Value vs. Volume
What are you selling, mowing or lawn care? How would you define the difference? Is it better to service many clients at a low price or a few at a high price? The answer depends on your resources, your capabilities and your market. The more accurately you define these factors, the greater your profit potential.
SETTING THE STANDARD
The first step to determining the best plan for operations is to figure out which services your company is best suited to offer. Then match those services to the client base that desires them and is willing and able to pay for them. The real challenge is making the right match to provide sufficient funds to not only cover all of your expenses but also create the desired level of profit.
If you're concentrating on volume, start by matching your equipment to your job sites and your crews' capabilities. A machine that is hard to adjust won't be adjusted. A mower that is too big to maneuver may lead to property damage. Ease of operation and operator comfort will pay for themselves over time.
To profitably provide basic mowing services only, focus on the most efficient and cost-effective methods of mowing. With small, heavily landscaped properties, maneuverability may be more important than mower deck size. Consider a 21-inch rear-bagging walk-behind mower to trim the perimeter of the property and around the hardscape features and heavily landscaped sections of the yard to eliminate the need to blow or rake away clippings. Add a larger mower deck in either a ride-on or walk-behind unit for the rest of the lawn. Use a string trimmer under fences and where it is more efficient than the mowers. Look for multiple clients with similar properties within the same neighborhood or general area to reduce travel time.
On larger properties with a mix of landscaped areas and large open areas of turf, look for the largest deck size and fastest ground speed in a ride-on mower that delivers an acceptable quality of cut for the open lawn. Consider a zero-turn mower with the largest possible deck size to maneuver around the majority of the landscape features. Add a rear-bagging walk-behind mower for the perimeter cut. Use a string trimmer as needed to wrap up the job. (See “The Impact of Deck Size on Mowing” on page C10.)
Generally, less interaction with the clients is needed on basic mowing accounts than on upscale accounts, but do allocate some time for personal or phone contact. You'll want to check for problems and make sure you're providing the level of service they expect. Most of all, you'll want to make sure they know who you are and that you want and appreciate their business.
Upscale lawn care requires a personal touch. The basic mowing aspect will remain much the same, though the quality of cut may be more important and the need for attention to detail will definitely be greater. Assign the same crew to a site for at least the entire season — and longer, if possible. Efficiency and cost effectiveness are just as important on upscale accounts, but often the perception of the level of service provided has a greater impact than the actual time spent at the job site. Never leave the site without insuring that every detail of the job has been properly completed.
You'll want to interact with these clients frequently to make sure that all services performed meet or exceed their expectations. If a problem does occur, apologize profusely and correct it immediately, if possible doing even more to make it right than the client anticipated. The extra effort is what earns the extra bucks.
ASKING THE TOUGH QUESTIONS
Are you personally and financially capable of expanding your business? Be brutally honest with yourself before moving forward. Do you really want to take your company to the next level? You'll increase the financial pressures and your personal stress levels whether you make the move to increased volume or to a more upscale type of service. Sit down with your accountant or banker to thoroughly examine the financial impact and make sure you can handle it. Talk with your business partners and spouse about the consequences in terms of the increased time and energy directed to the business. Make sure you all are willing to make the necessary commitments. How good are your communication skills and management practices? You'll need to sell the additional accounts or sell your current accounts the upscale services. You'll need to plan and execute the changes in your business to deliver those services. What's your track record with employees to date? You'll need effective training and supervisory skills to bring current employees to a new level and/or to add new employees.
Would you rather spend your day on a mower than behind a desk? Are you a hands-on, do-it-my-way-or-not-at-all kind of manager? Do you work most effectively with a small group of one or two others? Does your personal satisfaction come from seeing the difference your work accomplishes at the job site?
If you answered yes to the majority of these questions, you'll be most effective running, and working along with, a single crew. Each of your customers' sites will get your personal attention. While you could manage high-volume basic services in the right market, it's more likely that the quality of your work is too important to you to handle that many job sites. So make the most of it by offering and charging for upscale services.
Or, are you capable of giving your employees the training and equipment they need and allowing them to do the job on their own? Do you enjoy the planning and organizing it takes to set up and oversee the work of multiple crews? Can you effectively coordinate several different projects at the same time? Do you gain personal satisfaction from the accomplishments that others make toward the success of your business?
If you answered yes to the majority of these questions, you can effectively run multiple crews without the need for your personal attention at each site. Your market and the capabilities of you labor pool will help determine whether you offer high-volume or upscale services. Either is possible since you set the standards your crews must deliver. However, by incorporating efficient methods throughout multiple crews, you may generate greater profits by providing high-volume, consistently good, basic services.
Know where you want to go and then plan accordingly.
ASSESSING THE MARKET
Is there a market for your services in your targeted residential area? You can get a good overview of the potential by checking out the demographics. What is the average annual household income of your target market? What is the average household size? What is the median age of the residents? What are the average home values?
You can find these details and many more via the Internet by searching for the “demographics” of a specific city. Just pull up one of the search engines, such as Google or Yahoo, type in the word demographics and the name of the city and state. For larger metropolitan areas, the information generally is available by zip code once you reach the main listing for the city. If you're not computer savvy, other sources for similar information include the city's chamber of commerce, the local library reference desk or a friendly real estate agent.
The data will reveal whether the home value, income and relative buying power of the area's residents would make them likely candidates for lawn care services. (See “Assessment of Potential by Zip Code” on page C4.)
Armed with this information, make a visual assessment of the area. Are the homes, lawns and landscaping comparable to that of others seeking lawn care services? If you're already in the business, are these properties similar to those of your existing customers? Or, is the area a step up from your existing customer base, but one in which you'd like to expand your services? Could you provide the services you'd like to offer with your existing crews and equipment? What level of business would you need to generate to afford hiring and equipping an additional crew? What companies are already serving this market? Can your company compete on both service and price?
If you would prefer serving commercial accounts, conduct a similar investigation of demographic information, visual assessment of properties and research of the competition.
EXAMINING THE LABOR POOL
What is the potential for hiring employees with the necessary skills to provide the services you want to offer? Are there enough qualified, dependable individuals available within the salary range you can afford to pay? If not, do you have a source of affordable, interested individuals that you could train to provide these services?
Will you offer seasonal or year-round employment? Are you looking for a limited number of full-time employees or a larger number of part-time employees? There are advantages and disadvantages whichever you decide.
You'll need a solid customer base and a means to sustain sufficient cash flow to provide for full-time, year-round employees. In exchange, you should expect reliable personnel with a specific level of skills and the ability to continually upgrade those skills.
You won't be obligated to provide year-round income or benefits for seasonal, part-time employees. You may find some individuals who like the flexibility, enjoy the work and become dependable employees for a season or multiple seasons. You also may find some who want to work only when they really need the money, put out the lowest possible level of effort and move on to another job with little or no notice.
You must set the standards you will require your employees to meet. You also will need to determine the benefits you will provide for them.
SIZING THE CREW
The size of your crew will not determine whether you serve many clients at a relatively low price or fewer clients for a higher price. You can choose either route with a single, two-person crew or multiple crews with multiple personnel.
Since personnel costs are your greatest expense, the more efficiently your crew members operate, the greater your profit potential. Coordinate the little things to trim time on each job. Develop an equipment loading and unloading plan for maximum efficiency. Allocate the assignments at each site to eliminate idle time. Make sure each crew member knows exactly what to do in what order and can effectively move from task to task.
Consider adjusting crew size for different properties. You may want a four-person crew on certain sites, a three-person crew on others and two three-person crews working together on the largest accounts. Ask your crew members for their ideas to increase efficiency. Develop a reward system for time saved.
MAKING IT PAY
Whether you choose high-volume or upscale marketing, spend time evaluating your operations at least monthly. Ask crews to time themselves one day each month and discuss the results in a staff meeting. Compare the time spent at each site from week to week and analyze the variations. Minutes are money. Make each one count. (See “Comparing Pricing Differentials” on page C6.)
Steve and Suz Trusty are freelance writers who reside in Council Bluffs, Iowa.
ASSESSMENT OF POTENTIAL BY ZIP CODE
One zip code in the western corner of Omaha, Neb., lists the average annual household income as $56,331; the average household size as 2.5 people, the median age of the residents as 37.5 years. More than 70 percent of the residents own and occupy homes valued between $90,000 and $175,000 or higher. Five percent of the residents own and occupy homes in the one-half to one million dollar range.
This compares to the overall demographics for the city of Omaha, which lists the average annual household income as $40,006, the average household size as 2.5 people, the median age of the residents as 33.5 years, and the median home value as $94,500.
What does this tell you? Residents of this zip code own nice homes, make decent money, are in the prime years of their earning power and have relatively small households. It's highly likely that many also will have busy schedules and enough disposable income to be interested in purchasing upscale lawn care services.
COMPARING PRICING DIFFERENTIALS
Time saved is money generated. This is extremely important for high-volume lawn service companies. Check the impact made by one time-shaving adjustment — clustering the job sites.
A three-person crew leaves their headquarters at 7:30 a.m. and returns at 4:30 p.m.
- Total time expended = 9 hours = 540 minutes
Mandated break time: 30-minute lunch, two 15 minute breaks
- Total mandated non-billable time = 60 minutes
- Time remaining: 540 minutes — 60 minutes = 480 minutes
Travel to reach first job site and to return from last job site to headquarters: 30 minutes
- Time remaining: 480 minutes — 30 minutes = 450 minutes
Job Time allocation:
- 25 minutes mow, edge and blow per job × 15 accounts = 375 billable minutes
- 5 minutes load, unload, travel per job × 15 accounts = 75 non-billable minutes
375 billable minutes per day × 5 days per week = 1,875 minutes divided by 60 minutes = 31.25 billable hours per week.
Clustering job sites with multiple job sites within a block eliminates some of the load, unload and travel time.
One stop with seven accounts eliminates 30 minutes of non-billable hours. (Six stops of travel, load and unload at 5 minutes each)
If repeated 5 days per week (30 minutes × 5) = 150 billable minutes per week = 2.5 billable hours per week per employee.
For the three-person crew (2.5 hours × 3) = 7.5 billable hours per week per crew
For 28 weeks of work (short season, April through October)(7.5 hours × 28 weeks) = 210 additional billable hours gained per season per crew
Upscale lawn service companies concentrate on premium results. Because of the perceived higher value of the services rendered, higher prices can be charged.
Check the impact of raising charges the equivalent of one dollar per hour per employee when selling upscale services as compared to basic services.
1 additional dollar charged per person per hour for a three-person crew figuring 30 billable hours per week = ($3 × 30 hours) = $90 per week additional income.
For 28 weeks (short season, April through October) 28 × $90 = $2,520 additional income per crew per season.
Working with four 3-person crews = 4 × $2,520 = $10,080 additional income for those four crews per season.
THE IMPACT OF DECK SIZE ON MOWING TIME
(Assuming the two units compared have equal quality of cut and ground speed)
One operator, using a ride-on mowing unit with a 72-inch deck, can cover the same ground as a mower with a 36-inch deck in approximately one-half the time. A 60 minute project becomes a 30 minute project.
One operator, using a ride-on mowing unit with a 60-inch deck, can cover the same ground as a mower with a 36-inch deck in approximately
Add these services without adding additional power equipment:
- Clipping removal
- Flowerbed maintenance
- Spring cleanup
- Fall cleanup
- Putting up and taking down holiday decorations (Christmas, Halloween, Easter)
Add these services that require additional equipment or attachments:
- Snow removal
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