Landscape maintenance businesses are a very hot topic these days. If managed properly, they can turn into billion-dollar revenue streams, a fact which has, by no surprise, caught the eye of many financial institutions. Private equity firms seem to be snatching up landscape companies, and at good multiples. But they aren’t the only ones who are sitting up and paying attention; so are landscape contractors themselves. There seems to have been more activity in the last six months than in the two years prior combined.
Although much of the activity from the financial institutions has been geared toward companies that specialize only in landscape maintenance, they are also looking at opportunities within smaller companies who balance both design/build and maintenance.
As the financial market seeks more acquisitions, opportunities available for the smaller landscape contractor are enhanced.
There is a middle tier of landscape contractors who not only do design/build, but also have maintenance routes, working on small commercial accounts.
For this article, we will be addressing the contractor who does design/build as well as monthly maintenance.
Rick Doesburg, CEO of Thornton Landscape, Cincinnati, Ohio, had to overcome his preconceived notions about maintenance when the housing market crashed.
“For most of our history, we were 100 percent design/build,” said Doesburg. “Two-thirds of our business went away when things went a little crazy in 2008, and we figured we had to make some changes if we were going to stay alive.”
Now, more than 50 percent of his business is maintenance, and he plans on keeping it that way.
“We had a lot of growing and changing to do, but we were able to hang with it,” said Doesburg. “We are still continuing to grow.”
Doesburg’s philosophy is: the more diverse the services, the better off the business will be in the long run, assuming they are skilled at what they do.
Maintenance work may get the reputation of being mundane, but in actuality, a well-managed maintenance division can provide income security to a company while it’s waiting for the next design/ build contract. Hitting the streets and offering quality maintenance services is the tip of the landscape iceberg. Over time, as you provide your customers with quality work, they will begin to have confidence in you, creating a doorway to other services and revenue streams.
Now, it’s great to get a lot of mowing jobs right off the bat, but if you start off overwhelmed and unprepared, you will lose control and your business will ultimately suffer. It’s a fact, but it doesn’t have to be a death sentence. As with all skilled jobs, there are challenges to overcome. If you can tackle the first few obstacles, then you will be on your way to creating a profitable business.
So how do you avoid crashing and burning? What are the obstacles to look for?
First, be aware of your competition—they’re out there and while there are more than enough lawns to go around, the success of your business will depend on how you interact within your immediate market. Next, make sure the equipment you own will be able to handle multiple types of terrains, such as slopes and sites with limited accessibility. Lastly, the most important aspect to having a successful maintenance division is proper time management.
Okay, so maybe it’s not as easy as making money in your sleep, but conquer these three obstacles, and you’ll be able to make money by simply riding around on your mower.
There is a lot of green to be made in grass. That being said, do not expect to grow a successful maintenance business from the turf up with just a push mower and an eager attitude. It takes time as well as smart business planning to stay ahead of the competition.
Be business smart
The maintenance portion of landscaping, similar to the service industry, is built on customer satisfaction.
So before you get the “mowing itch” (from all this talk about money to be made) and blindly hitch up your trailer, be sure to examine your marketplace first. Analyze your desired niche, locate potential clients, run the numbers, and determine if it will be worthwhile to expand.
Picking up jobs that others have cast aside is a strategy that is still paying off for many maintenance companies. However, if you find that your business is not growing in the way you had imagined, it may be time to start planning a more focused marketing strategy.
It can be challenging, especially in larger residential neighborhoods, to know which clients to target for maintenance services. Knocking on doors is a great way to get started, but it does not help you direct your efforts. It can be an extreme waste of your time if you search inefficiently.
So let’s discuss who you should be targeting when offering mowing services. The list of potential customers who will likely need assistance with maintenance includes homeowners who frequently travel, retirees, “snowbirds” with winter homes in warmer climates, and condominium association or facility managers. (Keep in mind that there are other arenas to target outside of the residential marketplace, such as golf courses and city properties.)
Many homeowners will jump at the chance to have a real professional who knows the business of tending to turf. They want someone with the proper equipment and expertise to get the job done right. And if they know you from a previous install, you are more likely to beat out your competition.
Grow your customer base by increasing your form of brand recognition. While billboards and print ads can be too pricey for smaller companies, email marketing is a great alternative. A business can send out thousands of emails for approximately the same price as one newspaper ad. Other forms of inexpensive marketing include social media outlets and building up a good reputation through word-of-mouth recommendations.
Just remember, while you concentrate on expanding your client base, don’t forget about your current customers. They are more likely than any other demographic to hire your company again, as they are already familiar with your quality.
After locating your customer base, next focus on determining your pricing system. A maintenance contract over a 20-year period can be worth millions of dollars, so it is important that you take into consideration your time, labor, and competition when determining your end fees.
While you do not want to be the most expensive service in town, you also do not want to saturate the market by undercutting the competition. Doesburg has found that some of the bigger maintenance companies are more willing to get down and dirty when it comes to pricing out their services. Most will deliberately underprice their mowing services to stay ahead of the competition. They are more worried about beating out the competition than about the quality of service they provide.
“Recently,” said Doesburg, “we’ve found that the low bidder isn’t really chosen anymore, because the client is so frustrated with the poor quality of work they end up getting. It just doesn’t match up.”
Pricing your services somewhere in the middle or toward the top of the range is a good rule of thumb. Most landscape professionals determine their rate by “guesstimating” how much time it will take them to mow a property, and then multiply that by a price per hour. However, the problem with this method is that variables such as steep slopes and ornamental landscaping can affect the estimated time.
For example, let’s say you estimate it will take you 70 minutes to mow a 10,000-square-foot property using a 22-inch mower. Based off of those variables, you calculate your rate. But toss in a multitude of backyard obstacles, and your estimate is no longer accurate.
Experts recommend pricing based on lawn size. This is a less arbitrary way to set up a pricing structure. You will appear more professional to prospective clients if you have an established, formal price structure.
(To account for any unseen variable, you can build an adjustable percentage into your price.)
There are many different options to choose from when it comes to collecting payments. You can create packages or contracts, charge by the hour, or simply collect a flat-rate per visit. Every company does it differently.
“We structure our services to be flexible to our clients’ needs and budgets,” said Rick Huffman, director of landscape management with The Pattie Group, Novelty, Ohio. “They are itemized and provide frequency options. This allows us to build piece-by-piece a package that is right for each specific client.”
Stay Green Inc., in Santa Clarita, California, offers its clients yearly contracts with a 30-day cancellation clause, providing customers with the freedom of flexibility. These contracts usually work best in areas that do not experience strong seasonal changes.
While there is no right or wrong way to draw up a bill, you will want to make sure that whichever method you choose is by far the best for both you and your customer. For example, you might find that offering longterm contracts as opposed to month-to-month will eliminate the hassle of needing to go through the bidding process each year.
Choosing the right mower or mowers
When it comes down to it, size matters.
“Depending on the size of the job, we go from 21-inch push-behind mowers, to 36-inch stand-on mowers, to 52-inch and 72-inch ride-on mowers,” said Grant Clack, an operations manager at Stay Green. The company has more than 80 different mowers on hand for their 275 employees to use.
It may cost more upfront, but in the long run, larger mowers can cut labor costs if used in the right situations. One crew member with a large mower can trim a football field in approximately an hour, versus the two-and-a-half-hours it might take using smaller-decked mowers. That is labor saved, and labor saved equals money saved!
But bigger isn’t always better. You have to examine your client’s property before determining if a bigger or smaller mower would be ideal. Large-decked mowers are designed for cutting open, grassy areas; they are not usually ideal for residential yards that have an abundance of scattered trees and patio furniture.
Therefore, if your business is mostly residential, you probably will not need to purchase a massive mower. The time wasted maneuvering a large piece of equipment around tight spaces, even if it is a zero-turn mower, will cancel out any time you saved by cutting wider swaths. Instead, complete the task using a smaller mower. In the end, it will be faster.
Whether you purchase a walk-behind, stand-on or riding mower will depend on the sizes of your job sites. If you are mowing mainly large sites with multiple acres, you should take into account the fatigue factor. Your crews will be very tired by the end of the day if they are stuck cutting big areas of grass while either standing or walking behind their mowers. Tired workers make for slower work, and in the end it will affect how many jobs your crews can finish per day.
Now that you’ve thought about which type of mower is right for your business, it’s time to think about where you are going to purchase said mower from. Before you walk into a store, check out a dealer’s reputation. Having a good relationship with a good dealer is crucial. It can either make or break the type of customer service you will receive. Find out if he’s going to offer you future support in your area. Does his repair shop work fast? Will he provide you with a loaner in place of a damaged mower?
Mowers that break down in the middle of a job can cost you money in terms of time and labor, even if the mower is under warranty. It is crucial to the survival of your business to keep your equipment in peak condition. The list of routine maintenance duties includes cleaning the mower blades daily, changing the oil as necessary, and cleaning the air filters to keep engine wear to a minimum. Keep in mind that the easier the maintenance is to do, the more often it will get done. Also, purchasing mowers that are the same brand can be a good policy, as interchangeable parts will make for a smoother repair process.
A little TLC can go a long way. A quality commercial mower should give you years of solid service, but you can shorten the timeframe considerably by putting off manufacturer-recommended maintenance.
Time is money
Scheduling for multiple jobs and crew members can get complicated. If you think it’s simple or unimportant, you are going to find yourself out of business pretty quickly. You have to be vigilant about the logistics—from travel time and needed equipment, to the amount of knowledge your crew members possess.
The Pattie Group applies the basic principles of Time and Motion Studies, the scientific study of completing tasks, to manage their crew’s limited time wisely. “We want to be as efficient as possible,” said Huffman.
This is a great tactic for any company, whether they are extremely large or quite small. Smart planning is essential for all companies, because a job can take anywhere from between eight hours to as little as half an hour to complete.
When planning out your service days, plot the most direct routes possible. You want your crews to spend as little time (and as little fuel) as possible when commuting between jobs. Cut down on the number of crosstown trips your crews will need to make in a single day. Remember, you are paying them even when they are sitting in the truck.
Make sure you know the dimensions of your clients’ properties and the exact amount of time it will take to service them. This is a critical piece to the scheduling puzzle, because the effects of underestimating can snowball. If it takes your crew 15 minutes longer each week to complete the job, over time, that will add up to a lot of extra costs.
“We rely on our skilled labor; a lot goes into how well the crew is trained,” said Clack. “We’ve had employees who have been around for 40 years, so they are all very skilled and knowledgeable. They know the way we work, and get the job done a lot more efficiently than others who are still being trained.”
Another way, besides mastering the art of scheduling, to save time (and therefore, money) is to offer mulch-mowing services. This mowing method involves pulverizing grass clippings and leaving them behind on the lawn. The organic matter found within the clippings breaks down, returning nitrogen and other nutrients back into the soil.
“Mulch mowing does make the job faster,” Clack said. “It is an added bonus environmentally for our clients, and for us it saves a lot of time wasted on bagging.” It’s a win-win situation.
In addition, what once took hours to do manually can now be done using a variety of software tools and apps such as Jobber and the Landscape Management Network. These programs help take the guesswork out of creating a schedule. Browse through a variety of options and choose the one best suited for your company. Each program or app may have a different approach; make sure you do not simply choose the first one you see; don’t pick one based on popularity alone.
Expanding into the world of mowing and maintenance can provide the kind of ongoing, supplemental revenue stream to keep your business running smoothly even in the off-months. You don’t have to live in a major metropolitan area with big corporate clients to run a successful maintenance division. Every town has school districts, shopping centers, restaurant chains and office parks. If they have grass, it needs to be mowed. There are opportunities everywhere!