Have you considered offering customer’s 3 year lawn care contracts?

Are you in need of more cash now to upgrade your equipment but you don’t want to take out a loan? Why not consider this business owner’s method of raising a large amount of cash, offer a 3 year prepaid lawn care contract to a favorite customer. In this discussion from the Gopher Lawn Care Business Forum, a member discusses the details of his contract and how he got a check in hand for $14,000 by offering a customer a long term contract.

He wrote “well, I made out with a huge deal today. I locked in a current customer for another 3 years and he pre-paid all the way. Amazing! This is a guy that has both a commercial and residential property that I service. Thanks to this one contract, I have decided to take the winter off!

He has been a great customer with me for a couple of years now and he must think that I am a great service company as well. Before me, he went through 3 companies in only 2 years. He is currently on his 2nd year of a 3 year contract with me in which he pre-paid for. But I thought of a good way to get some cash in quickly and pay off some business debt by extending his contract.

There is a catch to it though. I agreed to let him pre-pay for three more years at the same exact price that he paid in two years ago on his first contract. Now you might think that I am nuts because the cost of living, fuel prices, and everything has gone skyward since then, but I am currently thinking of short term gains from this contract and long term gains. By getting the money now, I have approximately $14,000 to use right now for equipment and most importantly to pay off debt. By paying off that debt now, I do not have to worry about any more interest rate charges, which in the long run, will save me money.

Another key reason to lock him in is because his house and office are both key properties for me. At his office, I already maintain 2 of his neighbors, and at his house, I already maintain 3 of his neighbors. So if I was to lose either his house or his office, I feel that the surrounding neighbors might leave too.

I might get nervous about this long of an offer if I didn’t get along with the customer so well. Luckily I have only had one customer where I wanted to get rid of them so badly. They were on a 3 year snow removal agreement. Finally last year (the 2nd year of the contract), we both agreed that it would be best to go our separate ways. It was fine by me. I was happy. I didn’t even charge them a cancellation fee.

In regards to customers paying so far in advance, it states in my lawn care contract, that if they cancel at any time there is no refund, only credit towards future services. That saves my butt in case they cancel after the 1st year and I have to try to come up with $10,000.

Perfect example of this. I had another customer, that pre-paid for his house and his mother’s house in advance for the year. His mother’s house was on the market and it stated in the contract that only a credit would be given if her house sold. Well, the house sold and he got a $900 credit. He applied it to other things around his house and basically ended up using the entire credit. But he never got the $900 back in cash.”

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