Newbie advice

Discussion in 'Business Operations' started by Signboy, Sep 26, 2002.

  1. Signboy

    Signboy LawnSite Member
    Messages: 1

    Hello all, I'm finalizing plans to start a property maintenance company and would like some feedback and advice from everybody. I intent to borrow between $20,000 and $30,000 from the SBA or other lender on either a 5- or 7-year loan. I'll use some of this money to purchase a few pieces of necessary equipment, as well as a decent trailer. Another portion I'll put into decent advertising using a local marketing company (or perhaps Yes Marketing, dunno yet) to do a nice direct mail program targeted at developments, apartment complexes, home-owners associations, shopping centers, etc.., yellow pages and targeted newspaper ads, as well as get some decent printed material to be able to hand out. The remainder (which I hope to be in excess of $10,000), I'll put into the business account to help generate some positive cash flow for the initial winter and early spring months, and so I can pay myself enough to get my personal bills paid. I'm currently studying to get a pesticide applicators license and will offer spraying, fertilizing, aerating, mowing, mulching, trimming, seeding, and misc. maintenance, preferably on annual contracts, hopefully targeting the spraying, fertilizing, and mowing jobs. In the winter I'll initially offer snowblowing and shoveling any possibly expand into plowing the following winter. I'm sure without the capability of plowing, the jobs in this area will be limited, which is okay with me. In my first year in business, I'll be tickled to death if I can land 35-45 contracts including residences as well as a few commercial sites. So that's the plan anyway, but I have some questions...

    1. Is this a reasonable plan? I know alot of people out there may not advocate borrowing money, particularly that much, to start a business like this, but in my experience, I'd rather enter a business with some positive cash, even if I have to repay it to the bank over time. I'm not prepared to struggle through the first year of business, I've done it in the past and it's not worth it to me. Even with a little money in the bank from the outset, it'll still be a struggle, i know.

    2. Off the bat, what pieces of equipment will be most beneficial? I'm thinking around a 20" pushmower, a 36"-40" walkbehind, a couple weedeaters and blowers, the spraying equipment, a fertilizer spreader, assorted hand tools, and a trailer to haul it all. If things go well, possibly a core aerator and a decent riding mower of sorts down the road.

    3. Insurance. )-: do you all carry policies to protect you if you destroy someone's lawn, or anything on your equipment, or just your personal health insurance.

    4. Advertising. I'm a big advocate of advertising if properly done, and I intend to do so. From experiences, what kinds of advertising expensive or free, has worked and hasn't worked? What markets respond to what kinds of advertising?

    So, I think that's it for now. I'm sure I'll ask more questions soon. I'm so sorry this is so long winded, too. (-:
    -Thanks in advance,
  2. Hodge

    Hodge LawnSite Senior Member
    Messages: 261

    Well I do agree with you that the borrowing of that amount of money to start your business is a good idea, but very risky. Alot of question come to mind

    1. Have you been approved for the loan and if so you must have submitted an approved business plan.
    This plan would require you to agree and follow an establised plan.
    2. Have you done this business before.
    3. Start small then work your way up
    4 Too Many More ??? I am sure other will gladly respond to this open ended post
    Here is a post from Bruce32 another Lawnsite member:

    JJohn My quick advice:1. Don't listen to anyone who says there's too many people doing this. They're your competition! LOL I haven't advertised in years and turn away people every week who approach me. They say they can't find anyone RELIABLE.2. Make Reliability and quality-for-the-price your selling points. Lowballing on prices just to get customers just results in customers you don't keep for long and lowers pay for everyone. 3. Related to the above, you can charge above-average rates on residential lawns if you are 100% reliable and do good work for the price. This means do NOT overbook your schedule on the assumption that it will never rain, you will never have breakdowns, and you will never just be not in the mood to work late. Only one or two "no shows" will destroy the customers' opinion of you. Once you gain their trust, you will find referrals easy to get and the customers less picky and demanding. There really is NO excuse for not getting a lawn mowed on time, short of maybe 3 straight days of rain (never happens here)4. Spell out what you will do for what price, and be as specific as possible. A "mowing" is not always the same. Prices vary a lot based on how often you mow, and what you do on-site. Just talk to the prospect and find out what their expectations are, then price the lawn providing just a little extra degree above what they want. Just a little. That allows you to toss in "freebies" that they really appreciate, but you're really getting paid for them. Pricing low to get customers will result in you trying to cut corners, and they will wind up unhappy. They also may assume you're inferior in quality if you're much too low on price. 5. Always do what you say you will do, and return phone calls promptly. My customers at first always seem surprised that I call them back so quickly. I guess they're not used to it. You don't have to give out your cell phone number, but do call back the same day if you get a message. 6. Avoid hard-to-please people, and don't hesitate to drop them like a hot potato once you identify them. 5% of the people will cause 95% of your headaches. I find widows and single women generally much easier to deal with than Corporate office workers/professionals or old men. My theory about it is that some businessmen/professionals have a chip on their shoulder because they feel they should be doing it and feel unmanly because they can't. Some old men tend to have 1950's pay scales in mind, and in their era they saw manual labor jobs as super-low paying. They tend to also be guys who love working in the lawn but can't anymore, and they are bored, so they pester you with niggling requests, and often want to watch you as you work. Talk about a drag! Older women and working women seem to really be impressed and greatful that you've saved them the drudgery of getting all sweaty on the weekend. They also tend to value a professional looking lawn guy more than men do. I guess they're worried about some scroungy guy being there. 7. Dress sharp (hiking shorts and t-shirt with company name as a minimum), and keep your equipment sharp looking. You'd be surprised how much more you can charge with a late model truck and good equipment. My brother is an electrician and switched from an old white van to a new Dodge Ram 4x4 with special walk-in top, professional signage, etc, and he said people instantly quit haggling on price. They just assumed he was better because he had a nicer vehicle. People are superficial, so use it to your advantage. It also indicates to them, true or not, at quotation time that you're a sucess, not someone who mows lawns because he can't hold a 9-5 job due to his drug habit. 8. Buy the best equipment you can afford, but do not overbuy. This means that if you're only mowing 8 lawns a week, don't invest $10,000 in a diesel zero-turn mower. That said, I love ZTR's and working full time, it can pay for itself in a year in added income. Do NOT show up with your homeowner equipment, you will immediately be seen as a pretender. It will also break down constantly. Minimum equip for 1/2 acre lawns would be a 36" commercial walk behind mower w/ bagger, straight shaft string trimmer, backpack blower, and a 21" trim mower if you need one to fit in tight areas. Trash barrels/tarps for clippings may be necessary. A stand-on sulky is a good investment too. It's more expensive to buy junk and replace it soon than to just buy good stuff to start. Remember, a 36" walk-behind will mow about 3 times faster than a typical 21" mower, and also handles heavy grass much much better. It would almost pay for itself in a season in terms of added productivity. Even part time, it pays to buy a real commercial mower. Consider a used model if you're on a budget, for about $1000. New models range from $2500 to $3500 and more. 9. For part time work, consider a nice full size pickup and a ramp system so you avoid hauling buying, and storing a trailer. Better systems will speed you up and pay for themselves. The truck can double as your personal-use vehicle and usually is a better bet than buying an old truck only for work. I think a used full-size truck is a better bet than a new compact. 10. Since you're part time, working for EXTRA money, stick to doing what you like best and avoid getting drawn into stuff you hate. There are always lots of people who just need the lawn mowed and nothing else. If you start planting flowers, doing light landscaping, etc, you will find yourself driving back and forth and never getting much paying work done. Mowing pays the most per/hour, is physically easier than digging/etc, and since you've already got the equipment, you might as well max that out. It also is more, pardon the pun, cut and dried. It's either mowed well or it isn't. Not many complaint calls to fend off, unlike landscaping. Some guys do flowers and such because they like the creativity, but it doesn't always pay that good when you factor in drive time, shopping, call backs,etc. Keep it simple and mow, mow, mow until you gain experience. Then expand if you want.11. You'll need business insurance on your vehicle and liability. It's not always easy to get if you're brand new, but try looking online. It's a little more to insure your vehicle for business use, but if you had a serious accident, you could be denied coverage on a personal-use policy. I pay about $1600/year for truck and gen. liability coverage of $2 million. I was paying $900 for just the truck on a personal policy, but despite my agent's assurances, I found out it would exclude coverage if I had an accident while at work. 12. Open a "doing business as" DBA account at your bank. This allows you to deposit checks in your business name and keep your finances seperate from your personal account. 13. Use a simple financial program like Quicken to track your finances. It really helps at tax time and gives you a lot of info you wouldn' think you'd need. 14. Spend time looking at your customer base and figuring out which type of lawns pay best overall. Do you make more doing the ugly weedy lawns for undemanding customers, or the manicured, fussy lawns that pay a little more per mow, but take up too much time? Then go get the high paying ones and drop the money losers. I did this and make more money and work a lot less than I used to. 15. Don't bother with a sign on your truck, business stationary, etc, if you don't want to. I've never had anyone flag me down in traffic for a business card, which I do recommend. It also can look pretentious if you're a guy mowing a few lawns each week on the side and acting like you're some big company. Be professional, but be realistic. I suggest using a company name that shares yours. eg. "Holden lawncare" rather than some cute corporate name like "mows n gos". 16. Do your research, find out what you can charge, decide what you need to charge that's within what the market will bear, and stick to it. You may want to give small discounts early on, but be prepared to raise prices once you've established trust with customers. If you charge $24 at first because you're desperate, you can NEVER raise the customer to the $36 you should be charging. They simply wouldn't stand for it. 17. Read and learn about how grass grows. Even if you're not doing applications, it's nice to know what you're talking about if you spot problems and can leave a note for customers. I once tried to seed a Bermuda lawn for a customer, upon their request, years ago when I started part-time. Trouble is, you can't seed a hybrid Bermuda lawn! I got a polite call firing me later when rough, common Bermuda grew up in their lawn. I have since become a PLCAA certified turfgrass professional. 18. Don't do fertilizing/weed control. You can't do it legally without a lot of overhead anyway, and it is a huge source of customer calls with questions and complaints. It also screws up your routing and mowing schedule. Your insurance also won't cover you for this unless you pay extra. Many small timers out there fertilzing lawns may well be doing it illegally. It doesn' t pay that great, either.
  3. Mykster

    Mykster LawnSite Senior Member
    Messages: 668

    Nice post Hodge.
  4. tailoredlook

    tailoredlook LawnSite Member
    Messages: 142

    Sounds like a good plan. Just sounds a little risky though, starting off all 30k in debt. I'd start small get a few properties offer full service, mow edge prune mulch etc. see where that gets you. Good Luck.

    MATTHEW LawnSite Senior Member
    from NE OHIO
    Messages: 665

    Watch the advertising cash flow!
    It can put you behind faster than anything else if you let it.
    You need to search the L.S. archives before you do this.
    You asked questions that have literally hundreds of views.
    Good luck.
  6. Nebraska

    Nebraska LawnSite Senior Member
    Messages: 525

    Go for it.... Be selective on the advice you take and toss conventional wisdom and LIMP advice out the window. Risk it all, what do you have to loose?
  7. bubble boy

    bubble boy LawnSite Bronze Member
    Messages: 1,020

    geez, ya think hodge would take the time to elaborate...:D kidding of course.

    i do disagree on a couple of his points though.

    do put sinage on the trucks. i have been called by people seeing me drive around. and they conect the logo on my flyers with the logo on the truck

    get a trailer if you can... you always can use the space, but storage and budget should be a determinant

    landscaping can have higher margins than cutting IMO...fert and pesticide applications definately have higher margins, at least here. the scheduling can be a pain, but by doing the so called weed and feed you will be full service once you start a selling point.

    i didn't see a three times increase in productivity goinng from 21" to hydro 36" but i was less tired at the end. 2x as fast i can believe, and better quality

    what are you pulling with? can you plow this winter?

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