In my experience you can have great success in the commercial lawn mowing business by using data driven bid processes, by bidding by gut solely from your experience or a combination of both.
As I look more and more into what processes successful commercial lawn maintenance companies use to bid jobs, I am amazed at the number of professionals that use the drive-by and guess methodology of estimating. Yes, it can work when you have a lot of experience and you can intuitively drive through a property and just know what the right price to charge is, but I don’t advise it.
The challenge with this method is many, but the greatest issue may be in the fact that you are growing a business that has little value to someone else. If you want to build a business that has value beyond you and your equipment it must be profitable and at the same time have repeatable processes in place that don’t rely on you, the owner. If you have a business that only runs when you are in the driver’s seat then you have a job, not a business. That’s the sad truth of way too many professional lawn mowing businesses.
Here’s a quick test for you. Can you leave your business (in season) for three weeks and know it can run without you? If you can answer yes, you likely have a great business with standard operating procedures that are simple and known by everyone on the team. If you must answer that question with a big fat no, then you have a job. It may be a good paying job or a low paying job in which you don’t know if you can make payroll at the end of each week. Sadly, for many the latter is the case and you may be better off working for someone else and forgoing the risks of ownership.
I want to help you build a profitable commercial lawn mowing business. If you are determined to build value into the business, one of the best places to start is with your estimating procedures. In order to estimate properly you first need to know your true costs. Your bid must reflect the real costs of providing the service to your client and it should never be based on what you heard on the street. It needs to be based in facts.
I would rather see you build your business slowly and profitably than to have you build a large business quickly with little to no profit. What’s the point? There is a saying in the business world that drives this home. “Revenue is vanity, profit is sanity”. Revenue doesn’t mean a darn thing, if you don’t have enough profit.
Way too often lawn care contractors are sucked into the trap of top line revenue with little regard to profit. I’d much rather you have a small profitable business than the nightmares that come with a large company struggling to make ends meet on a daily basis. Ideally, if you learn how to bid and track your job costs you can build a profitable business that supports sustainable growth and builds value that someone else is willing to pay you for when you decide to exit your company.
Estimating properly is the first step in building a profitable lawn mowing business. In order to estimate properly you need to know your true costs involved in performing the actual mowing and landscaping services. At the most basic level these include the major costs such as:
- Capital Equipment – mowers, trucks, trailers, etc.
- Equipment Maintenance – lawnmower blades, string trimmer line, etc.
- Desired Profit Margin
Pricing also must consider the existing market and the level of competition. But you should never be pricing based on “what you heard the going price was on the street”. Once you understand your true costs and desired profit margin you can make educated pricing decisions.
You can build a pricing strategy that is simple, accurate, consistent and repeatable. From here you can begin to build a profitable business based on data and not purely on luck. In a later post, I’ll share an estimating calculator with you, but in the meantime, start gathering up all your true costs in the areas listed above.
Once you have a clear picture of costs you can choose a methodology for bidding. There are a few different ways that most contractors estimate. Each has its pluses and minuses.
Drive by and guess. I’m not going to lie, this can work for the deeply experienced lawn maintenance contractor. It’s quick, easy and might be accurate if you have years of deep experience. I don’t recommend this method as it is the rare person that has the experience needed to be successful and profitable using this method. More importantly, to my opening comments in this article, it is not repeatable and relies on the owner. Again, if everything relies on you, the owner, you are a ticking time bomb of a business that has no value if the owner is removed by accident, sickness or retirement.
Pace and price. A little bit better than our first approach in the fact that you are getting out and walking the property. In the process you can gain some rough estimates of square footage and have enough information to build a bid that is better than a guess, but still not good enough in my opinion. This method is still based in a single person having to have deep knowledge to have any chance of coming up with winning bids that maintain enough profits to build a sustainable business.
Spreadsheets and/or software. Using an estimating software or simply a well-constructed excel bid template is my preferred method of bidding. It is accurate, repeatable, may be used by more than one person on the team and a great basis for job costing. In the end, you will have a system that gives you consistency from data driven information gathered, analyzed and adjusted overtime. This is the type of system that can help you make hiring decisions, equipment purchasing decisions, routing decisions and more. Most importantly, overtime this type of system can give you confidence and predictability in your business profitability.
I’ll share with you some tools as we move on, but your first piece of homework is to begin to gather everything you can to understand your true costs. Most of these can be found on your income statement, but some will require more thought.
If you have some thoughts, tips or resources to share with other commercial lawn mowing pros, please share below.