Jacks of All Trades
30 Jan, 2009 By: Brian Albright LDB Solutions|
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Because the landscape industry is seasonal, business owners are always looking for ways to boost profits during the peak season or keep their crews busy during the winter. Many companies have turned to add-on services to keep the cash flowing all year long.
"In order to thrive, you have to get as much business from your existing customers as you can," says Ivan Katz, founder of Michigan-based Great Lakes Landscape Design Inc. The company does everything from power washing decks to storing lawn furniture and installing tennis courts for clients.
But without proper planning, adding new services can eat into profits, burn out employees and distract the owner from the company's core business.
"One of the main reasons people get into add-on businesses is to provide cash flow, and to keep their people working. The key is to first identify what your core business is, and what you're good at," says Ed Laflamme, CLP, a consultant with The Harvest Group. "People see potential profits in other areas, but that can distract them from making money at what they already know how to do. Be careful how many active business you have running at one time."
Adding On
Add-on services generally fall into two categories: Those that are provided during the regular season (power washing, pavers), and those that can help keep crews busy during the winter (snow removal, holiday lighting).
At Great Lakes, Katz recently expanded his warehouse facility and began offering cleaning and storage of his client's patio furniture. "I talked to different storage companies and found out what they charged for space," Katz says. "We came up with a price for each piece of furniture, and then we add any cleaning, pick up and delivery."
Great Lakes also installs landscape lighting (including twice a year light bulb changes) and pavers, and he recently started an entirely new business installing game courts (he's a Flex Court distributor). "That has given us that extra volume at a time when a lot of people are struggling to find work," Katz says. "There's also a lot of synergy. We did a tennis court installation, and as a result of that I picked up the maintenance and snow removal contracts for three apartment complexes."
The separate business, Game Courts of Michigan, also repaints lines for existing courts, installs epoxy flooring for garages, and does court renovations, mostly using equipment that the landscape business already owns. "My investment has primarily been in marketing and branding," Katz says. "I've hired someone to run that division for me."
Power washing is a popular add-on for landscapers because the equipment investment is low and it's an easy sell for existing customers. However, you have to have the right equipment, including a pressure washer rated at 2500 PSI or more (depending on the unit, prices can range from a few hundred to a few thousand dollars) and the right chemicals.
Great Lakes Landscape Design started Game Courts of Michigan to install, maintain and renovate sports courts.
Photo courtesy: Great Lakes Landscape Design
You also have to price the service correctly, and the lawn and landscape industry has not been very consistent. Some companies charge 10 to 13 cents a sq. ft., while others use an hourly rate ($20 to $40 per hour), plus a chemical application fee. Professional power washing companies often charge much more per hour, particularly for large commercial jobs, and customers gladly pay it. The key is to carefully track your time and materials cost, make sure the jobs are actually turning a profit.
Seal coating of driveways and decks (a good adjunct for power washing) requires the same kind of attention to profitability. Some states also require special licenses for the chemical application, which can add to your overhead.
"You have to know your cost," Laflamme says. "If you don't know how to price a new service, and you don't know how to estimate it, and you're not efficient at it, you have to ask yourself, 'Should I really be doing this?'"
Design-build contractors often move into pavers, hardscapes, lighting and irrigation services. Companies who want to expand into full-service contracting will need specialized staff (stone masons, electricians, trained irrigation techs) and enough work to keep them busy. There's an additional investment in more excavating equipment as well.
Other in-season services like pest control or pet waste removal don't require much capital, but can involve new licensing and training requirements. They can also take a lot of time, so even if your crew is, say, doing a pest control treatment during a regular maintenance visit, someone still has to take a half hour or more to do that work. That said, services like spraying for deer ticks or applying anti-desiccants to evergreens can be good moneymakers.
In Texas, where lawn work can go on all year, BMW Lawn, Yard & Tree Service owner Trey Bernhardt has found a number of ways to supplement his business during the occasional slow periods. Bernhardt began his San Antonio-based business earlier in 2008 doing basic lawn maintenance, but also provides tree trimming, holiday lighting and apartment clean-out services.
Bernhardt is experimenting with a number of add-on services to see what can be profitable in his market. He's partnered with a more experienced contractor on the tree service side, and hires temporary workers and rents dumpsters for apartment clean outs to keep his investment low.
"I'm still pretty new and still learning a lot," Bernhardt says. "If things keep going how they've been going, I can buy more equipment next year. My goal is to have five trucks and five crews."
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