Trading Accounts

Discussion in 'Business Operations' started by edensgate7, Feb 21, 2012.

  1. edensgate7

    edensgate7 LawnSite Member
    Messages: 142

    Mabey I am the only one who thinks this way but as I pass by other lawncare companies on the road and see other companies working in what I consider to be my target area I always think to myself...what if all the reputable, quality companies in an area got together in some sort of association and pooled their accounts together then divided them back out based on area closest to each company's shop location and company's service profile. Big guys would get the big accounts that small and medium accounts don't have the equipment or man-power to do..., medium guys would get medium accounts that the big guys don't have time for and have too many laborers for anyhow and the small guys guys would get small accounts that the big and medium guys have that they do with equipment that is too big and with too many laborers that could be making better use of their resources on the bigger accounts.

    The reason to do this....efficiency and quality. Everybody would drive less, be able to do more work while making equipment and labor last longer and doing it all in less time. Accounts would be getting done with the right amounts of people and equipment. Companies wouldn't be competing to survive and "lowballing" to get accounts because they would all have their respective coverage areas and account types that they are set up for. I know for a fact that not everybody wants to be the biggest lawncare company out there that does everything for everyone. Everyone has their purpose and place in the market.

    With gas predicted on today's news to hit more than 5 bucks a gallon this summer, everybody would have to drive alot less and therefore would be much more efficient in getting jobs done which in turn creates the ability to make much higher profit. This may all sound like crazy talk but just wondering if anybody else has thought of it or considered it an option?
  2. elitelawnteam1

    elitelawnteam1 LawnSite Senior Member
    Messages: 410

    would you factor in how much each account is worth? what the chance of getting add-on services are?, etc.

    I personally wouldn't take part in something like that, i have a hard time believing other LCOs would take part in it either. There are way too many things to factor in (of course someone is going to try to come up with them all and post them)

    for some reason this idea sounds communist, but i'm not sure why
  3. Runner

    Runner LawnSite Fanatic
    Messages: 13,497

    We do this all the time. We actually have sort of a network of fellow companies and friends that we give each other work. It is a matter of establishing good relationships with worthy people. By worthy, I mean those with integrity, honesty, doing quality work and having professionalism. Many of us, believe it or not, actually help each other out in binds. It is not that uncommon if someone has a machine problem, to be loaned a mower or whatever is needed. Other times, one of us may go cut a place for someone if they are running behind or have a situation or crisis of some sort. This is not to mention those that are referred just for the niche and specialty work they do for certain things. We are much like the farmers... If one gets ill, the others are going to band together to get his crops out of the field for them. It is the American and Christian way, and I wouldn't give my fellow lco friends up for the world.
  4. edensgate7

    edensgate7 LawnSite Member
    Messages: 142

    I have been called that (communist) before lol. I am glad you replied too runner. Things must be pretty chummy up there in flint. I wish companies everywhere would at least be willing to try to have a relationship like you described. It would make things easier for all of us. True communism in its purest form is not a bad thing because everybody would care about everybody else and everyone would take care of each other without thinking what's in it for them. I am a christian as well and sadly what has become "American" for many is to "get ahead" (whatever that means anymore) at all costs and don't trust or help anyone because that will only slow you down on your way toward the top of the ladder of sucess (which has no top in this world that I can see lol).

    And to answer elitelawn's questions....yes there would be alot of variables that would have to be worked out and yes I would think the value of the accounts would have a significant part in how things were set up. As for value-added services, I posted this in the mowing forum because that is the type of business I am talking about (not to say that only mow-only companies could take part....that would just be the focus of the companies in the association).

    Ultimately it would take trust between the companies that would take part in this association of sorts but that's the beauty of it all. Everyone would be working "together" toward the ultimate "individual" company goal we all have (I think) which is being the most efficient most profitable and highest quality company that we can personally be and keep customers happy while doing it. I believe that goal is possible but not likely to achieve unless the majority business owners change their thinking on what it means to be successful.
  5. gebby

    gebby LawnSite Senior Member
    Messages: 712

    I did not read all of the posts. Please forgive me for not. Word of caution, there is a government agency that will take you to court and fine you heavily, tie you up in court for years, make you spend many many dollars to defend your self and possibly give you a go to jail card. Even if you are found innocent, you still get to to all of the above. Please never put your self in to a position to ever defend yourself. You will lose one way or another. Believe it or not this is a term we all have heard. Its called price fixing. FOR YOU, YOUR FAMILY AND YOUR BUSINESS, JUST SAY NO. IT IS NOT WORTH IT. Don't believe it, check with an attorney. You may even find it on the net. Check under antitrust laws.
  6. jsslawncare

    jsslawncare LawnSite Bronze Member
    Messages: 1,673

    I network with some guys and have traded up and down on accounts. It works great and like you say less driving.
  7. edensgate7

    edensgate7 LawnSite Member
    Messages: 142

    WOW...... I am shocked that my comments suggested that any association I am talking about would be fixing prices....that's not the point at all. I am talking about RELATIVE FAIR MARKET VALUES OF ACCOUNTS here. Each company would still negotiate their own prices with the customers they get in the trade process just like a normal free-market would operate. They would just be dealing with customers that they are best suited for considering proximity to their shop and their ability to meet that demograhic's needs.

    For example... I have my largest commercial account that is a 10000 dollar a year contract that is 15 miles away from my house. Another company larger than I am is located right next to the one 15 miles away and they have two medium -sized contracts that are probably worth close to 10000 per year that are only 3 miles away from my location. We both do the same type and quality of work (mow, trim, blow, fert, trim the bushes etc. ) In my proposed association, I would trade my largest account which I am barely big enough to do at this point in my business for the two smaller ones that are closer and more suited to my desired customer demographic. I drive 24 miles less per mowing and I am taking care of a customer that is more suited to what my business is set up for. Likewise with them. We all make more money because we have less overhead. Competition would still be persent in the marketplace for customers because companies would move from demographic to demographic in their area specific areas as they run their company as they see fit.

    It is still free market because the customers and I would still come set an agreeable price and terms for the account and they would then be my customers. The larger company would do likewise and my one customer would be theirs. It is just companies doing business the most efficient way possible which makes prices cheaper for everyone. The government has never (that I know of) gone after companies for doing things more efficiently and at less cost to the consumer. As a matter of fact, that is what electric coops are all about. They get together a certain area of customers to buy electricity at lower costs from power plants that can provide service to them than what the individual could get on their own. The power companies like to serve different sized large groups of people because it is more efficient to do business that way than to have a power plant for each town. Bigger power plants get the bigger cities and smaller plants get smaller cities etc. Its all about maximizing efficiency, profit, and consumer satisfaction.
  8. gebby

    gebby LawnSite Senior Member
    Messages: 712

    First off I am no attorney. Second I believe the power companies are already regulated by government agency's. They are not allowed to do anything before they have the OK to do it. Let me just say this again before I would agree to do any sort of trading accounts, I would check with a lawyer that knows the antitrust laws in the USA. What appears to be a great idea to most people and companies in no way apeals to the government. I have been in front of a Federal Grand Jury to testify before. I worked for a mid sized company that was being investigated for price fixing and or splitting territories up. 4 years later all the regional companies being investigated were found innocent. Unfortunately all of the companies had spent over one million dollars each to defend themselves. That does not count all of the hours the employees spent gathering information and records for the government and the lawyers. Being innocent was great but the blemish on the companies along with the employees was very hard to deal with. If you were to ever to go testify before a federal grand jury for hours you would have a better understanding. Couple of other interesting facts. Our attorney once worked for the Antitrust department. While eating lunch with this man he hands me a index card. I look at it and he said read this and put it in your pocket. He advised me at the first question I am asked, pull the card out and read it out loud. Even though I did nothing wrong, I was forced to plead the 5th so I could get immunity for something I had never done. I did what I was advised and then signed papers to get immunity for my testimony. To top it all off while walking through the courthouse our attorney is telling his buddies to get more guys in there because he needs the business. So, again, before you agree to trade any type of business work, call an attorney or be be prepared to possibly face the consequences.
  9. edensgate7

    edensgate7 LawnSite Member
    Messages: 142

    Wow what you have described sounds like a serious deal. I don't want to get into any political discussions over this because that is not the purpose of the site. I haven't had any companies in my area that I have any kind of relationship with that are willing to do the sort of thing I am describing so it is a non-issue anyway. If something like this were to ever happen on a large scale in the region though, I am sure there is a way to satisfy the government's concerns up front with the sort trading I am talking about without being in danger of price fixing or manipulation of markets. I don't think the governmental part of all this would be the hard part....I think getting stubborn business owners set in their ways to work together and trust each other would be the greatest challenge;) Thanks for your advice and sharing your experience though gebby. Like you said, it is definitely an idea that would have to be implemented the right and legal way up front:)

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