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The Economy as it Pertains to this Industry: My Thoughts

Discussion in 'Lawn Mowing' started by MOturkey, Jul 27, 2008.

  1. MOturkey

    MOturkey LawnSite Silver Member
    Messages: 2,780

    I've been thinking of this post for a few weeks now and, finally decided to make it.

    We all are aware the economy is not the best, and even with fuel prices on the decrease, at least around here, most would agree we shouldn't expect a quick turn-around. I've also noticed a few posts regarding the loss of business due to the weak economy, and have some thoughts regarding this.

    Some of the posters were obviously angry that their services had been eliminated. We all need to realize that there is basically no difference between us and our customers. For most, lawncare is a luxury, not a necessity. If you were faced with the choice of paying the electric bill or the cable TV bill, but not both, which would you choose?

    I have, during my time here on Lawnsite, seen dozens of posts with quotes like "I wouldn't drop my tail gate for less than $40", or "I won't do bi-weekly accounts". I personally think, if things remain tight for a period of time, many of the guys with that attitude won't be around long. Some will be OK due to the demographics of their service area, but for those, probably most, of us, that have customers who are struggling to meet their monthly obligations, inflexibility isn't necessarily a virtue.

    If I had a customer threaten to drop me due to reduced cash flow, I'd try and work out something with them, possibly skipping some cuts, or mowing the less visible areas of their property on an extended cutting schedule. In other words, I'd do anything I could to keep the account open, rather than lose them, because if they sense the attitude that you could care less about their business, and are ticked off because of the cancelling of your services, I strongly suspect, when and if they require lawn services again, you are not going to be the one they call.

    I am not knocking independence, just suggesting that as a business person, you have to go with the ebb and flow. If you are not willing to do so, you may well find yourself out of business. Just my 2 cents worth.
  2. Big C

    Big C LawnSite Bronze Member
    Messages: 1,642

    Good info...and very true....
  3. NCL

    NCL LawnSite Member
    from NJ
    Messages: 132

    If your not making a profit, why bother being in business???
  4. born2farm

    born2farm LawnSite Bronze Member
    Messages: 1,149

    here is what my plan is since i am just starting out my buisness. i am going to try and diversify myself as much as possible and get into sides of the buiness that people wont or cant do themselves.
  5. ed2hess

    ed2hess LawnSite Fanatic
    Messages: 14,298

    Good post this is another type of thinning the herd. Alot of folks probably won't keep working if they can't make $25 to $30 profit an hour. Some of us onthe other hand will be happy with considerable less. The mid size companies are doing to residential what the Trugreen and Valley and Brinkman did to commericial.
  6. DuallyVette

    DuallyVette LawnSite Gold Member
    Messages: 3,842

    At some point, you may have to lose $1000 a month to keep the $15,000 a month coming in. GM, FORD, and...that other one, may lose millions for months, but they keep some people working, and hope they can hold out for a better day.

    I live in an area that has a good economy. There use to be more diversity (manufacturing went overseas, bank services went overseas) We have some large banks here in Charlotte lots of layoffs coming. Their the ones in big trouble. Sub Prime lending, how was that supposed to work? Lending money to people that historically don't , can't pay their bills Charge them a higher interest rate, making it harder to pay. Sell them houses whose prices and values were inflated. Builders, brokers, and bankers SOLD lots of product, put their cut into their pocket, and now the government(taxpayer) tries to spend enough so that people aren't jumping out of windows.

    Try to cut your costs and hold on; or, go stand in the unemployment line.

    Welcome to Waltons Mountian
  7. DuallyVette

    DuallyVette LawnSite Gold Member
    Messages: 3,842

    How about some examples of this diversity, you speak of.
  8. whoopassonthebluegrass

    whoopassonthebluegrass LawnSite Platinum Member
    Messages: 4,305

    Efficiency is key. I've found ways to cut my time spent on the lawns so that I can avoid price hikes. So far so good...

    Working solo with a full schedule, if someone wants to quit on me - I just don't care. I'm certainly not rude about it, but I don't fight to keep them. I only want those who aren't feeling the crunch anyhow.

    Another thought: I, too, am looking at extra services. I have always hated the thought of weeding, etc... but with costs where they're at, I realize I walk away with a better profit from pruning, weeding, sprinkler repair...

    Good luck, guys. Maybe we'll all look back a year from now and laugh at this scare...
  9. jeffex

    jeffex LawnSite Bronze Member
    Messages: 1,933

    paying attention to YOUR individual circumstances and knowing the economics of your customers is vital to sustaining a business. How far down on list of things your customers can cut are your services. Will you be the first thing to go? then you need some better clients . Difficult in the short run but as a long term goal you need to develope a customer pool that would cut back on a few nights out or 1 less shopping spree before they would cancel you. Mostly a demographic thing . Elderly and physically impaired customers need your services to stay in their homes and will be solid even in rough times. A mix of customers is just as sound as a mix of investments. I believe there may be a new demand for "green" services in the future such as instalation of solar and wind power systems to homeowners. Rain barrel water systems my become the next best thing to install since the backyard pond craze. But these are still targeted at people who have disposable income. The "green" movement is still a luxuary in that it costs more to use less energy and water with current systems. They require and investment that hopes to recover costs over time. Finding a service that could SAVE customers that are struggling with monthly bills could be profitable. I can think of one ...spraying growth inhibitors on lawns to cut back on the number of cuts may keep a customer from totally canceling your service if your theroy is , some money is better than no money. I'm not ready to chase that yet but it may come to that for some areas of the country. IMO a customer who is considering dropping your service due to cutbacks in his/her wallet may be hard to return to previous level of service once you show them they can live with 2 week cuts or "B" level service. Not for me .. I'll find something else to do
  10. steve45

    steve45 LawnSite Bronze Member
    Messages: 1,325

    Granted, the economy is slow in some parts of the country, it is booming in many areas. It's not nearly as bad as the downstream media would have you believe. It's a ploy by them to help elect O'Bummer.

    Keep in mind that some areas of the country have suffered significantly from flooding this spring. Others are experiencing drought conditions. Where I live, we've had less than 2" of rain this year. The elderly lady across the street still has her lawn serviced weekly...

    I'd suggest that you really focus on doing a good job, which means personally following up with each customer when you're finished (if possible). Also, have a meeting with each customer if you need to raise your rates due to fuel costs, etc. I think most people would be understanding. If you have customers that are in a real bind, work with them rather than lose them.

    Another potential market is helping to improve the 'curb appeal' of homes that are for sale. If people are having trouble making their house payments and have to sell, show them how you can make their home more marketable. (Get cash when you're done!)

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