MAINTENANCE: Maintaining Steady Income

In uncertain economic times, you can’t beat the peace of mind recurring revenue offers. That’s one lesson many design/build and construction-only firms have learned throughout the years.
 
Greg Bashaw, owner of Fairway Landscape, Bellmore, N.Y., started providing maintenance for his existing design/build clients about five years ago. He realized his clients weren’t receiving high-quality maintenance after their design/build projects were installed. Plus, he couldn’t ignore a maintenance division’s other benefits: recurring revenue and the guarantee his employees would remain busy if the work ever slowed down. “You soon find out you need a certain amount of maintenance to survive,” Bashaw says.
 
Today, Fairway Landscape spends about 75 percent of its time on maintenance and 25 percent on design/build. Typically, maintenance refers to lawn mowing, trimming, edging and blowing; however Bashaw’s brand of “full-service maintenance” includes five annual chemical lawn care applications, shrub trimming and spring and fall cleanups, too.
 
The company started by marketing maintenance to its existing design/build customers and has since advertised the service through traditional methods in local newspapers, through its Web site and by word-of-mouth. Bashaw estimates he spends $2,500 per quarter on advertising.
 
To start out in maintenance, a company needs the obvious: a truck and trailer, mowers, trimmers, blowers and edgers. If companies want to provide fertilization and pesticide applications as Bashaw’s does, they need to obtain licenses through their state departments of agriculture. Chemical lawn care firms also require more equipment – typically handheld or backpack sprayers, spray tanks on trucks and spreaders (for more information on equipment costs, see “Equipment Checklist” on page 14).
 
Bashaw recommends maintenance contractors look into their local governments’ requirements for disposing clippings. On Long Island where he operates, contractors are responsible for hauling and dumping clippings, so he has invested in a dump truck, which costs $10,000 more than a traditional contractor pick-up truck, depending on make, model and options.

PRICE POINTS. Unlike design/build where pricing is about material markups as well as meeting budgeted man hours, maintenance pricing is essentially about labor. “Everything is priced according to time when doing residential maintenance. You really have to know your margins.” As such, Bashaw or one of his project managers visits each property to give an estimate. Even if Bashaw is familiar with a prospective client’s neighborhood and the sizes of lawns in that area, he prefers not to give estimates sight-unseen in case of any potential obstacles, like a gate that only a push mower could fit through. Though some contractors prefer to measure all properties, Bashaw is confident in his knowledge of his equipment and crew capabilities. “I can tell how long something’s going to take depending on the equipment we use,” he says, adding it’s poor use of his time to measure every inch of a property.
 
Billing and collections can be a challenge in any service industry – and those concerns only compound with recurring services. “On Long Island, it can be a challenge to get paid on time,” Bashaw says. “So many people feel they can afford a landscape professional, but when it’s all said and done, they can’t pay on time. It’s still a luxury item; however people don’t look at it that way here.”
 
One strategy to alleviate problem payers, Bashaw says, is to focus on acquiring clients who want mowing, chemical applications and cleanups vs. those who just want mowing. “I prefer to take full-service customers, not just people who want their lawn cut for the cheapest possible price. Those are the people who give you the most trouble.”
 
Bashaw bills his clients monthly from March or April through November. He takes the total price for all of the services a client receives during the growing season (typically 31 mowings, five lawn care applications and spring/fall cleanups) and then divides it by eight or nine to arrive at a monthly rate. Other methods for maintenance billing include billing per project/per visit or billing monthly for all of the work rendered during that period. Bashaw has found that most clients prefer to budget the same amount each month during the period they’re receiving service, but he advises against 12-month billing. Though customers who are billed 12 months are paying less per month than they would during a shorter term, “People don’t take into account they won’t receive service in December and January,” he says. The confusion this can cause makes it more trouble than it’s worth, Bashaw adds.
 
Customer communication, he says, is one thing contractors should consider when getting into maintenance. “You must maintain an on-going relationship with customers every week in order to maintain your client base,” he says, adding residential maintenance customers come with their own set of quirks. For example, a number of customers have requested crews only mow with push mowers, even if ride-on mowers are getting the job done in a high-quality, efficient manner. When Bashaw first started receiving these requests he thought the larger mowers were possibly damaging the clients’ lawns, but after following up, he found that wasn’t the case. Even though the ride-on mowers don’t cause damage, some clients still don’t want crews to use them.
 
“It appears to the customer that the guy is having too easy of a time cutting their lawn,” he says, explaining customers don’t feel they’re getting their money’s worth. When Bashaw receives such requests, he explains to clients that if his workers have to use smaller, less efficient equipment, the price will go up in proportion to production time.