How to bid commercial accounts for real

Discussion in 'Business Operations' started by PROCUT1, Feb 22, 2011.

  1. supercuts

    supercuts LawnSite Silver Member
    Messages: 2,814

    great post, i love all your posts/threads. i dont know why so many break your stones, your giving some of the most honest and straight advice on here. you made me rethink growing and downsized. my net is way up over last year and gross income is only slightly down. not only that, i stopped doing all the back breaking work and took a seat back on a mower. my body is much happier and I can lift my 5 year old again without my back going out.


    Ditto the "Procut for pres"
  2. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,725

    You really have quite the cult following what you said was nothing new to me it was common sense. The guys that drool over your posts are clearly missing some of their business fundamentals if they feel every thing you say taught them some top secret formula for success you simply state what they should have already known. The area I have problems with is getting the large condos to ask for a bid in the first place after 9 years we still get very few calls like that.

    A few years back I got nice opportunity it was for a condo of about 240 units we did the walk through. And listened to what the guy wanted basically he was your typical collage grad lib who thought he knew how to get info in a more easily understandable format wasn't true he had never done this and had no clue what was involved.

    So we took our packet home to study it demanded edging every week (latter told us different he didn't know the difference) bagging the entire place all 5 acres of turf you get the idea. So I was to do a bid on fert as part of it and sent my partner to measure the lawn we were the only ones to do it says the people that lived there. And something interesting came out it was more then 7 acres of turf and why did I know that cause I don't care what the home owner or property owner says to me they are untruthful until proven other wise. That would of been a fun to learn I'm 10 bags of fert short every time we do and application after I miss quoted the job by over 2000 dollars a year.

    But the real reason I prefer to measure all large jobs no matter if they want fertilizer or not is it grounds you in reality. It opens your eyes to the real size of the job and that is essential for bidding on anything out of your comfort zone. So on this job with fall and and spring clean ups and pruning and fert and mowing how did I do? Well I bid 47,000 dollars on the place the guy told me he wasn't going to use us which was a disappointment. He said they had 3 bids in the ball park mine and one for 48,000 and one for 49,500 they went with the highest of those 3. There was 2 guys that bid way low 20,000-30,000 they were thrown out as not having a clue what they were doing. And they had 2 high bids 70,000 -90,000 so this place was all over the board.

    The reason I think I lost was not price it was they wanted a Thursday-Friday cut but insisted no weekends I could not promise that if I got bumped by rain so I wanted Tuesday. They wanted no fewer then 3 men I had no issues with that if I did Tuesday I would of hit the place with 2 two man crews. The thing I think hurt me the most was against my better instincts I didn't drive there in a dump truck but instead a smaller short bed 1500. I got the impression he assumed that that meant we didn't have the right equipment silly perhaps but this year I drive in a ram 4500 and the jaws drop.

    Now I had another large one last year the people who called were trying to orchestrate a coup so they wanted the prices for a condo meeting. Well ran into a problem kind of hard to price a place when your told you can drive through but you can't walk around. This place had some very old very large shrubs and were talking days worth of trimming with a 3 man crew. So while I was able to price the lawn and the clean ups I left that trimming part blank and man did that guy flip. You had a walk through he screamed yes sir I did all of 45 mins I needed 3 more hours and you wouldn't let me have it. So best I can tell you is this is my price per hour.

    Now I think the coup failed but it hurt to be willing to walk away from a account that was worth 30,000 a year but I did. Because it doesn't matter if you have the account the question is are you making any money on it and with out a way of verifying I was I could not commit to something that big.

    Now Procut you seem to dislike the hourly rate formula and my thinking is cause most do not understand it so they just adopted what every one else picked. I do charge 60 and hour and never less then 50 and the reason cause my hourly expenses are nearly 40 an hour. My guy that makes 17.25 and hour add in time and half and your at 25 add in the gov F U charges and hes 30 an hour at time and half. Then there's all those little expenses you talked about rent trucks you name it and that adds up to 10 an hour. So when I saw your 1000 hour example I knew my bid wasn't going to be 27000 no it was going to be around 55,000 and if I got the job great but if not I am fine with not giving up a 1000 hours a year for 0 or worse yet a loss.

    Also read your post how to fail on banks that was eye opening never have your credit line with the bank you have your checking account from that actually was great advice even if you gave it indirectly. And not over leveraging your self was also some good advice. So do you plan to have a more advanced lesson post so I too can one day tell you best post I ever read.
  3. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891


    I hope you dont take my posts the wrong way. I just like to write about the lightbulbs that went off in my head over the years. All these things that to some are common sense, many people will learn the hard way, as I did. Reading posts every day on here its so evident why the lawn business has "gone downhill"

    It starts with the "what do I charge?"
    They throw in a bid not having a clue where that number came from.
    Then theyre on here whining about lowballers a couple years later.

    That was me years ago. Before lawnsite.

    Like I wrote about in my how to fail threads. This business looks sooo easy in the beginning. It seems fail-proof. You mow a lawn, pay your expenses, which are peanuts, and have way more cash left over than that 15 an hour you make at your day job. Just keep adding lawns, start another crew, keep expanding, and life will be good.
    Thats what I thought.

    Its so easy to make little mistakes along the way that go unnoticed. I made every single one of them.

    I wanted the condo complexes like the big guys had.
    I wanted the big trucks and enclosed trailers.

    I ended up with all of that.

    Every couple of years you had a guy that was just growing like crazy. Had a fleet of trucks, got all the condo complex work...he was bigtime.

    Then a couple years later, someone else. And the first guy is still there, but doesnt seem to have as many trucks out there anymore.

    A couple years later....You see a couple of used trucks with his name on them and they look like anyone else out there. Then you dont see him at all anymore.

    I cant count on 2 hands the number of guys that followed that path. One year they are the king of the industry, and a few years later theyre driving an oil truck, or working for another contractor.

    Of all the "big boys" I associated and competed with. Only a couple are still self employed, and theyre not nearly the size they were. Theyre back to sitting on mowers.
    Ive been one stubborn bastard. If I followed gods should have been out of business many times over the years. I just wont give up.

    As far as bidding. It doesnt matter the system. I make fun of the "dollar a minute" because most dont have a clue where that comes from. They charge a dollar a minute because thats what they were told on lawnsite.

    If you calculated your costs, and that formula shows that $60 an hour is your number, there is nothing wrong with that whatsoever. My point to others is, dont just go by what you hear.

    When I was in the business, it cost me over 10,000 a month just to cover overhead.
    The guy doing the same work as me, from his home garage, with 2 helpers, had a lot more flexibility in his pricing than I did.

    He maybe could profit 25 off that $30 lawn.
    I could have lost money cutting a lawn for $30.
    Same lawn. Huge difference.

    When I did the time tracking, after I realized the weak points in my business. It opened my eyes to my competitors too. When I knew what they were charging for a job, I could take 2 minutes and calculate that they were losing their butts on it.

    I have friends who are property managers and now that Im not in the busines anymore and not even in the same state, they consult with me when they take bids. I help them choose the contractors.

    When they send me the bids....Every single time....The bid spread is HUGE....

    A property that I would have priced at $35,000 for the year will have bids from $9,000 to 125,000.

    How in the hell can one property, that everyone bid on the same specs, that everyone is running similar equipment, and going to have similar expenses, have a spread of over 100,000?

    How many of those guys have a real system of bidding or how many drive in circles around the place a bunch of times and pull a number out of their behinds?

    My way is not the only way. Its the way that I found worked. Any system that takes all of that information into account will work too.
  4. SoCalLandscapeMgmt

    SoCalLandscapeMgmt LawnSite Silver Member
    Messages: 2,155

    The other biggie is knowing when to say no thank you and walk away. Earlier this year we bid a 65 acre shopping mall. We met with the management, spent an entire day walking every square inch of the property, measured everything and then went back and plugged it all into our estimating spreadsheet. We submitted a price that we felt was fair and would allow is to do first rate work. The next day I went back and forth with the PM over the price via e-mail. He said our price was way too high and wanted to negotiate it down to what was basically below our cost. At that point I simply told him thank you for the opportunity to bid your project but I don't think that this is going to work out. The sad thing is that here in So Cal there are literally 50 other guys would bend over backwards to let this PM name his price and then proceed to do the work at a loss just to say that they have the job.
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  5. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    It does suck. I have that happen in sealcoating and when I drive by and see the property being done, even when I know its being done at a loss, I still get a little bummed.

    What I run into a lot more is the disappearing property manager. You submit a bid, then try to follow up for the next month and can't get ahold of them. You don't get the opportunity to negotiate and the only way you find out you didn't get the job is when you see it being done.
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  6. Turf Logic

    Turf Logic LawnSite Member
    Messages: 243

    What I am curious is to see what most people are figuring they have in one employee with over head per hour. I work out of my dads shop for free, so we do not have to figure in rent or a mortgage into are overhead, and with our average maintenance employee making ten dollars per hour we still have twenty dollars per hour per man on a three man crew. This kills me seeing some of the companies the same size at us and some of the bigger guys with more overhead charging only twenty five dollars an hour per man. Seriously, whats the point? Im not asking for anyones cost per hour or what they are charging per hour, but I would love to see what most people are trying to make per hour per man on the ground.
  7. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    Everyone can work for a different price depending on their overhead and such.

    When I was in NY. My shop and office alone with utilities cost me $3000 a month.
    Health insurance through the company for my family and one employee was $2000.
    Commercial truck insurance was over 10,000 a year
    Comp was like 25,000 a year

    Thats not figuring in what I needed out of the business to pay my personal bills. Mortgage taxes utilities etc etc

    Those couple expenses are $85000 a year before I cut the first lawn or bought a drop of gas or paid an employee, or bought a machine.

    Thats a lot of $30 lawns.

    Little easier for the guy working out of his garage, with a truck that his full time job covers the payment and insurance. Health insurance through his job or his wifes.

    The business is a whole different ballgame when its a side job for extra cash, and i even put a lot of fulltimers in that category.

    Guys would be in for a heck of a wakeup call if they had to survive on solely the lawn business if they had to operate it completely on its own two feet with no subsidies or crutches.
  8. Turf Logic

    Turf Logic LawnSite Member
    Messages: 243

    I agree completely. I know everyones overhead is going to vary. I really don't understand how some companies make money for the prices they charge. The one thing that you didn't total in was your personal salary. We are trying trying to make anywhere from $10 to $20 per hour per man on the ground for maintenance. Are rates are anywhere from $30 to $40 dollars per hour and we charge to and from the job site. We have trouble getting these rates and this is well below the national average.
  9. supercuts

    supercuts LawnSite Silver Member
    Messages: 2,814

    can't knock a guy for throwing a huge bid. you never know, you might land a $35k job for $100k. I agree though, huge difference. We dont have large jobs like that. and I dont care because im not trying to impress anyone. Im trying to support my family and live comfortably. Ive had guys knocking me for going back to mostly mow and blow with less full service and choosing lower end lawns vs high end picky PITA customers. then they said they would rather make a bit less an hour and do the higher end work! now that im in my mid 30's my body will not keep up doing mulch and hedges all day everyday. and when we can blow out 4-5 lawns an hour with 2-3 men crew. you dont need to major in math to figure $/hr vs hedges at $25-$50/hr like most claim to get on here. let them laugh, we're booked up and keep up. and making "a little" less is often less then half of what we gross an hour. Luckily im at the point where my bids go up just because we dont want the work.

    our overhead sucks. the cost of living in CT is high. We pay employees a fair amount and are now trying to set up IRA's for the guys as a bonous. Gas is 2nd highest in the country, our medical is $1800/month, gas is $2500/month, my shops are on the property and not even calculated out of the morgate.
  10. prezek

    prezek LawnSite Senior Member
    Messages: 316

    I feel like I could have written your post. Around here EVERYBODY is chasing commercial and high end residential. I have focused on the older neighborhoods. Word of mouth spreads fast. I can knock out 25-30 lawns a day on a tight route and make great money doing it. The high end neighborhoods for me have been the biggest PITA's. Cheap and expect something for nothing.

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