“When I arrive at a property,” says Gachina, “I’m looking at the buildings; I’m looking at the curbs. I’m looking at the landscape. If the place is well-maintained, there’s a customer I would like to work for. If the paint is chipping off, the landscape looks tired. I’m thinking ‘This may be a low-ball deal.’ Maybe somebody just bought it and they’re going to spend big bucks renovating it, and I want to be the guy doing it.”
While the luxury of picking and choosing what jobs you are going to take isn’t always possible, there are some key points to consider when evaluating a job, regardless of size. Make sure to set up an appointment with the decision maker; otherwise, you’re just wasting your time.
First, ask about the project and their needs. Find out if they have any specifications or would like you to provide them. Ask how many bidders, and who the other bidders are. Find out if they’re dissatisfied with their current vendor, or current contractor.
Then walk the property and do an estimate on what it will take to maintain the site for a year, estimating the different tasks and how much time it will take, and the frequency with which they will have to be done. From that, process your costs, come up with a bid, and prepare a contract.
Even if you’ve taken all those steps, mistakes can occur. According to Kujawa, that happens when people bid the job, and not the specifications.
“A property manager or facility manager may have his or her own set of specifications. It calls for cutting the turf at a certain time or a certain height, and edging so many times. And you go there and look at the job, and it’s quite apparent that it’s not happening, for whatever reason. So you bid the job to what you think is necessary to maintain the property, and not the specifications. Well, if they decide to hold you to what you were supposed to bid, and you don’t do it, you could be in a world of hurt.”
But what happens if you make an honest mistake and you underestimate a job? What if your bid turns out to be unprofitable or you end up losing money? What do you do then?
“I’ve done that many times and it hurts,” says Gachina. “Generally, my philosophy is if I make an agreement, and it’s usually a one-year contract, I will honor it for that year. And then after the year, I’ll go back to the customer, and say ‘We’ve been losing money, and it’s my fault. I bid it wrong, but it’s been a year. I lived up to the agreement, but we either need an increase, or it may need to go out to bid. What do you want to do?’”
If your bid was way off base, and you can’t afford to write off the loss, you can approach the customer and explain the problem. Although you run the risk of losing the account, you also stand a good chance of creating an honest, open dialog with a customer who will appreciate your candor.
When setting up a contract, it’s important to take some measures to protect yourself against unforeseen expenses and rising costs. “The first preventative step is a good understanding that costs are never stagnant,” says Speers. “Customers have this general understanding, but need to know that in terms of their contract, price increases are one way to ensure that we can continually provide them the level of service they desire.”
“Negotiating multi-year contracts is one way to make both parties comfortable with what the future is going to bring. In other cases, costs increase in greater leaps and bounds, and for some contracts we will use escalation clauses that are tied to inflation indices. This often takes some of the emotion out of a price increase.”
Another common mistake companies make is stretching their resources too thin and taking on jobs they probably shouldn’t.
“I think you have to be careful when taking on something a little bigger than you’re used to. While it’s exciting, you have to be honest with yourself,” says Gachina. “You’ve got a good business, say eight guys, and this job is going to require five more men. Now you’re going to be growing the company by 50 percent overnight -- can you handle it? If you’re going to fail at it, don’t do it. If you think you can pull it off and that’s what you want to do, go for it.”
Since your reputation is everything, it’s imperative to maintain a good relationship within the real estate and property management community. People will talk about companies that mess up a lot more than they will about the good ones.
“I’m in the San Francisco Bay area,” says Gachina, “which is a huge market, but it’s also a very small village. It’s amazing how small a town this can be, as in any market. The real estate industry is very well connected among themselves. The contractors all know each other. The property management people all know each other. And word spreads. So you really have to protect your reputation. You can take a lifetime to build a reputation, and lose it in a day.”
A large portion of that reputation is established the minute you submit a bid. People like doing business with people of a like mind. By presenting yourself in a professional manner, and submitting a reasonable bid the first time, you are setting the stage for a year-long relationship that should not only prove to be profitable, but can also help lay the groundwork for continued growth.