Sometimes opportunities come your way that have the potential to really push your lawn care business way ahead of where you currently are. But how much growth should you be taking on at a time? Would you prefer large bursts of growth or slow steady steps? That is the dilemma one entrepreneur found himself in when he asked for help on the Gopher Lawn Care Business Forum.
He wrote “I have a dilemma. I’ve been in business for less than a year. Last year, we grew fairly fast. We picked up 30+ customers and have retained most of them this year and have added another 3 this week. My 5 year goal is to have 7 crews. Right now I have one crew with one stocked equipment trailer.
Today, we received a call requesting a lawn care quote on 2 apartment complexes. This quote is primarily a price check. The client has a total of 20 complexes in two towns within our service area. I can see the potential for having my business jump into overdrive.
On the other hand, a substantial investment would have to be made in order to handle this much work. Then, if I am dumped for any reason, I’m left holding the bag and my business may not survive. I agreed to give a written quote on Monday. I would appreciate any advice on this matter. My business is too new and too small to make a major financial mistake.”
A second lawn care business owner said “well that is a tough decision. You need to think about how much of an investment would it take in order to do this? I tend to be a risk taker and for the most part it has worked out however your comment about this being a price check would make me think again. Also having one customer with that much control over your company is not a good thing, especially if they sense you are smaller. Delayed payments can have a really negative effect on you.
I am staying away from commercial for the most part this year, I have accepted two commercial projects but they are not near the size of what you are talking about.
If you decide to do it, make sure there is an iron proof penalty clause should they back out. Perhaps you could look at a used vehicle to start, if you do take it on. I assume you would need to add a ZTR and as you know that is not cheap either.
Do you know anyone in the business that you could sub some of the work to, and know them well enough that they will do a good job? What made me think of this is I know two school bus drivers that operate one man lawn mowing shows in the summer. One is a good friend and I could/would consider sub contracting to him.
The other thing that came to mind, are these properties close to your current work? I was wondering if it would be worth hiring a couple of staff, pick them up early and drop them off at a site with a mower or two and a line trimmer, then do your thing with your crew, give them a cheap cell phone and tell them to text you with any issues, and if necessary you could always leave your job site since you have a crew there and move the property guys to another building.
It would be a pain I know but it would take out a lot of the risk, give you a chance to show your stuff and allow your company to grow. Bank the profit into a special ‘Capital Growth’ bank account.
It hurts sometimes to grow. I’ve been through this many times and seen many companies go through this in my years. Most of the time it turned out and worked well for them. Going from one to a two crew setup is the hardest leap you will face. It gets easier and the risk goes down as you add more crews after that point. If the economy wasn’t what it is I would suggest go for it. I have no idea what to expect this summer. At the moment I am flat out doing lawn renovation work and turning away two or three jobs a week, I find this very strange.
In my case I am fortunate, if the lawn care side struggles, I will focus on mini excavation or if that doesn’t work I will simply switch to construction, deck building mainly. A good rule of thumb is one customer should never represent more than 15 to 20% of your gross revenue. We could all probably take a 20% hit and recover but a 60% hit would put most of us under.”
A third business owner added “it’s a tough call. We can give you tips to help but ultimately… it comes down to how you feel about the job, industry, and future.
If you win the bid, you can have them sign an annual contract (or even a multi-year deal) with a cancellation fee if they let you go due to no fault of your company. If they can’t do that then you may not want to make the investment.
I had an opportunity to bid on 2 gated communities recently though they are both in the same area. It was about an hour from home and well outside our normal area. I thought about it for a bit and figured if I got them both it’d be worth the trip. Then eventually decided not to even submit a bid. It’s too far out of my range, but even if it weren’t that far I would have been in the same situation as you.
I had planned to open a 2nd truck this spring. I am trying to hold off on it now, but may have to before the end of season anyway. Growing pains are tough. You need to grow, but too fast means your expenses are eating profits and overhead skyrockets. If the market steps off or you lose a big client, you can get in big trouble quick.”
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