We don’t often get a chance to look inside a lawn care business after it fails but there is a lot to learn from the experience. Most of all, we want to know why it failed. What did the owner do or not do that attributed to the demise of his lawn care business? You can join in on this discussion at the Gopher Lawn Care Business Forum.
Mike wrote: “I am 21 years old and have 2 years of a college education complete in working towards a business management degree. My education has been temporarily suspended while I get this business up off the ground. I have always been told that I am very business and entrepreneur oriented, and consider myself to have some business sense for my age.
Previously to starting this lawn care company I was the manager of another lawn and landcape company in my town. This lawn care company is now defunct. This past February the owner came and told me he was going to liquidate his lawn care company. This was a bombshell to me, because he had led me to believe I had a future with his company and maybe even an ownership oppurtunity. He did offer me his residential lawn care accounts free of charge. I felt this was the least he could do. He agreed to send all of the lawn care customers letters explaining the transition, and agreed to help me get started. However, I haven’t heard from him since, and he never sent the letters. I pressed forward and talked to as many lawn care customers as I could, and was still able to pick up some. I picked up some others on my own by flyering, and bought some accounts from a competitor mid-season. All in all I would consider my first year in business to be a success. I have learned alot.”
Steve: “What do you think attributed to the liquidation of that company? What do you feel you learned from the experience?”
Mike: “First of all I said that it was a bombshell that he was going to liquidate in my previous post. This is partly untrue. I should have seen the writing on the wall, as it was all over the place, but I was 100% committed to turning this lawn care company around and making it work. Also, as recently as December (He liquidated in February) we had meetings discussing the future of the company and my role with it. Never was liquidation mentioned. Three major contributing factors led to him having to liquidate his lawn care business:
Money Management (Debt): This guy had more debt than you could shake a stick at. I never have seen anything like it. He financed his entire business on credit cards and, used credit cards to run his business. He also never made smart purchases. We had 7 lawn care trucks 5 of which had valid registration and license plates. We never used more than two in a day. 3 of these lawn care trucks were nice or decent and the other two were junk. He wouldn’t get rid of them? Why? I’m still asking myself. Also we had a shop full of lawn care equipment that never got used. We were primarily a lawn mowing company with some landscaping, and a snow removal operation in the winter. For instance. This guy had probably over $3000 in tree trimming equipment. Everything that you could imagine. You could scale a California Redwood with this crap. In the three seasons I was there we maybe did two tree jobs. Neither of them required more than chainsaws and trucks. Ridiculous. Also with all this debt and credit cards eager to spend money on he never purchased a Skid steer or compact utility loader which we were in dire need of. In the time I was there we spent so much money renting Bobcats we could of bought a damn good used one if not a new one. He wouldn’t break down and make that purchase, or at least purchase a dingo or something.
Equipment Maintenance: He did no lawn care equipment maintenance whatsoever. I did the best I could to maintain his lawn care equipment when I came on, but most of it was already trashed. He had two Walker Lawn Mowers with less than 3000 hours on them that were just ruined. He never greased them or did the required maintenance. They burned oil etc. His philosophy was all Kohler engines burn oil. BULL HOCKEY. I purchased a new Walker mower and have put a lot of hours on it and it has yet to burn a ounce of oil. I have done all routine maintenance religiously. That is the only difference. Also, in this lawn care business things happen. Things break. Things will need fixed from time to time. Whenever something needed fixed 9 times out of 10 it was fixed improperly, not fixed at all, fixed halfway, or jerry rigged in some time of way. Duct tape was his best friend. For this upcoming season he was going to need to drop a lot of money on equipment when all of it was prematurely destroyed, he had extended all of his credit, and had spent all of the cash paying creditors. SCREWED.
Communication: This is one of the major keys to business success, and he ignored it. He failed to communicate with his lawn care customers, and he failed to communicate with his lawn care employees. He had to go back to work full time at a local aircraft plant to pay creditors. That is the primary reason I was running his business. There would be weeks when I wouldn’t even talk to him or him call me. I had a company credit card in my pocket. I went out did the work, sold a job, or two, managed the employees, bought what we needed to operate and went home. Often times when I would call him to give him a report on the events of the day he would act as if I was bothering him, so I eventually just left it up to him to get a hold of me. Often times when we would communicate it would be over a case of beer at the shop. Nothing was ever serious. When I started calling his customers to let them know that A. he wasn’t showing up this season and B. I was if they would give me a chance. I was flabbergasted by what one customer told me. This lawn care customer lived in a neighborhood where we typically did not do leaf removal, but his yard had more leaves than others. He said, ” I probably called______seven times last fall requesting a leaf cleanup, and not one of my calls was returned.” I apologized and informed him that I had not been notified either. He was not at all surprised. He said that he had already found somebody else for the season and wished me luck. What could I say? The story was similar with many of his lawn care customers.
Needless to say this lawn care business was doomed, so it is probably a good thing that he liquidated. I did learn a lot from this guy. Mostly how not to run a lawn care business. I could talk your head off about this guy, but thats pretty much the gist of it.”
Steve: “What do you think got him into most of that debt? Do you know any history on how he got started in the lawn care business or why? Did he have any background? What do you think you will do differently from him?”
Mike: “As I said, 3 of these lawn care business trucks were decent and 2 were junk. We never really used more than 2 in any given day, but we did run 4 snow plows in the winter. 1 of these junk trucks was 2 wheel drive. We used it as our salt-sand truck, but it was useless with a plow on it. I was trying to get him to sell these two junk trucks and buy 1 nicer one that was 4 wheel drive and more functional.
His equipment replacement policy was simple. He didn’t have one. He finally broke down and bought 2 new trimmers and a new push mower towards the end of last mowing season. The only reason he did this, was if he didn’t we weren’t going to be in operation. Consequently the trimmers were not broke in properly, because they had to be immediately thrown into service.
First, what got him into most of that debt? I’m not 100% certain. There were several mitigating factors, I’m sure. Like I said before, he made many unwise purchases. Most of these were financed by debt. Then he would realize that it was stupid and then go make another purchase to fix it financed by debt. It was just a compounding snow-ball effect. That is the way debt works. If you let it get ahold of you, it is going to snowball out of control. What is so ironic, is this guy isn’t dumb. He graduated magna cum laude with a degree in economics from a ivy league school. He’s a genius in alot of aspects. Alot of times I thought he was almost too smart for his own good. It’s amazing that he amassed such a large amount of debt with an education like that.
Yes, he did have a background in the industry. Him and a partner started out push mowing 40 lawn care mowing accounts about 8 years ago. Whats sad, is that 8 years later when he liquidated he only had about 75 lawn care mowing accounts. He just didn’t grow enough to sustain his business structure. He had his business structured to be a full service, growing, lawn and landcape business, and he just couldn’t sustain it without growth.
What am I doing/going to do different from him? A lot to say the least. I did start my lawn care business with a loan, but I made sure that it was one that the business could easily pay off. I have one company credit card, as opposed to his 10. I have only used this card when I have absolutely have needed to. I use my cash in the bank, when at all possible, and avoid using my credit unless it is urgent or an emergency. Also, I know a thing or two about money, but not near as much about my Dad. I have sort of brought him on as a C.F.O. type of figure to help manage the company finances. This was an excellent decision, and has definitely saved us some headaches.
Secondly, I perform all lawn care equipment maintenance religiously. All the maintenance charts were taken out of the lawn care equipment owners manuals, put on to spreadsheets, and posted in the shop. All of my trimmers, and blowers are serviced every 100 hours. Also, I plan to replace all the equipment every three seasons. Including vehicles. Another good rule to follow is try to replace at least one piece of equipment each season. For instance, I plan on replaceing my hand held blower with a 2nd. back pack blower before next season. This is a good way to grow your equipment fleet, as you grow your business, and also keep things in good shape. Also, don’t purchase equipment until you need it. For example, I did not purchase a chain saw this year until I sold my first tree job.
Thirdly, I communicate with all my lawn care customers and employees reguarly. Talk to your employees daily, even if you get rained out. Always check your phone, and return phone calls. Check your voicemail. This guy never checked his voicemail. If your on a customers property and, you see them outside, take a minute, stop what you are doing, and reach out to the customer. If nothing else, just give a friendly hello, or how are you doing.
Fourth, I market my lawn care business which he didn’t do. We have signs on our truck. He didn’t until his last year in biz. We flyer like crazy, and we have a plan for growth. Those who fail to plan, plan to fail.”