Is Mowing in Your Revenue Stream?
A lot of landscape contractors, even some with multi-million-dollar operations, started out with just a single lawn mower. Quite often, the mower wasn’t even his, but belonged to his dad.
Learning on the job, he added trimming, edging, mulching, fertilization and landscape installation.
Then, he began repairing irrigation systems, eventually learning how to install them. He built his first paver patio, which led to more design/build work. To hang onto his best employees during the off-season, he went into snow removal.
After a few years, he decides that mowing lawns and doing other landscape maintenance chores isn’t really his strongest service area. He decides to focus on other aspects of his enterprise that will make him more money, and hangs “For Sale” signs on all his mowers.
A wise decision? For him, or for you, it may be. But for many multi-service landscape companies, mowing and maintenance is still a viable source of revenue; one they wouldn’t want to dispense with.
If mowing isn’t a part of your revenue stream, maybe it should be. There are many reasons why.
It’s a relationship
Why do some landscape company owners decide to continue mowing, while others empty the grass bag for the last time? There’s one big reason, and that’s the ongoing customer contact it provides.
Touching the customer on a weekly or biweekly basis is invaluable as a way of getting other work.
If your client is pleased with the way you mow his property, the chances are very good that you’ll be the professional he’ll turn to when he wants to install a sprinkler system, or a new patio. This is valuable enough to some contractors even if, for them, the mowing operation is sort of a ‘loss leader.’ It’s that way for Ground One Enterprises of Minnesota, LLC, in Bloomington. “Mowing and maintenance is a relatively small piece of what we do,” said CEO Pat Weiss. The company specializes in all aspects of hardscaping, which includes building pools, pergolas, fire pits, decks, water features and stonework, as well as irrigation, lighting, landscape installation and snow removal for commercial and residential customers.
“Though we mainly do design/ build, we keep the mowing service as a way of staying in close contact with our clients, even though the margins on it are razor-thin. It gives us a continuing relationship with them. Keeping that connection gives us a way to provide them with the other services that are much more profitable.”
Maintenance contracts have worked that way, too, for A+ Lawn & Landscape, LLC, in Des Moines, Iowa. Its services include landscape design and installation, tree and shrub care, lighting, irrigation system installation and repair, and lawn applications, in addition to mowing and trimming. The company also builds water features and has a retail garden center.
When it comes to those mowing and maintenance contracts, A+ works it a little differently. “If someone says they want us to ‘just mow,’ we say no,” said owner and general manager Shawn Edwards. “We do mowing because we want a full-service customer.”
Lawn cutting is bundled with other services, such as irrigation system maintenance, fertilization, weed and pest control, and snow removal. Customers can choose from packages that include at least three services, one of which can be mowing.
Many contractors use this ‘package deal’ approach as a way of boosting the margins.
It’s an ongoing source of revenue
Antonio Zeppa is CEO and coowner of Zeppa’s in Louisville, Kentucky, a company that’s been in business for ten years, offering hardscape and water-feature construction, irrigation servicing, backflow testing and snow removal, as well as a full array of landscape services. Mowing and lawn care is still the biggest division, and has been since the beginning.
“This year, we started doing a lot of landscape installation,” Zeppa said, “We might install a $20,000 job, but it’s a one-off. After that, we’ve got to sell the next one.” Maintenance, however, provides an ongoing income.
Zeppa participates in the NALP (National Association of Landscape Professionals, formerly PLANET) Trailblazers mentoring program, which pairs contractors up with longtime industry leaders. “I told my Trailblazer that I was thinking about cutting back on the mowing. He brought up a really good point; he said it’s ongoing work that pays ‘residuals.’” “He said, ‘You have it today, and next year, and the next one after that, and five years, ten years from now. You just have to set your prices so that it continues to be profitable.’” Besides, mowing is very easy in terms of management, according to Zeppa. Because crews are at the same locations every week, they don’t need new procedures or equipment explained to them repeatedly.
Complete Lawn Care Inc., in St Louis, Missouri, is a company that provides a full range of lawn care services, including aeration, dethatching and fertilization, as well as leaf and snow removal for both commercial and residential customers. It turns more than $400,000 annually, and at the height of the season, employs six people.
Mowing makes up 50 percent of the company’s revenue stream, and has been a primary revenue source since the beginning, in 1999.
“True, the margins are not as good as they are for some of the other services we offer,” concedes owner and president Mark Becker. “When you separate out mowing from all the other maintenance functions, there’s around $100,000 invested just in one truck and trailer.”
“Then there are all the different types of commercial mowers you have to have. We own two push mowers, two walk-behinds, and one rider, and we need them all, in order to service our accounts.”
To maximize all of that capital investment, he tries to find the customer who wants a full range of lawn care services, including fertilizing, aerating and seeding, in addition to mowing. “We’ve been established long enough that we won’t take on any customers who strictly want mowing,” said Becker.
This strategy has worked well. Every year, the business has continued to grow. “In 2008, I had just come out of a partnership, so I restarted my own business in September of that year. I was back up and running with the same customers I’d gone into the partnership with. We’ve grown as much as 50 percent each year. Right now, the rate is around ten or fifteen percent.”
It can inoculate you against recession
Something else happened back in 2008, as you might recall; the kickoff of a long, deep recession. “A lot of landscape companies, prior to that time, were able to function well without having a maintenance aspect,” said Fredric R. Haskett, CA, CTP, a landscape-industry certified manager and business management consultant with the Harvest Group.
Small, mid-sized and very large outfits were able to entirely predicate their business models on design/build or installation, according to Haskett. The market was there, and had been for a very long time, so everyone got “a little bit lazy” about diversifying their business models.
“But when the housing market collapsed,” Haskett continued, “and the recession hit, the installation and construction side of our business ground to almost a complete halt, and a lot of landscape companies failed.”
The firms that survived that period, said Haskett, were either focused entirely on maintenance, or, if construction-based, also had significant maintenance operations.
He tells the story of one landscape company that, by 2008, had grown to $93 million in annual revenue by focusing entirely on the new-home construction installation market. Another small percentage of income came from maintenance contracts on model homes.
“But by 2012, revenues had shrunk down to $18 million. Over those four years, the company had been forced to lay off 1,200 people, and was down to just 200 employees. It was just days away from collapsing when they landed a couple of large maintenance contracts.”
The owners of this company learned from this painful lesson. Their focus over the last three or four years has been to acquire an existing maintenance operation, with the goal of having that represent 20 to 25 percent of its bottom line, going forward.
Another large construction-based company had entered the maintenance business a few years prior to 2008 and had concentrated on developing it. When the economy tanked, it was forced to make some cutbacks on the construction side. But because the company’s owners had built a $20 million maintenance operation by then, it sailed through the recession with its corporate structure fairly intact.
“There are probably 500 stories like that, when you go down through the whole breadth of our industry,” said Haskett. “The companies that were maintenance-focused, or had at least 20 to 25 percent of their business invested into the maintenance side, had a much better survival rate.”
There’s another aspect of this that shouldn’t be missed. In a recession, homeowners, HOA managers and corporations cut back on expenses. Instead of three lawn treatments or color changes a year, they’ll dial back to two.
But if the owners care at all about the appearance of their properties, there are some things that just can’t be let go, and mowing is one of them. Letting lawns get overgrown and weedy isn’t an option.
For all these reasons, Hackett advises all of his clients who have mowing and maintenance divisions to keep them as a hedge against future recessions, and tells the ones who don’t already have one, to start one.
Becker can attest to the wisdom of that. The recession barely made a dent in his mowing-heavy operation, even though he rebooted it right when it started.
It raises the value of your enterprise
Edwards points out still another reason to keep mowing in your revenue stream. “One of the reasons we continue to mow is because we’re looking ahead to someday getting out, selling the operation.”
“With landscape or irrigation installation, you don’t have that revenue from recurring contracts, so your company won’t be valued as highly. Those maintenance contracts add a lot of dollar value for a potential buyer.”
It makes money when it’s done right
Make no mistake—there is good money to be made mowing lawns. If you’re doing it and not making enough, it may be time to take a closer look at what you’re doing.
Haskett says that you need to look at it from ‘the mower deck level.’ Are you using the largest size deck you can get away with on the properties you mow, and still get a nicely striped result?
“I see a lot of contractors who are using smaller mowers than they could,” he said. “The wider the deck, the more square feet per hour you can produce.”
Taking a close look at how you’re mowing may reveal little inefficiencies that are hemorrhaging profits.
To eliminate these, Haskett teaches his consulting clients about ‘job sequencing.’ It’s a bit like choreography. For instance, say your crew is string trimming the turf areas that the mowers can’t get to, all the little nooks and crannies on the edges. Very often, Haskett observes that crew members trim before the mowing gets done, then backtrack and finish off the areas that the mower missed.
To sequence this job correctly, the crew members using the string trimmers should be following behind the mowers. Otherwise, they’re trimming twice. There are many other time-wasters and duplications of effort like that that’ll jump right out at you, once you start looking for them.
‘Outsourcing’ has become a dirty word, but it can put money in your pockets when it comes to commercial maintenance and mowing contracts. Haskett points out that most companies and institutions seldom have in-house groundskeeping staffs anymore.
Landscape maintenance and mowing is hired out, as are janitorial and other services. It’s cheaper and easier to let someone else buy and maintain the expensive equipment and hire, fire, pay and insure personnel. That ‘someone else’ could be you.
To keep his mowing operation profitable, Zeppa specializes in working in a certain area of town. This cuts down on ‘windshield time,’ the number of minutes wasted driving from one job to the next. “If a job doesn’t fit into our route, we don’t take it,” he said.
He also makes an effort to mow as many yards as possible on a given street. “We want to go to a neighborhood, put the tailgate down once, and mow five or six properties in a row. Or to an HOA, where we’ll mow the front entrance, then cut 20 or 30 of their lawns. That’s how we make money mowing, by maximizing our billable time.”
There’s still gold in them thar lawns; all you have to do is gather it. Do it efficiently, with smart planning, and it can make your company’s revenue stream gleam with bright nuggets of profit.