This always makes for a lively debate on the Gopher Lawn Care Business Forum. Should you build your lawn care business on commercial lawn care customers or residential customers and why? The answer a lot of times is shaped by the experience each business owner has had with these different types of customers. However when everything settles down, some common points seem to become clear and one path seems to stand out as a better way to go.
One lawn care business owner asked “I have built my business with about 95% residential lawn care clients and have done a few big commercial lawn car bids in the past week or so (still no word on if I got them or not). But to be honest I kinda hope I don’t get them & may turn them down if I do. It seems to me everybody out there wants the big commercial lawn mowing jobs so bad that it’s extremely cut throat and not worth it.
Say for example there is a 5 acre commercial property, everybody wants that big contract so bad that the going rate seems to be $9,000-$10,000 a year. If you break it down it has much lower margins than an already competitive residential market! My average residential area lot is 10,000 SF. So in terms of square footage 5 acres is equal to approx. 22 residential lots. What I make in going out & servicing 22 lawns in day (which is about what I do daily) is nearly what these contracts pay per month!?
So I ask the guys who focus on commercial properties….. what gives? If I can go out with 1 helper & in a day (16 total labor hours) make almost as much on residentials as a big commercial property pays for a month (that will take 2 guys, a half a day, 4 times a month = 2 days = 32 total labor hours). Why the hell does anyone do it? If you were just starting out & needed the work I could see it, but the companies that focus towards this are usually well established…. I just don’t get it? I can’t get passed that what I get for 22 residentials monthly is over a grand more per month than these places are paying for the same square footage. I’m not hurting for work by any means (thank god) and I don’t “need” these jobs.
I got calls from my advertising so I went & bid them, what the heck right? I looked at them several ways…. by sq footage, by time, accounted for the fact that one big account means less travel, fuel, even oil changes & brakes…. Still I don’t see it. I bid the jobs a decent bit over what they are currently paying but still less than what I think it’s worth to me really so as I said earlier…. I’m not gonna cry either way over these. I just hope maybe somebody can help shed a little light as to maybe a big advantage I’m not seeing here? I consider myself more intelligent than the average idiot but maybe I’m looking at this from the wrong angle?”
A couple of lawn care business owners told us why they liked commercial lawn care accounts.
“The benefits are small in size, but add up. Like for instance you said less gas, travel time. But also less people to deal with (sometimes customers can take up a ton of your time chatting, or this and that), 1 bill instead of 20. Less paper work, less stamps. I think you do more in a day than most other companies. So they may be servicing 10 residential customers in a day, so half a day job would only replace 5 of them instead of your 10 or 12. So the pay seems better for them.”
“What I like about commercial jobs is you can usually quote a bit higher, since the person taking bids for the job isn’t the one paying you. They don’t care what you charge, so they’re not going to be offended if you bill them a bit higher. I’ve just taken on 3 commercial accounts, 2 at $300/month and one at $350/month. All I have to do is cut the grass twice a month (none of them take over 2 hours) and do a bit of weeding/other stuff maybe once every two months. It’s a pretty sweet deal if you ask me.”
And here is a view on why commercial lawn care accounts aren’t the way to go.
“Well, here is my .02.
Residential cusomers are¬† the way to go. In the area I live, every pickup truck has a mower in the back. They go after these small commercial properties because the misconception is that they pay better. That might have been so in the past, but companies now are hiring people to cut costs. So they are going through contracts with a fine tooth comb.
With residential, as long as you have a good reputation, if you fall within $5 dollars of all the other bids, you’re gonna get the job. I recently combined my crews and was able to downsize my cutting crew to three guys. They are cutting lawns and if everything goes smoothly and efficiently, I can make upwards of $8,000.00 a week. That’s right.
With over 180 lawn care accounts, my foreman just called and said they are done for the week. It’s 10:30 on Friday morning. With those numbers, I can not see why I’d go underbid myself on a commercial property. In fact, even with this recession, I just gave all my guys a $1.00/hr raise across the board. It’s all about efficiency with residential. My guys don’t speak with the customer unless they have an issue that needs immediate attention, otherwise they call the office.
And to address the issue of billing, since we’ve switched to automated billing, we bill out over $3,500.00 of weekly lawn service every sunday. Payroll capital is never an issue now. And it cost a little less than invoicing with paper and stamps. My advice is to keep tightening your residential lawn care customer routes and know you limits. Take a map of the area that you do work in and create geographic boundaries. If you do this, you will make money!!!!”