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How to fail in the lawn business by someone who did it.

Discussion in 'Lawn Mowing' started by PROCUT1, Feb 18, 2009.

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  1. JJS

    JJS LawnSite Senior Member
    Messages: 334

    Procut? you think you struck a cord with some people in the business. 26 pages in what, a week. Great responses and very helpful insite on many issues. I have been in the business for 23 years now , first started out doing it for a living got married supported a family of 3, then 4, then 5, then it got tough , medical benefits 600.00 a month for nothin coverage, long story short, got on with the fire dept, and secured great benefits and a great working schedule.
    Life happens and i had to retire on a disability pension, still kept the lawns for side income, but the business got tougher, now i got a bad back, thank god for ztr's, now i have to make up for 50% pension, bigger house and a family of 6. Thank ghod for my son who is now attending college for his b.s. in horticulture, he's help since he was 7, and i warned him of the business, so we made a deal, we became partners and started building up the business, as long as he agreed to get his degree in horticulture. It's that extra edge you need to sell to the customer, instead of dude with the pick up and mower on the back, you have an educated fully licensed professional do it for a few bucks more, and now he just passed his supervisors exam for fertilizing apps.
    Didn't mean to be so wordy, but theory of mine is, an owner on every job, i'm lucky enough to have two boys to be able to put out 3 crews, myself and two boys w/ there own, thats as far as we'll grow, each guy can run a crew of 4. Some guys are able to move into the office to promote new business and grow successfuly, that doesn't work
    so well with me, wish it did, but you have to do what work for YOU.
    GOOD LUCK....
    will be starting a fertilizing co. this spring seperate from the landscape.
    hort101 likes this.
  2. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Messages: 1,133

    Procut1 I remember your post from some time ago, the "know your costs post" about how you could not help someone establish an hourly rate without all the financial records. I knew then that you were right and I went to work to see what my costs were in relation to the amount of production that I could accomplish. That post of yours inspired me to set reasonable rates for various services and have the confidence to always stick to them, but at the same time to know how my money is mostly already spent.

    Since then, I have learned that we not only need to know our costs, but we also need to know the cost of the next thing we will need or want, and what the roi will be.

    Somehow I think reading this thread will be just as beneficial as the "know your costs" thread was.

    Procut1 it sounds like you are well on your way in the new business and I wish you the best! Thanks for starting a great dialogue that we can all learn from.
    hort101 likes this.
  3. Exact Rototilling

    Exact Rototilling LawnSite Fanatic
    Messages: 5,378

    mom's basement....:laugh:

    This is precisely why so many people pour into this business thinking this is good money. And this is good money if you don't pay taxes, carry commercial insurance, business licenses, collect sales tax and jump through all the hoops to be a legit operator.

    In many areas of the country the cost of living is higher but wages are not higher by much.

    I took a tour of a well known knife manufacturers near me to mainly scope it out to see if I wanted to work there. Making widgets all day or night depending on the shift. :dizzy: Starting pay less than $9

    Sadly many jobs nowdays barely pay $11 or $12 an hour with little to zero benefits. 12 x 2080 = $25,960 gross. Even with expenses and overhead the $45k looks good at this point. I haven't had medical insurance since 2001. Wife and son haven't had it since 2006. But I carry max medical on all of our vehicles. Medical insurance is not an option at this point.

    My old career field of aircraft maintenance has now drifted down to the $16 to $18 an hour for someone who has well over 10+ years of heavy jet experience. Then you often work nights and you have to relocate to some undesirable place to keep or get that job. Precisely one of the many reasons I left the field long ago.

    So I guess if you are solo legit operator with relatively low overhead it doesn't look so bad.....maybe I will test out for the Fire Department again. Wish me luck. Starting pay is $48,000 with a nice benefit package and I can still keep my Lawn biz. payup
  4. capnsac

    capnsac LawnSite Senior Member
    Messages: 702

    1,000,000 General Liability - $51/month
    Truck Insurance (full coverage) - $113/month
    Taxes - 30% of gross every month put into separate account
    Business Licenses - Not required in NE
    Collect Sales Tax - Again, not required

    If you have zero employees you don't need workman's comp, so that is one less expense. You also don't have to account for their taxes that you will have to personally withhold that you will pay quarterly, nor will you have a labor cost.

    So, after all of that, including equipment cost and the like you'd be looking at breaking even. Plus you have 22 more weeks out of the year to do something else. It's not good money at all for the amount of work you will have to do, but it can be done.

    Taxes - 1800/month
    Fixed Costs (ins, truck payment, equip payment) - 1000/month
    Variable costs (gas, supplies, etc.) - 1000
    Labor (your pay) - 2200

    So at $6000/month this can be done. Not gracefully, but it can be done, and with still being legal.
  5. elite lawns

    elite lawns LawnSite Senior Member
    Messages: 363

    Thanks for sharing your story.
  6. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,686

    Well I have read this whole thread I found you could start and by the time you get to the end its 2 more pages then when you began. I don’t feel it was the best thread of all time it was good though but I felt it reached the wrong conclusions on many items.

    Iv been hovering around 200 accounts for 4 years this season we are committed to breaking through that mark. So I suppose I have been a mid sized company for most of the time we have been in business. There was the statements in here you screwed up cause you didn’t have a detailed business plan that simply wasn’t the problem. Some say you need to know your costs and they will pound that point over and over. How can you bid if you do not know your costs? While that is true you do need to know your costs that’s not what’s important either.

    You need to control your costs that’s different then knowing them I like you got in trouble a few years ago had things come up that demanded my attention elsewhere. What I found was we were over extended big time which of course was justified cause you can go a little more in debt since your going to make so much more next season. And that is the recipe to flush your company. Where you screwed up was you didn’t take control of your costs you let them run wild I mean everything shop your insurance, shop your phone service, eliminate any and everything you can go with out. We had bank fees on 2500 checks a year we had 2 equipment loans we had 35 k in credit card debts you name it the bills were crushing. Your costs are not what’s important its how low can you get them so you can compete and beat your competition.

    We managed to eliminate over 2000 a month in useless bills from our operating costs we retired some 70 thousand plus in debt in 2 seasons we are completely debt free now no truck no equipment no credit card bills no nothing. We have bills but they are fixed ones they are simple insurance auto business workman’s comp we have 3 cell phones and the business phone we have rent we have the internet. That’s really it we have 4 trucks and I'm simplifying it but we all know we have gas repairs and supplies that’s a given. What you don’t need to do is race out and buy new trucks and new mowers some here do and it’s foolish. Why did your business fail its simple you spent your self to death.

    The business plan can tell you how your going to grow next season but they don’t tell you how to spend what’s in your bank account and if yours does your way to anal. You should just instinctively know that you need to be conservative with your spending. I heard debt was a tool on here ya right credit scores in the 800s and what do they do the second you charge something they begin to move up those nice interest rates. If you haven’t seen it you can not appreciate how bad the banks are. iv seen banks we had raise the rate from 14 to 21 percent in a month despite the fact the bill was paid early and the minimum was 200 and we sent 4000. Debt isn’t your friend grow slower and grow smarter oh but your miss out on all that extra income says the voice well that voice cost us easily 20,000 in interest since we have been in business that’s our money wasted.

    You want to get rich in this trade its not likely but if that’s your goal own your land own your shop that will go up in value and perhaps give you that golden parachute you seek. I mentioned we pay rent that’s true we do over 1200 a month its rent to me which in turn pays a quarter million dollar mortgage on over 2.63 acres next to my home. That’s my golden parachute and I will be building a barn on that soon. This world is made up of owners and renters pick what you want to be but understand the decision will haunt you for the rest of your life if you get it wrong.

    I do not agree that mid size business have to be so difficult and unable to make a profit. But everything you do costs and you need to understand while having extra positions in your structure may make your life easier it may also eliminate any profit at all. You cannot have an in house mechanic office staff field supervisors and jobs like that with 500 accounts and expect much to be left over. And that’s the moral of this story if your a mid size business you still have more in common with a small business and need to show constraint and not try to imitate a huge multi million dollar business when your not there yet.

    I grew 24% last season It look like I may see 50% this season that may sound insane or overly aggressive but the other key factor is this. Maximizing what you have our plans are to push the 2 two man cutting crews to there maximum this year the following year we will break into a 3rd crew but for now we want to see how much we can squeeze out of our existing model. With one acceptation I bought out my ex boss and he will be doing a part time planting crew. And with all that increase in business we plan on only adding one more dump truck this year that’s it. We already have what we need and were debt free. In closing try to live with in your means or you can drown in this business and with our current administration tight and conservative is the only real option atm.
  7. McFarland_Lawn_Care

    McFarland_Lawn_Care LawnSite Bronze Member
    Messages: 1,445

    very good post and so much information and wisdom here.....I am taking a lot of good warnings to heart here. There's this rule that they taught be in business management - a business can only properly sustain 33% growth per year. I know this isn't right ALL the time, but it's been a good rule of thumb for me too follow. If I try to grow more than that, I have to buy too much new equipment and then get more expenses than I can absorb in that current season. Good lessons from school of hard knocks.....BEST of luck PROCUT!!!
  8. tcalb2

    tcalb2 LawnSite Member
    Messages: 231

    Mcfarland: I haven't heard that before, About the 33% growth,but it rings true to me.
  9. capnsac

    capnsac LawnSite Senior Member
    Messages: 702

    Hell, I'm looking for 250% growth this year. Good luck to me...
  10. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Messages: 1,133

    Kelly, I agree with everything that you have added to this discusion except the part about the Business plan not telling you what you can spend. A business Plan should be able to do that, maybe not exactly to the penny, but how much there will be to spend and how to spend it is exactly what a business plan should do. There is a huge difference between being anal and being precise.

    In your own case, you mention that you will buy "one more dump truck, and that is it". That sounds like a plan to me. And, I am sure that you anticipate your other costs of maintenance, labor, etc, and I expect you plan to pay those costs too.

    Not to take away from the important point that you made about operating conservatively and making the most of what you have. But of course this too sounds like a plan to me, in fact I would say a good plan.
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