Have you been looking to purchase an existing lawn care business? There are many pitfalls to buying a business but some entrepreneurs seem to have great success with it. Before you jump in and try it, consider this discussion from the Gopher Lawn Care Business Forum on how one entrepreneur found success. The suggestions he has could be used as a road map for you to follow as well.
He wrote “I am in my second year of lawn care, after having bought an existing company. I run a two man team and love the business.
The biggest advantage I found to having purchased an existing business, is the contracts. Instead of having a few years of struggling to acquire customers, they were already there. My specific challenge after buying this company was taking it over mid season, and taking care of the customers so that they would return. To do this, I lowered the labor rate immediately and began to up-sell services to the existing customer base. Looking back so far, I don’t think I would have changed anything. My strategy has worked out pretty well.
When I took over, the labor rate was very high. Mostly it seems because the former owner was burnt out and just kept pricing jobs higher and higher so he’d get less work. I also found that because of his high pricing, the current customers were having other people do all this additional work like ( aeration, power raking, clean-ups), because they were cheaper.
As I found this out, I decided to cut the labor rate in order to be competitive, and then try to get them to have me do the work again. There were also some that just didn’t bother doing some of the extra services, because of the huge amount of money the former owner had quoted them.
I think someone who is thinking about purchasing a lawn care company should really look at what the former owner was charging, and decide if that is fair market pricing for your area. Maybe adjust it if you think you can do it, but don’t starve yourself out either. You may be surprised to find they could be charging too much or even too little.
To price jobs in their sweet spot, you really need to know your operating expenses before you start messing with your prices. The down side to lowering your price can be that if you go too low and can’t cover your costs, the customers will expect that price to continue for some time. Then it will be hard to turn the price around so quickly and raise it back up. Customers like price cuts, not increases. For me the price cut made sense and helped build a better relationship with my customers. I wanted to think about the long term sales with them, not gouge them for one big sale. Each business owner needs to find a profitable balance.
As far as up-selling goes… I also decided to offer extra services at a cheaper rate for contracted customers. Something like aeration is $15.00 cheaper for contracted customers. The logic behind that is if I’m already going to the customer’s property, I will save on an extra trip, so why not pass that on, and almost guarantee extra repeat services from them. So far this has worked really well, and yielded many new referrals. Amazingly enough, I have not had to do any advertising yet, it’s all been word of mouth.
I am finding as long as you do good work, at a fair price, and take care of your customers, you will retain them (and get new referrals). The best thing you can do to improve customer relations is talk with, and more importantly LISTEN to your customers. Often times they have done the work for you. The consumer most times is the educated about what the average price is because,
- They obviously don’t want to do it themselves.
- They don’t want to pay more than they have to.
- They want to be able to trust you with their property as they often won’t be there.
Trust functions both ways. I am of the opinion that if I am completely honest with them, they will be honest with me. That works for the most part. You will always have the exception to the rule, but that goes for anything in any business.
At times, I’ll get calls like ‘my guy isn’t doing such and such service this year, and I want to see about what you would charge.’ When I get such calls, I go and have an estimate price in mind of what I would like to do it for. While on site, I usually ask what the last person did it for, and I explain that I don’t want to shock them with an increase they can’t handle. I then try to match that price as closely as possible. You have to keep in mind that some of these people are on a fixed income, and they may have to say no, even if they are sold on you. Sometimes they tell me a price that’s higher than I was thinking, so over all, I think it evens out.
With all that I have learned, I would recommend an entrepreneur who is thinking about getting a business started, to consider buying one that is already in operation. Go out, visit the customers. Get to know what the pricing is and what kinds of overhead the company has. From there you can see what you might do differently to improve the business and improve the bottom line.”
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