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Do what you do best, or diversify

Discussion in 'Business Operations' started by SprinklerGuy, Nov 19, 2001.

  1. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    Question: Is it best to do more of what you already do now or add on services?

    should a person add to his market area or try to build his original area bigger?

    Should a guy also try to get more money from his existing client base before adding clients?

    Some of these are easy, but I would LOVE to hear all the opinions.

    Since I do not do lawn maintenance as of yet, I am considering that, but am wondering if it is worth it. Learning curve etc., as well as more overhead than I am used to as far as equipment goes
  2. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    First I cut down on the geographic area I serve then 5 years ago I cut down on what services we perform.

    I'm trying to get the most out of a smaller area (which is becoming more populated). I think if the growth potential is there for what you are doing and where you are doing it and who you are doing it with you gotta become the monster competitor #1 and selectively add service(s) if you can or want #2.

    When you get into expanding geographically from one location drive time can eat a lot of production time. One possible way is to ive a trusted employee a vehicle and plenty of stock or a more local place to buy it. Then computer and software that you can network with where he can pull off a daily route sheet and upload at the end of the day. If he's buying or pulling from your stock make sure what he takes or buys equals what he is selling.

    I'm finding it extremely hard to market lawn fert programs to sprinkler customers because they don't read and they don't listen so after a number of years it's still "I didn't know you did that".

    I think a simple written contract/service plan would help get more $ out of the irrigation accounts but I'm not expecting much there. When there has been a satisfactory history of system perfromance and service if and when they need it, a package loses some edge.
  3. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    We have spoken a couple of other times about the package idea......sounds good and looks good on paper but it might be a nightmare. I had 45 clients on one last year and it became quite the headache to keep up with. Even with computer/software and a smart person (me) taking care of it.

    The only thing I have yet to try is mailing postcards 4 times per year with friendly reminders of who we are and what we do.

    I would love to just do repairs, this way I could just organize 4 o5 5 technicians day and handle the office. If I wanted I could even go do a couple repairs once in awhile. I like to do that.

    Problem is when I have to be involved with every job, bidding, estimating, supervising, finishing job and collecting money. I hardly do that anymore but that is what has controlled my lack of growth in that department, I simply do not want to see every friggin house..
  4. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Messages: 1,276

    You've asked some tough questions. Questions that every business asks themselves at one point or another.

    For your Q's re: diversification, I don't know that there's a single right answer for any biz. Each year we've diversified, but we've moved slower on diversification than some of our competitors, wanting to have a good knowledge base so we don't subject our customers to something they might know better than us. I think market size needs to be looked at when making that call. In a big metro area like Chicago, Detroit, Minneapolis, a company can likely do well offering a limited service range, so long as they are good at what they do (i.e. worth having to call you for your thing, somebody else for other stuff).

    I would love to do about 90% hardscapes, and the other 10% plantings, with no sod, no seeding. Unfortunately, I can't get away with that in this area, because the market is too small for specialized companies like that. Sure, every company has an emphasis, but nobody does ONLY hardscapes. This year was odd, we were at about 55% hardscapes, 45% softscapes, and that 45% was mostly seeding (yech!!).

    I think you next question was about market share vs. market size. For that, I'd think it'd just be easier to spread yourself thicker close to home. You'd know the turf, people would see your trucks buzzing around more often, you'd be brand-building in that area. Spreading out geographically I'd think it'd be too hard to snare any sizeable market share without a huge pump shooting cash into your marketing all year.

    As for lawn maint, yeah, more overhead. As for learning curve, I'd think the only curve would be getting accustomed to high volume, low margin sales. That seems to be what that is all about. The technical expertise we've all been taught mowing our own lawns as kids, other than specifics of mowing with a certain machine.

    In my area only one of the big co's even does lawn maintenance. Any that did sold off that part of the biz...I'm guessing it was too hard running a high margin, low vol biz next to a low margin, high vol biz. Plus, every 9 yr old kid in town is a competitor. I get junk on my mailbox or door all the time from 'billy' down the street, as well as lawn maint start-ups offering 'deals.' In technical terms, that biz has low barriers to entry. And the low margins I mentioned.

    I'd try something with higher barriers to entry, like hardscapes or softscapes. Sure, you haven't seen overhead until you started getting these toys, but not everyone can do what we do, and it takes awhile to learn it well. Softscapes, too.

    Ok, I've gone on long enough...
  5. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    Nice! Good points stonehenge. I prefer to leave the creative type businesses to guys like you. I like the cut and dry, it works it doesn't work, type of work. This way I can manage the guys and keep em busy. I don't want to go to all jobs and lend a hand so to speak. That's just me though.

    Actually, I have a new sub that likes to do that and he's been selling lights / and softscapes and using my guys. I just want to reach my nut on a daily basis and I tell him as long as I get what I need labor wise per day for my guys he can do what he wants.

    Advantage to me is that I don't have to go to the jobs at all and I make my nut. Advantage to him is that he uses my name reckognition to acquire customers, my phone support, my supply house contacts, and he just gets to be creative and write his own ticket. My labor is basically just a line item on his bid. If he screws up the bid, I still make the money.. Now to figure out how to get him more customers....................
  6. Island Lawn

    Island Lawn LawnSite Senior Member
    Messages: 632

    My perspective =

    I have a VERY SMALL market size. But, I don’t have “market envy”. It’s not the size of the wave that counts; it’s the motion of the ocean!

    I try to get the most out of... or rather, give my best to... each and every customer! I want to make myself irreplaceable to my small, very select group of clients, and charge them accordingly!

    If I control all aspects of landscape maintenance, then I know what's going on. I won’t have to wonder if TGCL fertilized yet, or when will the “Sprinkler Guy” do something with that area that is not being watered properly...

    I am in the process of selectively adding services. I am specialized to the extent that I deal w/ plants. The mowing, pruning, fertilizing, pest control, ect.... (Hardscapes remain a future consideration). As some of you may know, I am carefully evaluating the prospect of (i.e., experimenting with) adding irrigation services to my list!

    I stay close to home! And, as Stonehenge said, I know the turf (market), and people see me buzzing around. I do have a couple of customers that are 15-20 minutes away...but I charge them for dragging me off the island! I concentrate my efforts and K.I.S.S.

    The lawn maintenance business has low barriers to entry. Every year, lots of people start up, and lots of people fail. On the other hand, fertilization, weed and bug controls have more barriers such as licensing and certification.

    My $.02
    Thank you for asking!!!
    Questions like these help me refine my focus!

  7. paul

    paul Lawnsite Addict
    Messages: 1,625

    I have a question for you. What kind of $ volume are you looking for?
  8. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778


    dollar volume for what? the add ons? Or overall?
  9. paul

    paul Lawnsite Addict
    Messages: 1,625

    With any expansion our company looks for a target volume, what it takes to support men, machines, trucks, ect.... plus our profit we look for out of these resources. Larger areas that you cover means more chances to develop the customers that meet your needs. Certain areas home size, disposible income, keeping up with the Jones are going to be more profitable than lower income, falling home values, or just a bad side of town. Larger service areas might also mean you need more offices or shops, managers or formen. We have some of the largest compaines in the country, most have more than one shop, this allows them to cover larger areas with less travel time.
  10. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    When I originally posted this thread I was trying to decide if I wanted to add on some services. I have decided to just do more sprinkler repairs AND raise my prices.

    I just contacted the top sprinkler repair companies in town and found myself to be in the lower tier price wise. I had raised my prices 18 months ago to get higher into the tier, but alas, I have sunk again. 50% are higher than me 25 % are about the same and the other 25 % are way lower.

    So, to answer your question, I am looking to do approximately 120-150k more per year to add on one repairman. This will also lead to more installation work which is currently running about the same amount per repairman in leads.

    I am going to do this by remaining in my same area but agressively marketing my business again and also marketing and keeping in contact with existing customers. I will also contact more LCO's which have always been a great way to get work.

    One of the good things that will come from raising prices is that if my marketing does not work as well as I wouldlike, the price increases will help as I am currently running numbers using the old prices and the new ones will br approximately 20% higher.

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