter is different. If somebody is not going to be a good payer, whether they have a piece of paper in hand, or not, they will not be a good payer. A simple piece of paper isn't going to change anything.
  8. luckydooley

    luckydooley LawnSite Senior Member
    Messages: 329

    To Manicured and Roger, you both seem well established. I have a couple of questions, if you would not mind sharing. I am relativley new. I started out with verbal agrrements, but have since converted to service agrements. It is non-binding, either party can cancel at any time, but it details what I will do and what they will pay. I bill in arrears monthly , and it makes me feel better to have somthing in writing should I need to try to collect. 90% of people have been fine with this, those that are not pay me weekly at time of service. Are you guys strictly verbal, nothing in writing? Do you bill in arrears monthly, at time of service, or in advance?

    I have only had trouble with a small amount of slow-no payers. I did not think the agreement would go over well, but I have not had trouble getting most people to sign-it, so I think next year I will ask for a credit card on file or pay a month in advance. I dont think this will go over well, but with the luck I had with agreements, it just might.
  9. Dave_005

    Dave_005 LawnSite Senior Member
    Messages: 359

    I have 38 residential accounts all without contracts ! and they are all very loyal have had most for 3 years now... with residential customers they tend to shop around until they find an LCO they Like and does good work then they tend to be VERY Loyal to that LCO. if you offered my accounts a lower price i would bet you wouldnt get more than 1 or 2 of them. if you want Job Security then Do a GOOD JOB for the customer and give them a FAIR Price and they will be very loyal to you... THATS where job Security comes from...
  10. Manicured

    Manicured LawnSite Member
    Messages: 18


    Every business evolves and takes on its own idenity as it grows. My business history might also be unique when compared to yours. In the end I hope to answer your questions.

    I was a police officer and wanted (needed) to suppliment my income in 1990 (I guess I'm showing my age a little). While patroling the neighborhoods I picked out yards that I thought might be potential customers. Then one day I knocked on their doors and asked if I could mow their yards. Three of them said yes (I'm sure being a police officer helped). So I went to a store and purchased a 21 inch Honda mower. I didn't even have a truck then so I pushed my mower approximately 3/4 a mile as I made my rounds. My business continued to grow by word of mouth to the point that by 1997 I was making the same amount of money that I was making as a police officer. In May of 1998 with a truck, trailer, walker ghs and a gravely walkbehind (debt free)I resigned from the police dept. and went into lawncare full time. I'm sharing this with you because its important that companies no matter how big or successful they become never lose sight of their humble roots.

    Many business owners often forget who is serving who when you listen or watch how they treat their clients. Many lawncare companies look at potential customers as "cash cows" or rate their customers by their compensation. Often companies look at their customers as locations from which they take. Never loose sight of the fact that the customer is intrusting you with their largest personal investment and you are about the business of serving not deserving.

    With this in mind I have never felt the need for a contract because the success of a relationship between a business and it's client comes down to trust and respect to and from both parties. When I get a new customer I give them the billing options from which they choose. They can pay me at the conclusion of each visit to their property (an option most often taken by senior citizens-"The Lord never promises me tomorrow so I will pay you each time") or I can send them a monthly bill. Contracts never seem to come up or need to be required. However, if I am going to do a landscape job for a client that will cost over $1,000 I will often write up a simple one page letter stating the tasks to be done and the quoted price. As stated earlier by a previous entry, commercial accounts are different. You will need to have a contract agreement. This is important for both parties. Not for security purposes but for documentation purposes. Contracts can be broken so don't look at contracts as a rock of stability. Contracts are more often than not just a statement of expectations.

    I guess what I've been trying to share is that contracts are not the answer to a businesses financial stability and/or growth and contracts should not be a requirement for a potential customer. Grow your your business by meeting the needs of others. Never worry about your next customer- just focus on exceeding the expectations of the ones you already have. (Happy customers are talkative to their peers.) Take the small yards as well as the big ones. "Small hinges open big doors". Most businesses that spend their energy on getting new customers in the front door are loosing the same amount out the back door. Furthermore, a part-time business owner should never expect (or force) a customer to commit full time when the business owner himself refuses to become a full-time business.

    I hope that some of this made since Luckydooley.

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