Turf Magazine - June, 2014

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The Pros & Cons of Commercial Accounts

By Steve Rak II

Commercial landscape maintenance is a very large segment of our industry. I know from attending industry trade shows and browsing the message boards at http://LawnSite.com that there are quite a few companies out there that are interested in breaking into this market. My company has been servicing commercial landscape properties for over 20 years and in my experience it is a great business. Here are some pros and cons of the commercial landscape business for anyone who is thinking about getting into it:

Pro: Consistent pay/cash flow - Most commercial work is based on a contract with terms that stipulate a monthly payment. This is good from a cash flow perspective and for budgeting because you know what kind of revenue you will be generating monthly and yearly from that property.

Con: Pricing pressure - The commercial market is very price driven. If you are going to get into this market it is very important to understand that you will not be able to charge the same hourly rate as you do for D&B work. It is a totally different market and the pricing definitely reflects that.

Pro: Scheduling - One of the nicest things about commercial maintenance is that once you have your routes set up they can pretty much run themselves. The schedules can stay the same every week so the crews learn the routes and properties and know what to do with limited supervision.



Photo courtesy of Getty Images.

Con: Personal relationships - Unfortunately in the commercial maintenance world the personal relationships are much different than in the residential market. For example, the HOA board can change, a property manager can get fired, a facility manager can quit and all of those contacts you had can be gone overnight.

Pro: Multi-year contracts - Most commercial clients are willing to sign multi-year contracts which makes it easier to grow your business and know what you will have from a revenue standpoint a few years down the road. You don't have to start from zero every year.

Con: Lots of bosses - If you are working in a condo association with 150 homes, then you have 150 bosses. In theory there should be one property manager or HOA member that you report to, but in reality it is up to your company to keep as many of those 150 homeowners as happy as possible. It's not always easy and there is always going to be one or two people who aren't ever going to be happy. But, ultimately, when the homeowners speak you have to listen, or you won't have the job very long.

Pro: 12-month work - If you are in a market that gets snow then you can benefit by having commercial jobs in your portfolio of work. Most commercial clients want one provider for their year-round grounds management. This has helped my company stay operational and generate revenue during the long Cleveland winter months.

Con: Customer loyalty - In the commercial world you just never know what is going to happen. You can do a great job, have no complaints and still lose the job for various reasons. Sometimes the landscape budget gets cut, sometimes they get a lower price, etc.

Pro: Multiple jobs from one customer - Most property management companies have multiple properties they manage. If you do a good job for them they will give you more opportunities on their other properties. Same for businesses, restaurants and other entities that have multiple locations.

Just like any other business it's all about doing a good job, communicating with the customer and giving a fair and competitive price. There is a lot of opportunity in this area, but along with the opportunity comes quite a bit of competition as well. Commercial maintenance requires a long-term mind set because you will be dealing with the same customers for a very long time, hopefully many years to come.

The author is the owner of Southwest Landscape Management, Columbia Station, Ohio, and a partner with his brother, Jeff, in Rak Consulting. Contact him at steve@sw-landscape.com.