March 5 2018 04:22 PM

What you need to know before putting your business at your customers’ fingertips.

Almost like a magic wand, a smart phone app can make just about anything appear very quickly. A consumer can summon a grocery delivery from Instacart, a dog walker from Wag! or a ride from Uber or Lyft.

And now, too, he can use a number of app-based services such as Plowz and Mowz, Lawnly, Green Pal, LawnGuru, YardLove, Lawn Love, Cuttly, Mowdo, LawnStarter and others to have someone come in minutes to mow a lawn or plow a driveway.

On-demand, app-based companies all work in a similar way. A contractor signs up for free. He is then offered jobs through the app, which he can accept or not. The company decides how much to charge. When the contractor completes the job, he gets paid within 24 hours.

The app company takes anywhere from 15 to 30 percent of the gross. That percentage pays for the cost of booking and dealing with the customers. If there is a problem, the app company handles it. All the contractor has to do is the work. He doesn’t have to worry about advertising, accounting or other overhead costs.

However, he’s using his own equipment and vehicles and must supply his own fuel. He must have a business license and all the requisite liability and workers comp insurance. The app companies pay for none of that.

Whether these companies prove to be as disruptive to the green industry as Uber and Lyft have been to the taxi industry remains to be seen. But people, especially younger ones, have become accustomed to using their smartphones to get everything they want, right now.

The wave of the future

On-demand does seem to be the wave of the future. The Harvard Business Review recently reported that the on-demand economy is atracting more than 22.4 million consumers annually and $57.6 billion in spending.

The on-demand entrepreneurs for the most part come from the tech world, not the green industry, although a couple of them mowed lawns as teenagers. Like Mike Fingado, founder of Mowdo. He and his brother paid for college through the landscape company they started in their home state of Michigan.

In 2014, after college, he began working with a program at the University of Nebraska that helped student athletes who didn’t make it into the pros find work with startup companies or start their own. While there, he met a woman from Berkshire Hathaway Home Services.

She wanted to know if he knew of any startups that could help her realtors keep up the curb appeal of homes for sale.

“I did some research but couldn’t find anything. So I said, ‘I’ll work with a couple of athletes to see if we can’t pilot something.’” Mowdo was the result. “We got our first hundred customers within that first month. That’s when I realized there was a business case for this,” Fingado says.

After moving to Seattle, Fingado raised money to build out Mowdo’s app and launch it across the country. Fingado was approached by Amazon when it launched a Home Services division and the company as absorbed into it.

Jeremy Yamaguchi, the CEO and founder of Lawn Love Lawn Care Inc., started the San Diego-based company in 2014. He had spent the three years leading up to the company’s founding creating software for home services startups, a career he began at age 16. “I saw an opportunity to bring technology to a market that really hadn’t had it before and make it easier for homeowners to find lawn care services,” he says.

“Instead of having to call a bunch of contractors after finding them on Craigslist, Yelp or through a Google search, and then wait for them to come to his property and give him a quote, he can take out his smartphone and use the app,” he explains.

Yamaguchi says it solves a lot of problems for lawn care professionals as well. “They can find a lot more work immediately, instead of running around trying to drum up new business by leaving flyers on people’s porches or purchasing leads. When they sign up with us, they immediately see a huge list of customers who are looking for their services.”

2014 is also the year that Wills Mahoney co-founded Plowz and Mowz in Syracuse, New York. The app originally offered snowplowing on demand, then moved into lawn mowing and landscape services on demand. To date, more than 3,000 landscaping companies have signed up.

Working with on-demand services can be a good way for a new contractor to get a jump-start in finding clients. David Bowen started GreenUp Landscapes in Indianapolis in 2012, after having worked for a number of different landscape companies. Besides grass cutting, he provides sod and landscape installation, lawn fertilization, gutter cleaning and builds hardscapes and patios.

“Before I joined Plowz and Mowz in the middle of 2015, I was hitting the streets and putting out fliers and talking to people at their homes,” he says.

Work and clients trickled in. “But after I started working with the app, jobs started coming in left and right. This gave me the opportunity to buy better equipment, and make sure the bills were paid.”

Jesse Perez, a snow plowing contractor in Syracuse, New York, also works with for Plowz and Mowz. “The app means that there’s never any down time. If I’m out plowing a driveway for my own residential clients, and I see a job pop up on the app that’s right down the street, I’ll jump on it.”

Does it pay?

It has for Bowen. “When I first started doing lawn care with my own business, things were slow. By my third year, I was probably averaging something like $30,000 a year. I’ve made much more money since 2015, when I joined Plowz and Mowz, averaging $60,000 to $70,000 a year. 2017 was my best year ever — I broke the $100,000 mark.”

Perez is planning to expand as fast as he can, adding lawn mowing this spring, finding those jobs, too, through the Plowz and Mowz app. He says his success with the app is the main reason he’ll be able to grow his business. He’s even thinking of hiring another person to handle his own clients, while he focuses on the app customers.

Bowen says, “If they required me to do every job they sent me, I wouldn’t work with these apps (he works with more than one). But because I’m able to pick my own jobs and get 70 percent for them, I think that's pretty smart business.”

But is it “smart business” for established contractors? Mahoney says yes. “Although a lot of new companies did start out with us, we also work with many established landscaping companies. The average contractor who works with us has been in business for about 10 years.”

A contractor since 1979, Lebo Newman, owner and CEO of Signature Landscapes, Reno, Nevada, and Coast Landscape Management, Napa, California, is wary. “New guys just starting out don’t yet know what their costs are yet and often think they’re way lower than they actually are. And asking 20 or 30 percent off the top makes it awfully cheap work.”

But he concedes that getting paid up-front with these apps does take away the receivables problem.

Todd Tindel, co-owner of Cutting Edge Lawn Care in Austin, Texas, says on-demand work is not for him. “We’re more of a full-service outfit, we don’t just do mow-and-blow. That’s not the kind of client we’re looking for.”

His main objection echoes the famous quote from Forrest Gump. “With mow-on-demand, you never know what you’re going to get.”

Newman, who has looked at some of these apps, agrees. “Most people really have no clue how big their yards really are. They also often don’t tell the truth about how high their grass is.”

This puts the contractor in an awkward position.

“When you tell somebody it’s going to be $40, but then, it takes three man-hours or whatever to cut it, and now the bill needs to be over $100, well, it’s hard to go back to them to get approval,” says Tindel.

Uber and Lyft drivers have it hard enough. They buy the gas and pay for the license, registration, repairs, insurance, and the car itself. Can the fares really offset those costs, not to mention the wear and tear on their own vehicles?

Multiply those factors for a contractor, whose expenses run even higher. On the other hand, he’d have similar expenses working for himself. Perez and Bowen both say the 30 percent Plowz and Mowz takes off the top is reasonable. They figure it’s about equivalent to what they’d be paying out in overhead.

Advanced technology

One advantage the on-demand companies have is their cutting-edge software. Newman has tried to fix the estimating problem by having his staff pull up a client’s property on Google Pro and verify the square footage. “Unfortunately, you can’t see every yard that well, because of tree cover or other things in the way.”

“That’s Lawn Love’s secret sauce,” says Yamaguchi. “Through a combination of our proprietary software and recording algorithms, plus satellite imagery, machine learning and human mapping, we are able to give the customer a price quote in two minutes, sight unseen.”

While a contractor has the right to requote any job that is too far off the mark, this rarely happens, according to Yamaguchi, who claims the technology produces quotes with a 95 percent accuracy rate.

“What’s really exciting is that when we get enough density in certain geographies, we can employ sophisticated job routing and job costing optimization, and that’s powerful. We can create much denser routes, so lawn pros don’t have to spend as much time and fuel.”

What about repeat business?

The on-demand business model can sound strange to the ears of a contractor. Someone calls to have his lawn cut right now — fine. But what about next week, or next month? Won’t it need cutting again?

On-demand contractors do get repeat business, but without a contract. Bowen says, “As long as I keep getting high ratings from people, they keep giving me the same yards, over and over again.”

This can be troubling. That’s what a conventional maintenance contractor offers, plus mulching, trimming, fertilization, aeration and weeding, which on-demand companies are also starting to offer.

The looming question is, why don’t these contractors simply convert their repeat on-demand customers to their own regular clients and keep 100 percent of the gross? The companies call this “disintermediation,” and they have different ways of handling it.

“We just ask them not to do it,” says Yamaguchi. “If it happens a lot, then we may delist them from our platform. But contractors have a super incentive to stick with us, because they ultimately make so much more money with us than without us. The thing that prevents disintermediation for us isn’t so much the stick as it is the carrot.”

Bowen, for his part, is happy to keep things as they are. “When customers ask me to become their permanent contractor, I tell them to keep going through the app. It just makes the scheduling and everything else easier for me.”

Should you be worried?

“The only thing I see as a threat is that a lot of those companies are charging really cheap rates,” says Tindel. “But at the same time, I’m not too concerned about them. It’s more of a speed thing. The cut isn’t nearly as good. If people want that, that’s fine.” Newman isn’t afraid of the on-demands siphoning off his maintenance business, either.

But there’s one more thing that might put a chill down a contractor’s spine. “We’ve been watching demonstrations of these robotic mowers that work kind of like Roombas for lawn cutting,” says Fingado.

“You’ll eventually see these apps integrating them,” Fingado predicts. “The partners will focus on doing the edging, irrigation and other things that go with maintaining a lawn, and the robot will do the mowing.”

Things are changing fast, and not just for the green industry — technology is rocking everyone’s world. It’s going to be fascinating to see how all of this shakes out.


PROS AND CONS OF WORKING ON DEMAND

+ Easy to find immediate work

+ Signing up is free

+ A way to fill downtime

- App gets a share of the profits

- The project size can be underestimated

- No signed contracts for repeat business


The author is senior editor of Irrigation & Green Industry magazine and can be reached at maryvillano@igin.com.