Weighing Your Options: Mowing

Some landscape contractors chalk up residential maintenance as the cause of many headaches. These jobs require more interaction with chatty clients, more intense detail work and more administrative chores. Even contractors who enjoy residential work readily admit it can be a pain.

Residential customers are often demanding, explained James Reeve, commercial division manager, Chapel Valley Landscape Co., Woodbine, Md. “They all want to be mowed on Friday,” Reeve said, laughing. “Each client has a very specific set of needs he or she wishes to pursue, and they are unique. You have to find the right prescription for each job site. You have to consider the client’s likes and dislikes. Pesticides you can use on one site, you might not be able to use on another. There may be pets on the site, so you have to make sure you close the gate or the dogs will run out. Some people won’t allow blowers on their property, so everything has to be done by hand. That’s inefficient and costs more, but that’s their desire. You have to tailor those needs as required.”

Contractors say they choose to focus on residential, commercial or a mix of both based on their own personal style and the type of work they enjoy doing. “I like unemotional and larger work – that spells commercial,” said Mike Rorie, president, Groundmasters, Cincinnati, Ohio. “If I wanted to know what Mrs. Jones thought and if I liked to do gardens, I’d be in residential.”

While larger companies like Groundmasters tend to do more commercial work since it is capital and labor intensive, smaller companies generally gravitate toward residential jobs. “I think people start in residential, decide whether they will stay there and then may graduate to commercial,” Rorie said. “You don’t see many people start out in commercial because there is a lower barrier to entry in residential.”

There are pros and cons to focusing solely on residential or commercial maintenance, or choosing to do both. Several landscape contractors reflected on their experiences managing residential vs. commercial properties.

100 PERCENT RESIDENTIAL. Commercial maintenance jobs just don’t bring Shawn McLean the same sense of satisfaction as residential jobs. McLean heads the department of property maintenance at Stonebridge Associates Inc., Wilton, Conn. “You don’t get the appreciation you get when a homeowner is satisfied,” he said. “You get a lot more ‘thank yous’ and ‘well dones’ with residential than you would from a board member or committee with a commercial park.”

Also, since homeowners always want to dress up their properties, McLean said, there are more opportunities to sell add-on services. But there are also challenges. “They are looking for perfection,” he said. “When they pull into the driveway, they don’t want to have to deal with anything. They are paying us a premium to deal with (maintenance). We are full service and do everything from spring to fall clean-ups, pruning, mowing, edging and planting annuals.”

An additional challenge is continually identifying new services to offer customers, McLean said. “We always look at how we can improve and do more for our residential customers,” he said. “Each one wants his house to be the best-looking one on the street.”

Being honest and upfront with customers and asking about their expectations will lead to success in residential maintenance, McLean said. Having these discussions will address unrealistic expectations while educating clients, he added. “Some clients will say, ‘I want my lawn to look like a golf course,’” he said.

Residential maintenance can be profitable by carefully watching labor, material and equipment costs, McLean said. Efficiency in all aspects of the business is key. “Your employees have to know exactly how much time is allotted for each visit (to a site),” McLean explained. “Having two crew members is not profitable because there’s too much to do. But having a three-person crew has been profitable.”

With residential, employees also must be adequately trained. They must be familiar with the properties and the areas where they work, McLean said. “Just taking the shortcuts instead of sitting in traffic on the freeway, in the long run, saves you 20 minutes,” he said. “And all that little stuff adds up at the end of the year.”

Having a small number of clients helps McLean attend to their many individualized needs. Responding quickly to questions or concerns will ensure success for any contractor, he said. “If there’s a phone call that needs attention, respond immediately,” McLean said. “Don’t let complaints go. The client starts to fester at that point and the situation just becomes worse.”

100 PERCENT COMMERCIAL. Rorie prefers commercial maintenance. With residential, he explained, too much administrative intensity is needed to deal with clients, and these accounts have less profit potential.

“You’re dealing with someone’s home, and the average account is $3,500 vs. $10,000 to $12,000 (for a commercial property),” Rorie said. “In commercial work, you’ve got one-fifth as many customers per dollar and about one-tenth as much administrative structure per dollar compared to a residential contractor.”

For residential maintenance, contractors must also hire more skilled employees because the work is more intense and detail oriented, Rorie said. “You’ve got to get an even more conscientious worker to do residential work,” he said.

Still, commercial maintenance has its down side – the work is more capital intensive, Rorie explained. “You need larger, more expensive equipment because you get into bigger work,” he said.

Another drawback to commercial work, Rorie said, is that most of the properties are controlled by third-party management, which can be unstable. “There might not be the most competent person or there may be high turnover,” he said. “The Smiths will be at their home for 10 or 15 years. As long as you can make them happy, you know what you’re dealing with. Office parks may continually change managers on you.”

By focusing on commercial accounts, Rorie said he can structure the business to one type of client and perfect marketing and other services that are necessary to improve profitability. “It’s easier than trying to service both markets and manage both sets of employees and managers, and finding people who are fluent at billing both types of clients,” Rorie explained.

Like McLean, Rorie emphasized the importance of communication for success in commercial or residential maintenance. E-mails, voice mails, faxes and mobile phones allow Rorie to respond quickly to his clients’ needs. “If you can communicate with them quickly in whatever form they like, that’s a very competitive advantage to discover and be competent at,” he said.

Rorie said landscape contractors can be successful in either residential or commercial, but he doesn’t advise trying to do both. “Decide what you want to do and then structure your organization accordingly,” he said. “Getting caught in the middle is a dangerous place. You’re really a hero if you choose both. You’ll have to work twice as hard. If you have separate divisions in one company, you need to run them independently. And you still will have to divide your resources.”

Rorie offered some questions for contractors who are trying to decide between residential or commercial to consider. “Where’s your passion? What kind of work do you want to do? What kind of structure and organization do you want to build?” he asked. “You can hit higher margins if you’re good at residential because the costs are lower, but you have to be good at backing up what you say.”

15 PERCENT RESIDENTIAL. Chapel Valley Landscape Co. plans to grow the residential maintenance portion of its business. “We recently split off a residential maintenance branch, and we’re going to pursue that specifically as an area of growth,” Reeve said. “This has been part of our long-range plans to provide that complete service to those customers.”

Reeve said forming a separate branch was a natural, gradual move. “I think it was really the people who had the desire to do residential,” he said. “We basically had separate crews already internally. We grew to a size that made sense to do residential as a focal group and split it that way.”

Focusing labor in the appropriate areas, Reeve said, is the key to making residential maintenance worthwhile. Ask employees which type of work they enjoy doing better and then match them to the appropriate jobs. “If they’re not having fun, they shouldn’t do (residential),” Reeve said. “People who struggle with it should be doing commercial.”

While Reeve said residential clients can be more loyal than commercial ones, he admitted his high-end customers can be more high maintenance. They are pickier and have higher standards than most property managers do, Reeve explained. “They live there,” he said. “They see a weed and it grows on them.”

Because residential customers don’t operate on business hours, he said, contractors must adjust their schedules appropriately to accommodate their clients. “Clients are working during the week,” Reeve said. “From a sales and marketing standpoint, you have to target evenings and weekends, when they will be at home.”

Reeve, like the other contractors, emphasized the importance of communicating effectively with clients, who want to know how the site is progressing every step of the way. Communicate with clients at least once a week to make sure they are happy, he suggested.

In addition, keep in mind that residential customers tend to see the site from a different angle than commercial customers do and structure services accordingly, Reeve said. “The commercial customer is looking for curb appeal and functionality, while the residential customer is concerned with how the property looks,” he said.

Residential work can be profitable if the work is done well, Reeve said. He offered a simple formula for success: “Do what you say you’re going to do. Be there and don’t let them down. Look at the job from their perspective, not just your own.

“If you do a fantastic job, you’ll get referrals, which grow your work. You get interwoven into the customer’s way of life. They depend on you. That’s what drives your profitability.”

50/50 MIX. Robb Lied, president, Lied’s Landscape, operates two locations in Wisconsin. The metropolitan Milwaukee office is 66 percent residential and the other office, in Fox Valley, is 40 percent residential. Lied said he is pleased with this mix. “We’ve predominantly been a residential contractor,” Lied noted, adding that commercial work presents more potential than residential work does. “We won’t give up residential work, but we’re trying to grow the commercial end faster.”

At the Fox Valley office, Lied is breaking residential and commercial maintenance into separate divisions. “It is a smaller office and making some of those changes is easier,” Lied said. “We’re doing this as a pilot program this year.”

A lot of contractors won’t touch both sides of the business, he noted. “They will do either one side or the other,” Lied said, pointing out that one residential contract generally has less impact on a company than a commercial contract. “If big projects turn over, you can lose or gain $200,000 on an account, and it’s tough to either gear up or gear down.”

Lied said the benefits of residential work are smaller job size and less turnover. But residential customers continue to become more demanding. “As consumers get better educated, it becomes more and more challenging to stay on top from a technical standpoint,” he pointed out. “Client service is the key, which takes a lot more time than commercial. We do a lot of technical maintenance, color installations, holiday decorating, renovation projects, and a number of our clients want to stay on the cutting edge.”

To meet customer demands, there needs to be regular communication between the salesperson, the foreman managing the account and the supervisor, Lied explained. “We create a kind of ‘dos and don’ts’ list,” he said. “There’s a book on each client’s likes and dislikes. Aside from that, we try to do more walk-throughs, looking at the site with them.”

Lied said he has made residential work profitable by developing budgets for projects so the foreman and crew know what the expectations are for the year. The foreman should know how much time he should be putting in on a monthly basis, and reviews are conducted to ensure the foreman is getting the job done. “You need to meet the expectations of the client,” Lied emphasized. “You don’t want to overpromise and underdeliver.”

Lied has set different price levels for various types of residential and commercial maintenance work to reflect the services that are needed and efficiencies of scale. “Pricing is changed to develop the same type of profitability out of commercial and residential services,” Lied said.

The type of residential accounts his business is after, he said, are bigger. “The smallest size account we would do is $200 to $300 a month,” Lied said. “Some residential accounts are $3,000 a month. We’re predominantly focused on getting high-end residential accounts. For the full-service end, you have to pay more.”

50/50 MIX. Mike Ward, president, Mike Ward Landscaping, Loveland, Ohio, said residential customers “will bug the hell out of you” if there’s a problem with their property. If the weather was rainy on Tuesday, he said, and the grass is taller and needs mowed: “The residential customer will call you every time, but commercial won’t bother.”

Residential clients, Ward said, often have a lot of specific requests – and all want to be mowed on the same day. “Everything is emotional to them,” he said. “If the lawn doesn’t look good, they’re not all business. They say, ‘You ruined my lawn.’ They get excited and scream and yell at you.”

Staying on schedule is a must if contractors want to please their residential clients and remain profitable, Ward said. Use small crews and make sure they are efficient, “or you won’t make any money,” he advised.

Doing residential maintenance well, Ward said, also means getting to know each client personally, determining each client’s needs, using appropriately sized equipment for each job and delivering consistent services.

In addition, pricing must be competitive, he said. “I think that markets can bear certain pricing and you have to be in the ballpark,” Ward explained. “I think there are two approaches. You have the ‘whole bunch in the neighborhood’ approach, and you can price more competitively. Or there is the ‘I do the greatest work and only I can do it’ approach, where you can charge more.”

In residential services, the key to making more money is tying other services to mowing – “not being just mow, trim and go,” Ward said. “That way you’re not dependent on just mowing for money.”

The author is Associate Editor of Lawn & Landscape magazine.

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