Residential vs Commercial accounts

Discussion in 'Starting a Lawn Care Business' started by spitfire3416, Sep 27, 2012.

  1. spitfire3416

    spitfire3416 LawnSite Senior Member
    Messages: 554

    yea sometimes I wonder if it's more because of the economy and not the competition. maybe its both. i mean i wasn't in business 15-20 years ago so I have no clue what the competition was like then, but so many companies are going out of business today or having trouble staying a float. maybe that's the reason commercials don't wanna pay?
  2. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    Spitfire I wasn't in business back in the day either but I talk to a lot of guys that were and still are, and they all say the same thing " I don't know how these guys are doing it" we can lowball the crap out of a bid and there is always somebody there going even lower, some of these guys aren't even paying there guys minimum wage.
  3. milkie62

    milkie62 LawnSite Senior Member
    Messages: 834

    I think as one poster said,it comes down to a LOYAL customer base.A commercial will probably be looking at bids year to year unless of course it is a smaller business and they are happy with your work.If a residential has kept you around and they are comfotable with you,then that is not a worry.I have one residential where they are out of town alot and another LCO that had a bunch of non english speaking mexicans in the truck give them a $20 less per mow bid.the customer said no thanks.I have a key for the garage so I can put packages in and I pickup the mail when I know they are away.They are happy with me and trust me.
  4. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Messages: 2,764

    We say the same thing on both the plowing and mowing sides. We have walked in with a bid we figured to make around 5% just to get our foot in the door and we will be in the middle of the pack. How can anyone work for less than 5%? I don't mind breaking even on some accounts to get more work from the customer, but when you are paying to go to work I'd rather stay home or work for someone else.
  5. superdog1

    superdog1 LawnSite Member
    Male, from Lebanon, PA
    Messages: 218

    I got the bright idea to take a bunch of commercial accounts this year. It seemed like the right thing to do?. I can tell you first hand it wasn't. I took all of them from a national that offered me the contracts. Some of the accounts paid pretty decent and others were a waste of my time. Even after driving to the sites and checking them out, I got burned.

    When you first drive up and look around, you get some ideas in your head and think, "Oh, this won't be that bad?" and you sign the contract. If I learned NOTHING else, I figured out that when they tell you, "We are just trying to help some of the local guys with work", it isn't true. When you are told that, "We just don't have enough guys and equipment to cover all the jobs we have" it isn't true.

    What is true is that since they (The nationals) know that time is $$, they take all of the sites that are a PITA because of hills, obstacles, massive amounts of garbage etc. excessive amounts of wear and tear on equipment or whatever and put them on a list of difficult locations, THESE are the locations that get contracted out to local people.

    While I can say that I made a little bit of $$ on SOME of the accounts, most were a losing proposition. The estimators they have need to be kicked right in the .................. The amounts they pay make NO, NONE, ZERO sense!!! I have a location that takes me less than 20 minutes to complete that pays $45 and another that takes 3 hours with 3 mowers running and 1 guy trimming and I get $150. It just makes no sense???

    While I (yes, me) am the dumb a$$ that took the contract, I guess I needed another degree from the school of hard knocks to get smarter? Next year, I will do NOTHING but residential. If I get a commercial account, it will be a local business that I deal with directly.

    The only positive thing that I can say is that the checks were there every month on the 12th and it kept my guys busy and working. While they had a job that I provided, I made next to nothing. Don't fall into the "I am going big time and doing commercial stuff this year". Stick to the lady down the street and keep her happy. Trust me, you will be happy too!
  6. Chilehead

    Chilehead LawnSite Bronze Member
    Male, from Stockbridge, GA
    Messages: 1,968

    I prefer residential accounts. For me, they offer a higher profit margin and are a good source for referrals. Conversely, I just picked up a shopping plaza.....what a PITA! The stores' customers don't have anything better to do than complain about how the dust from my blower blew on their car, how not to go near their cars, and that they don't like a lawn company "bothering" their shopping experience. I am grossing the same as I would for a like-sized residential, but good-god......!
  7. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    When a National wants to give up accounts that has to be a red flag.

    It was not that they pawned off crap on you. You forgot to realize if these accounts were gold mines they would of not parted with them.

    Something that is to good to be true never is.

    Did you walk every property and determine what price you would of charged if you were dealing directly with the customer?

    Did your prices of what you would of charged matched what the National was paying you?

    Point is why take on work for way less then your normal rate?
  8. SRT8

    SRT8 LawnSite Bronze Member
    from CA
    Messages: 1,318

    I sold off all of our residential accounts. It is a lot easier for us to only do commercial. Here in the San Francisco area profit margins are pretty good. Doing only commercial accounts also helps grow your business a lot faster. To build a days route on residential you need at least 15 accounts, in comercial you can pick up apartment complexes that take 3 days to do. So filling up a weeks work can be pretty easy.
  9. cuttin-to-the-Max

    cuttin-to-the-Max LawnSite Bronze Member
    Messages: 1,338

    Im sorry about your experience with Commercial accounts but you shouldnt HATE Commercial accounts due to a NATIONAL Management co.

    Yes a lot of national accounts do suck. But first thing you said, THEY did the pricing for work the YOU were performing. I NEVER take accounts like this. Its my price of nothing.

    Also Personally In regards to snow, I rather be in my loader pushing a plaza for 3 hours than plowing 150 driveways..For one thing its soooo much easier on the trucks! Sign a Multi-year contract and you're guaranteed. Just be sure not to put all your eggs in one spot. I know a company who had 5 local Meijer stores and literally CRASHED when they lost the account.

    We raised our prices and lost a lot of our cheap Resi customers. They all switched to Lowballers. The ones who stayed are the loyal/ bigger yards anyway. THose are the Resi's that i like! Also with 300 Resi's you're waiting for your checks FOREVERRRR! With most of my Commercial I know when their checks go out and for the most part its consistant! just my .02
  10. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Messages: 2,764

    100% agree with plowing commercial lots vs. driveways. Plow 100 driveways at $30 a pop or one lot for 3k?

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