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. qualitylandscaping

    qualitylandscaping LawnSite Bronze Member
    Messages: 1,581

    I don't agree with that. I think 30% is reasonable. If you're only closing 10% of your bids, that leaves alot of time wasted.

    I look at Marty, as I would look at a college professor. They teach the skill, not necessarily how it applies in the real world.

    For example, a horticulture student learns how to pull weeds in school. What they don't teach, is that real world jobs require that its done quickly. Clients aren't going to pay $60+/hr for somebody to poke around in their beds and only pull a few weeds every hour. There aren't time constraints when your in a classroom environment.

    Apply it to Marty. In a perfect world, with perfect profit margins, and perfect specifications; you may only need/expect to sign 10% of your bids. An average real world company cannot survive on those numbers.
  2. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    What if.

    Your company is growing
    You show a nice healthy profit
    No debt
    Bills paid on time
    Well compensated, happy employees
    Very nice salary for the owner.
    Money in the bank.

    And youre closing much higher than 10%?

    I like to stay away from "one liners" and generalizations.

    Like the "dollar a minute" rule you hear on here. Post a thread on what to charge for mowing....They all say "a dollar a minute"

    Would my company survive on a dollar a minute?
    8 employees
    12 trucks
    insurance more than an average americans salary

    Would a dollar a minute cover that? You have no idea. Nobody has any idea, they dont ask those kind of questions.

    Could you survive on a dollar a minute? I have no idea. I know nothing about you or your business.

    But guys on here will argue for 5 pages that "a dollar a minute" is what you charge.

    If you and i have identical businesses with identical overhead and bills.

    We both bid a job

    I bid 20,000

    you bid 15,000

    I get the job.

    Im charging more than you, and im making 5,000 more off the job than you would but I got the job.

    Is that because my price is too low?

    Or could I have been a better salesman?

    If we repeat that a bunch of times.......Do I have to raise my price?
    Im already selling the job at a higher price than my competitors.
    And Im closing more jobs than they are?
    Im making a nice profit too.

    Do I need to jack up my price because Im a better salesman?

    Am I getting the jobs because Im too cheap?

    Or am I getting them because I sold the customer on my company?

    Im already 5,000 higher than my competitor. So if I hit that 10%, how high do I raise the price?

    Whats the perfect number so I close the maximum number of sales for the maximum profit?
  3. lbmd1

    lbmd1 LawnSite Senior Member
    Messages: 462

    All I can say is that it takes a big man to admit his mistake like your story above. I respect and admire you greatly and hope others will learn from your business advice.

  4. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    People dont like bad news.

    If theyre daydreaming the last thing they want is to hear all the bad stuff. Its a real mood killer.

    My pet peeve on this site is "How much do i charge" threads.

    And people laugh at me how I respond to them. They think im an A-hole or just being a jerk.

    My response is usually something like......

    Post a copy of last years tax returns, a current balance sheet, and a current profit and loss statement along with an equipment list and then I can start to help you.

    People read that and either pass it over or wonder what the heck Im asking for that info for.


    What good is you telling me a dollar a minute if my business expenses are 2 dollars a minute?

    What good is me telling you I charge $40 an acre? Can you make money at that? I dont know....YOU DONT KNOW.

    Pricing is THE EASIEST part of the entire business. It is about as basic as you get.

    I posted a very detailed but boring thread about how you come up with your price the right way.

    That thread lasted about half a day before it was bumped off the board never to arise again.

    Guys dont want to hear the tough answers.

    You start talking about overhead percentages, margins, operating hours, billable hours vs. non billable, production times.......Their heads start spinning.

    They dont want to learn how to calculate all that complicated stuff out.

    They want to hear "The going rate is X"

    They want to hear 5 guys all list a similar price for the job.

    Then he will put his bid in.

    He has no idea if hes making money. The 5 guys that gave him the price have no idea. They heard "the going rate" from 5 other guys....and so on

    And if you go by the statistics, 4 out of those 5 guys that you are asking for business advice are a couple years away from going out of business themselves.

    Meanwhile theyre laughing at me for asking for vital business information that is required to even think about coming up with a price.

    I know nothing about building a patio.
    But give me a little information about your business and production times and I can sure as hell price the job for you.

    I dont know a geogrid from a cactus, and I dont need to. But ill price that job so you cover your costs and hit your profit.

    The real reason for failure in this simple simple business, is lack of business basics.

    Most on this board think they know.......They dont.

    I thought I knew.....I didnt.
  5. humble1

    humble1 LawnSite Silver Member
    from MA
    Messages: 2,519

    This is a great thread. Before I go on to me- You also left out employee theft- they mow lawns on the side w/ your equipment and you still are paying the overhead.

    You may think I'm full of it but here goes. I used to have 9-10 full timers.45-60 hours a week, plus Sat P/T guys. We had a mowing crew, installation crew, brick drives,walks patios, irrigation, design and plant installs. 2 guys would hydroseeded 5 days a week. One summer we installed over 600 residential lawns. I was in my mid 20's and cocky as hell. Before I got married I was looking at buying a $130,000 dollar boat, yep I would have financed that too. I thought I was king chit. Thank God I didnt. I got married in mid 90's. One Aug I had about 100,000 in my checking account, I was going to get rid of our 4500-5K a week mowing route because we were making so much in installs. My new wife said are you crazy- that is dependable income. So after much discusion( or in my mind her giving me shite) I kept the mowing route. So moving forward. One Sun in Aug we go into the Ford garage I figure what the hell I got about 100K in the bank, I will buy this mustang for $35K. My wife talks me out of it, more like a fight, I was pissed. She thought things might not be this good blah blah blah. So a few days later I sit down to do paperwork, because now all I did was put out fires, do estimates etc. I wasnt working in the field as much. I wrote over 100K in checks,payroll, suppliers, quarterly's, truck and equipment , yard rent, etc. I went down to my accountant almost in tears. I couldnt believe that I didt have payroll for the following week. He said "You learned a lesson that no buisness college in this country can teach you" I said whats that? Its the first hand knowledge of knowing what it feels like to not know your operating costs. He asked what my labor rate was? $X per hour we were on the higher end back then. He says what are your fixed costs per hour. I had no clue. I had to lay off everyone except 2 guys. I put equipment for sale. I then was out doing the mowing route. I started getting calls why we wernt there etc. Turns out my trusted foreman was mowing accounts on the side using my other 2 guys as his labor. I was paying all 3 guys time and a half over 40hours, plus the gas and equipment, all the overhead. I had no idea how long the lawns took to mow. I never time tracked anything.
    I bought clip, got back to basics. Ran a smaller crews. Big enough that I could keep my thumb on them. Bigger isnt always better.
    I did get a better plan and have a full understanding now of costs. I always try to help friends in the biz. I own everything I have, except my house, I put 20% down on that. Things are looking up for once. I got out of landscaping and into fert/squirt with lessons learned. Yup I will say it my wife was right!!
    hort101 likes this.
  6. Fife Lawn&Lane

    Fife Lawn&Lane LawnSite Member
    Messages: 97

    Excellent post Procut THANK YOU. The others that have contributed thank you as well, an excellent read. Some very useful information and insight was gained here.
  7. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    I appreciate the support and complements everyone has given me in this thread.


    Sums up everything I am trying to say in 1/1000 of the words.

    Print this post and tape it to your dashboard or hang it in your office.
    hort101 likes this.
  8. qualitylandscaping

    qualitylandscaping LawnSite Bronze Member
    Messages: 1,581


    Everybody needs to put all expenses into a spreadsheet, essentially creating a Schedule C. You can even you last years Schedule C, and make projects based on percentages you expect to grow for this season.

    We put everything into a spreadsheet. Each piece of equipment is itemized by category and cost, then expensed out for the season. I divide total yearly costs for each piece of equipment by 1400hrs (average billable hours in our mowing season for 1 person). Add in costs for advertising, fuel, payroll, insurance, etc. Get a total per hour cost, then divide by total of employees. We add in for 10% unbudgeted expenses, and 20% profit. This is a short example of a very long spreadsheet, but I need to bring in $53.91460046 per laborer, per hour in billable work to clear a 20% profit. Accounting for the non-billable time puts that rate, up closer to $55-57 per hour.

    Per Hour

    Per Hour




    If you don't know your business costs, you might as well pack up and close your doors now. It's only a matter of time, before a well organized and highly efficient company assists you with your own demise.
  9. AintNoFun

    AintNoFun LawnSite Bronze Member
    Messages: 1,807

    i sold joe/procut a truck a few years back.. been talking regularly since then.. his entire post is pretty much my story.. like he said its not a death sentenance saying every business will fail..
    was i driving a brand new suv, had a fleet of trucks, 20 guys, 5000 sq. ft. shop, yes sir i was.. was i also losing more money then we took in sure. we were in that "mid zone" took big and too small at the same time. im know i could have kept pushing to a large company but the money and stress wasn't worth it.. we started getting beat up in the residential market then moved into the commercial market. i had a run of a very few good years and then the big national companies came in and started slashing prices like crazy edie. we were getting pushed out heavily.. i phased out all my maintenance and just started doing landscape install work.. making a lot more money, with 1/10th the headaches. Best thing i ever did, although i do miss cutting grass and all that it entails sometimes. i wouldn't consider it a failure but i def gave up.. i was miserable day in and day out, wasn't sleeping stressed to the max.. seeing brand new mowers, whips, blowers, dissappear, get ruined in a week. it was a never ending battle, i woke up every morning just wondering what today was gonna cost me.. i give a ton of respect to those that run large businesses, successfully...
    Last edited: Feb 18, 2009
  10. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    Heres one.

    Lowballers. We hate them. Everybody that is cheaper than us is a "lowballer"


    Is a lowballer a lowballer if he is making more money off the job than you are?

    If you charge 40 and break even
    And he charges 25 and makes 10

    Whos better off?

    I learned never to criticize someone whos bank account is bigger than mine.
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