MAINTENANCE: Mowing for More

As he established his fledgling mowing operation, one of Chad Stern’s greatest mistakes was not accounting for his overall costs.
 
As the president of Mowing & More, based in Chevy Chase, Md., Stern thought he’d tracked his costs and had a handle on his profit structure. But as his company took off, nothing could have been further from the truth. “As my company grew, it really surprised me,” Stern says. “Everything from payroll, to insurance to vehicle maintenance, it all adds up and eats into your bottom line.”
 
Those and other issues gnaw and nibble away at a contractor’s ability to realize a decent profit from his mowing operations. And in the worst-case scenario, this oversight can put a company out of business.
 
Mowing is one of the base-line services contractors engage in when entering the landscape industry. On average, landscape contractors derive nearly 40 percent of their annual sales from lawn mowing and maintenance, according to recent Lawn & Landscape research. In addition, 30 percent indicated mowing/maintenance was their fastest-growing service in 2007, the research says.
 
So despite potentially debilitating business handicaps such as low-ball contractors, fuel costs and a shortage of skilled labor, there are ways contractors can control costs and strengthen their overall profit pictures.

ROUTING. Stern learned early on the importance of solid budgets in revealing a true cost and profit picture for his mowing operations.
 
“Budgets will reveal how much money you need to make and how much you can spend in a given year,” he says. “Without them, it’d be very difficult to find success and make a profit in this business.”
 
Fuel price is one budget item on every contractor’s mind. The sporadic rise of fuel prices makes it difficult to accurately map an operational budget. However, a contractor can take a more judicious approach to moving from one property to another through solid routing practices.
 
Choose routes carefully to minimize travel, says Pete Schepis, vice president of The Greenwood Group, Chesterfield, Mo. “Chart your farthest client as your first stop and work your way back to your shop,” Schepis says. “It’s the golden rule of routing.”
 
Along with solid routing, contractors need to be aware of the traffic patterns within their community, Schepis says. For example, crews rolling out prior to morning rush hour will get to job sites and out of stop-and-go traffic, which consumes time and fuel. Likewise, recalling crews prior to the afternoon traffic rush achieves an additional cost savings.
 
In addition, Schepis assigns 98 percent of his crews to only cut grass. “Considering the cost for mowing equipment today, I don’t believe in sending crews out to mow and then to stick around to do other maintenance work,” he says. “If they’re busy doing other things that a second maintenance crew could handle, than that expensive mower is sitting on a trailer and not making me money.”
 
While crew momentum is a solid mowing principle, Russell Hunt, owner of Total Lawn Care in Steubenville, Ohio, cautions contractors to not sacrifice job quality in lieu of improving time management and efficiency. “It’s true, you want to mow as efficiently as possible to improve profits,” he says. “But you also want to do whatever it takes to get the job done right.”
 
Hunt advises contractors to choose a market and stick with it. “You might get a call from a potential client who is a half-hour away,” he says. “And while the potential business is attractive, you have to decide whether it’s a smart thing to do. Stick to your guns about what you’ve defined as your market and carefully consider whether you’re ready to expand into a new market.”
 
COSTS AND CLIENTS. Mowing is a cut-throat business. Clients – both residential and commercial – are too easily swayed by a low-cost bid sheet.
 
Mowing contractors focused on optimizing their profits need to be OK with being outbid by a low-cost contractor from time to time, Schepis says. “I’d rather lose a job than to underbid and not make a profit on it,” he says. “If I’m not making a profit, than that job is just practice and we don’t need any more practice.”
 
Profit is directly linked to a solid understanding of a mowing contractor’s overall cost structure, says Jim Huston, president of J.R. Huston Enterprises in Englewood, Colo., and an industry consultant. Huston suggests mowing contractors ensure all of their costs – including general and administrative overhead – are passed on to their clients. Also, he advises contractors to track their costs to identify gross margins on their mowing jobs. “Most contractors just don’t understand what costs are and how to cover all of them in their pricing methods,” Huston says.
 
Many contractors try to maintain a 15 percent profit margin when mowing, and any job that slips below 10 percent is a cause for close scrutiny.
 
“The new guys in the industry have no idea of where their costs are and they’ll be more than happy to underbid you for a dollar,” Schepis says. “I have no idea how they expect to make a profit, and most of them don’t. You won’t see them next season.”
 
When bidding commercial work, one challenge is overcoming a property manager’s expectation that a contractor will beat the price of the existing contract. Never base an estimate on what the other guy did. Schepis says. “Explain and educate the client that it’s in their best interest to have you provide them a bid from a fresh perspective,” he says. “Who knows how long they’ve used that original contract. It’s very likely the property has changed over that time.”
 
A fresh approach includes carefully and completely measuring the property. Schepis prefers to submit his proposal only after consulting with the crew chief who will do the work. “I  base our pricing off of what our people tell us and what they’ll need to do the job completely,” he says.
 
Educating mowing crews on how to work efficiently is another important aspect in ensuring greater mowing profitability. For example, doing the job right the first time is an essential message to instill in mowing crews. Nothing saps profits faster than traveling back to redo a job that should have been done right the first time.
 
Another vital lesson involves client satisfaction. “Do what you need to do to keep your clients happy because it will cost you more money to replace a client than to correct a problem to keep one satisfied,” Hunt says.

EQUIPMENT. Most contractors say an investment in quality mowers pays back dividends in speed, efficiency and time management. “Not enough can be said about the benefits of a good piece of commercial-grade mowing equipment,” Hunt says. “Don’t be afraid to spend the money necessary to purchase a good quality machine.”
 
Quality mowers not only ensure reliability, but also allow workers to operate at a profitable pace. At the very minimum, Hunt believes a mowing crew should be equipped with a zero-turn with the ability to bag and a walk-behind for hilly or steep areas. “Ten to 15 minutes and then on to the next property,” he says. “If I have to spend an hour on each lawn then I’m going to lose money.”
 
Use mowers that can handle clients’ job sites, says Jimmy Eavenson, chief engineer at Cub Cadet Commercial in Valley City, Ohio. “Match the needs of the site with the correct equipment,” he says. “For example, use the largest mower that will fit the job.”
 
Schepis, for example, outfits crews with a 61-inch zero-turn and a 52-inch walk-behind for efficient mowing.
 
A preventive maintenance program also strengthens profitability,  Eavenson says. “Ensure the equipment is properly set up and adjusted,” he says. “Make sure it’s lubricated, the mower deck is clean with sharpened blades and the unit is regularly serviced to keep filters and fluids clean.”
 
In addition, educate crews on proper mower use. “Invest in training crews in equipment operation and safety,” Eavenson says. “And enforce safety standards. Accidents harm workers and the company’s bottom line.