There is a big difference between gross income and net income. All too often when a new lawn care company is bidding on a property, they look at the gross income they will make on the job and disregard the actual amount they are going to be profiting. As we will see in this discussion from the Gopher Lawn Care Business Forum, to turn a blind eye to this issue is to take steps towards your demise.
One lawn care business owner wrote “my husband is a real go getter. He has been doing side landscaping jobs for as long as can remember. I have been telling him that all it takes is 1 commercial lawn care job and the side work he has now and from there he will soar! I am taking this upon myself to get him launched. I plan for this year to be our year!
Recently I got word that a relative of his, who works for a medical building, that they are accepting lawn care bids. We have never bid on something this large before. All I am working with, at the moment, is a proposal from another company, as a template. I also looked up some local businesses in our area for some of the services that they offer.
I believe with what I have put together so far, we are low balling tremendously. The way I look at it though is that it’s a start. Another company bid $175 for weekly lawn service. I bid the job at $150. He is charging $15 for garbage removal. I am not charging at all for that extra service. On my proposal I threw in Spring and Fall cleanup at no charge. To replenish mulch beds once a year, he charged $750 while I charged $650. He is spraying the mulch beds weekly for $10. I as well charged $10 for mulch bed maintenance weekly. Tree and shrub pruning he charged $525 I charged $475.
I would like to throw into the proposal, edging of walkways and planting beds that the other contractor did not suggest. I am not sure what to charge though? Any suggestions? That is my final part in submitting my proposal. I am limited on time if anyone can help.”
A second lawn care business owner said “cutting prices to get work is in my 35 years of experience why thousands of companies small and large go under every year.
Your making a bunch of mistakes. First off it’s one thing to charge a few dollars less. It’s quite another to do something for free. To make it worst you don’t know the cost.
You are basing your proposal off another company. No two businesses are alike. The other contractor could be using a $14,000 mower and cutting in 45 minutes. Your husband might take 4 hours to cut it. The contractor might have a bucket loader so he could have bid the mulch with 2 hours labor plus materials. When your husband might pay $600 for mulch and spend 8 hours spreading.
I have been doing commercial work for years and every year at least one won’t pay there final month of service. Get use to being stiffed for thousands. Can you survive that?
Now I mainly perform excavation and landscaping services as I wanted to be more specialized and have a niche business. I had the capital to buy equipment the small guys could not afford or get financing for and I stay under the radar of the larger companies by simply not doing the work they do.
But even in landscaping this year I see guys renting equipment with no experience and doing a terrible job, I would guess 70% of our business has been fixing other’s mistakes, customers want to sue the previous companies and many do. The problem is they declare bankruptcy and are back in business under another name in no time, it just baffles me.
I had a neighbor who had a very, very successful lawn care company and they were big. I know he had at least 4 wide area mowers, those rigs were $30,000+, at least 6 trucks with trailers, they also offered snow plowing.
We had three winters with little to no snow, the majority of their lawn work was commercial which is put out to tender from time to time, they got low balled, he told me in April of last year they lost over 80% of their clients as they could no longer compete with the new guys on the block that have no idea what it costs to do this legally and right.
He went out of business and has since lost his home, it’s a really sad story. I see almost all of his equipment is still at the dealership, some of it he had paid for over the years but the gear he had was top of the line. Around here, if you get 30 cents on the dollar of the original cost for such equipment, you are doing good.
Best of luck but my best advise is a business plan and know your costs or as mentioned, you will be out of business in no time.”
A third said “I think the worst thing that has happened to you is getting a hold of another contract with prices already on it.
You cannot base your prices on what someone else charged/charges to do the job. I may only need $35 an hour to be in business and make a profit enough to support my family ( wife, no kids, all grown and out on there own, and wife working ) where you may have a larger family and need more income to survive.
If you would’ve ran your own numbers then compared, you would at least know your cost and what your losing. No 2 companies are the same. The other company could’ve been next store to the site or bidding it just to stay busy with no profit.
I submitted a bid in the past and a few months later got a call asking if I would drop my price $75 a month. I agreed knowing that it wouldn’t hurt me at all as the spring clean up and mulch was already done. If they would have called and said can you do it for this price, without me bidding it first, I would have hung up.”
Read more about Lawn Care Business Bidding Tips, Upsells, And Disasters To Avoid. Learn how to improve your bidding process with this book and be prepared before hand by knowing what you should be looking out for before a problem occurs.