There?s Gold in Them Thar Pipes!

Well, a lot of potential extra income, at least, for an industrious landscape contractor.

ave you tapped into the possibilities that expanding your landscape-only (or -mostly) business may be hiding? Well, there are a variety of ways that can add some oomph to your income statement by paying more attention to the H2O at your client’s site. And we spoke to several professionals eager to show you how. Expanding your business into the irrigation realm doesn’t really require much in the way of background or education. So says Larry Leavitt, president of Underground Irrigation, a franchiser in Merrimack, New Hampshire.

“The good thing about being a landscape contractor,” he says, “is that you already have contacts. A lot of contractors are either subbing out the irrigation work, or shying away from it, or referring it to someone else. There’s a huge potential for profit there — an untapped market.”

When you add irrigation services to current clients, you can perform services like annual checkups of the sprinkler heads, replacement or upgrade of components, and installation of new systems. In areas of the country where winters get truly nasty, then you have the opportunity of “winterizing” service work (done in the fall), along with the annual start-ups in the spring. Winterizing involves taking a compressor, and blowing out all the pipes to prevent them from freezing.

“They’re not that deep,” says Leavitt, “and they’ll freeze and crack in the wintertime.” This kind of winter work can bring in some cold-weather cash when many landscaping businesses just hibernate until the white stuff goes away.

There are, of course, things that you’ll need to learn and equipment that you have to have before you can begin tinkering with your client’s watering systems. And Leavitt’s company would love to shepherd you through the process.

Underground Installation has been in business for seven years. Leavitt came to the irrigation business while working as a stockbroker. He helped a friend install lawn sprinkler systems and learned the trade that way. His own company specializes in residential irrigation systems, and also does some light commercial work. As for his franchisees, he would recommend that they get their feet wet (ok, bad pun) with the residential work. Leavitt says simply, “Residential is less complicated.” However, residential work is also becoming more prevalent. “Residential irrigation used to be a very high end-type product,” says Leavitt, “just mansions and higher priced homes. Now, everybody wants a system.” Rather than the systems becoming more affordable, Leavitt just sees the public being more inclined to see irrigation as desirable. “Many people are re-financing to do home improvements and irrigation is high on the list.”

To Wing It or Not to Wing It

 Uncomplicated though it may be, plunging into irrigation before you are ready can get you into, well, deep water. John Eggleston of Service First, a franchiser in Lansing, Michigan, admits that “anybody can try to install and maintain irrigation systems. However,” he says, “many contractors get involved in irrigation and fail doing it, because they don’t understand the difference between a lawn spray business and an irrigation business.

There’s scheduling and routing involved,” says Eggleston, “and running your maintenance crews. There’s crew size efficiencies to take into consideration . . . bidding processes . . . how to put your overhead and profits into your pricing structure . . . Worker’s compensation issues, OSHA issues . . . insurance issues that are different than what you deal with on a day-to-day basis [in a landscape-only business]. There are a lot of intricacies.” On the flip side of buying yourself trouble by “winging it” is the multitude of benefits you can gain by knowing — and looking like you know — what you’re doing. The payoff is in obtaining, and keeping, customers.

“Clients always look at the seller and ask themselves, ‘Is he an expert? If he’s an expert, I must pay more,’” suggests Dave McElroy, of Green Leaf Mapping and Control Systems.

McElroy creates and leases software for irrigation professionals. Much of his tutelage comes in the arena of dealing psychologically with the customer. McElroy cautions that there are consequences in not being an expert. He says that customers often think, “If he doesn’t know what he’s doing, I can get him to give me his services for less.”

The negative perception can often come into play when a contractor exhibits a lack of knowledge with scheduling controllers. The client sees that the contractor isn’t an expert and decides—sometimes subconsciously—that he won’t pay more than a certain amount for any extra services that are offered later. Or worse, the customer ends up being able to argue that the special services should be included as part of his regular service. McElroy’s company makes management information systems (MIS) software to help irrigation contractors sell at a higher price. He was a contractor himself for 17 years and, by the time he moved out of that realm, he was charging 35% more than his competitors. He did this by creating a data-driven service business.

 McElroy is a self-proclaimed computer geek who had many friends in the high-tech realm when he was a landscape contractor. He moved to the San Francisco Bay Area in the 1970s, because this was where high tech seemed to be budding. He got so into technology, at one point, that he was doing infrared analyses of job sites from a helicopter.

Marketing and Perception

As McElroy sees it, everything is marketing. Everything a contractor does, be it a repair, installation or other service, can be a stroke in his favor as being a professional, if he does it well. For example, he can schedule irrigation optimally and show the client that he’s saved him money, and be looked at as a hero. “He’s seen as an expert and someone that should be kept in the stable,” says McElroy. “That’s the first step in being able to get the extras. Certainly, you can do the repairs, but you can also say ‘Look how well I budgeted.’” McElroy points out that while any client can respect that, the clients that especially do are property managers, because they are in the business of controlling costs.

Pricing a job

Whether you are performing small “extras,” like replacing a few sprinkler heads, or attempting a complete system installation, you have to know what to charge. Any expert will tell you that determining how to price a job is all built around what it costs you to do it. Leavitt says that involves calculating the number of sprinkler heads, determining the number of zones, figuring the layout of the yard, and other information. Once you figure out the cost portion of the balance sheet, “it’s up to the contractor to determine how much he wants to mark that up to get to the profit level he seeks,” says Leavitt. Around the country, prices swing dramatically, he says. Massachusetts, for example, tends to have more expensive pricing than in New Hampshire, where Leavitt does business. Be sure to take into account the cost of equipment you’ll need on the job. McElroy says that contractors often bid the “equipment job” at the same price as the “man-hour job.” In addition, the equipment job usually has a more technical worker associated with it, because that is the person that has to run equipment. The technical worker is going to be more expensive than a non-technical one. And don’t forget to figure in liability insurance, as well. McElroy says that contractors who get lazy with job costing can really hurt themselves. “A lot of contractors will use a fixed price, so that they don’t have to think,” he says.

Always do your homework!

Part of the homework on a job of any significant size is to create documentation that will help you to not only price the job well, but do the job efficiently. McElroy tutors landscapers to create a “punch list” of the specifics of the site. This involves going to the new site, doing a walk-through, and testing each sprinkler head. This will give you a chance to see if any of them need replacement. But you should also take note of particular pieces of information, such as:

The kind of ground in which the sprinkler is installed (turf, mulch bed, ground cover, etc.)

The location (just outside of a building, along a path, etc.)

Type of sprinkler head

The level of sun exposure.

This information helps you to figure out the proper water scheduling. Take into account whether the sprinkler is spray or impact, the terrain is sloped or level, the soil is clay or sand, and adjust the controller schedule appropriately. As McElroy points out, “Sending a rainstorm of water down a slope on clay-type soil for ten minutes will never get to the roots.” He says that many landscapers do a poor job with water management, mainly because they leave the decisions to when they are too busy to make good ones. “When they’re asked to do it,” he says, “typically it’s in the middle of summer and they have many other crises to deal with. They’re probably short-handed and don’t have anyone qualified to even operate the controller, much less calculate the schedule accurately. So, they wing it. They’re wasting millions of dollars of water and clients perceive that they don’t have a handle on it.”

Then, the situation gets even worse. “It gets hotter, they add more water,” McElroy continued. “They’re just way off target. We’ve audited landscapers all over [California] and they’re missing the mark; grossly. Plus, they’re putting down too much water, not getting it to the roots, and putting it into the bay or the ocean.”

Customer Confidence and Retention

The biggest “extra” of all, maintains McElroy, is customer retention. The contractor, when he’s able to schedule properly, wins the confidence of the client and gets something much dearer to him than the extras that it will help generate. It gives him retention. “Retention is everything in landscaping,” he says. “The longer you keep a client, the more money you make.” McElroy argues that today’s successful landscaper must present a corporate look to the client, and demonstrate that he really has his processes in place. This contrasts with what he calls the “cowboy” approach, meaning that “we blood-and-guts it all day long, ride into the sunset, count our money, and if we’ve got more than we started with today, we’re OK.” That won’t cut it these days, according to McElroy. “This is truly a process business,” he says. “Anyone that thinks it’s a cowboy business is losing money.”

January 2004