[familyguy]

The lowballing scumbag I refereed to last year around this time has been a significant pain in my ass. Seems to be really pissing off other contractors as well.

We just lost a residential bid to them. Our thorough bid = $32k.... theirs, $16k

Another for a very exclusive private school actually called me to make sure my figures were the right ones cuz theirs were so much lower. I was pisssed because I actually asked if their were other bidders, explained it was fine if their was but that there were one or two companies out there I would rather walk away from bidding than bid against numbers that are not based in reality. I did not say which ones, but was told the board loved our constrcution project last year and if our numbers were competitive with the existing company we would be considered a shoe in for the job. NOT AT ALL THE CASE IT APPEARS. One or two board members have a hisotry with this other company and their low numbers and managed to get a bid from them. SO, it seems that the cost was just too much lower to ignore and are now considering them as well. I will find out Monday.

We haven't been able to sign a new maintenance account other than the ones we inherit from our construction projects because this company is getting them all from their low low numbers. The walmart of landscaping around here. (Also we only entertain maintenance projects at least $10K a year)

They have gotten most of the really large contracts and are really really agressive in their pursuit. Maybe it is because as agla said, they see the slow down and are trying to snatch up all the maintenance accounts to prepare themselves. Either way, they seem to mow at cost in hopes of getting all the other work. They are promoting their tree company as being run by a guy that is "Bartlett" trained. (I bet Mr. Bartlett wouldn't be too happy about that, I'll have to ask him.) They have very vauge contracts and bill for extras which seems to be pretty see through to me but these boards are after the initial bid like a largemouth after powerbait.

Our saving grace is 1. the quality of our work and almost 100% cutomer retention. (we only seem to lose jobs to boards; condos, etc. and only 1 in the last 4 years.) 2. Our relationship with LA's that seems to provide neverending quality jobs. 3. Our slow growth, (motivated by the more levelheaded trickydick). 4. And our ability to deliver what we say we will no matter what it does to our bottom line.

So, to summarize, our season is proceeding just fine. It would be great if that inheritance getting lowballer had picked another town to settle into. However, at the end of the day, we are busy with high-end work from people who pay on time.

[Chubbyappleseed]

Greetings! Checking in from Orange County, Ca. It is interesting reading your perspectives on the state of the economy and its reflection on the industry. I am new to the design aspect of landscaping and spent the last six months redoing my own residence. From passing neighbors and family and there friends I have been offered 4 residential design jobs. Any words of wisdom jumping into the industry with both feet first? Thanks in advance.

[GLAN]

Update

I lost the contracts for 2 assisted living complexes and an age 55 and up condo complex that we have done since day one after the installation......Assisted living I have been doing 6 and 5 years respectively....the Condo 2.5 years.

I was told from one of the assisted places that the bid accepted was about half of mine.......I wasn't making much money to begin with......I knew it, they knew it to. I only did them for the winter work and that 2 of the places was right out of my street and I would have to look at them every day......I didn't lose money, but when it was all said and done at seasons end I didn't put much money in my pocket

Made a little money on extras......the only thing good about them was they paid regularly and It was good cash flow. That and the winter work was certainly needed.

We are gaining on residential contracts and lots of extras. Design / installs are OK.........I am going to push side work on our residentials.....

Oh, I added sprinkler service to our list of services....Being that my buddy who serviced my customers passed away last December, openned the door for me to provide sprinkler service. This is turning out pretty well.

Something else I did this spring and I don't know why I didn't do it years ago......not gonna question as to why, just be greatfull that I did it now.........I offered spring core aeration as an add on service..........In our full maintenance program core aeration is included with fall spot seeding.............Heck, I own the machines.....and lots of lazy scrubs aerate in the spring......so........I offered it as an add on service, with a discount coupon for first timers......after that the spring aerating will be added into the contract the following year and that fee added in We've done about 25.....for a minimum of $30 after the $10 discount.......I see no reason to rape my customers and it was like found money with realy no extra effort doing it during spring cleanups.

For 2008 I am looking to add on shrub spraying........only going to use dormant oils and soaps.......that way I escape the neighbor notification. Doing the spraying I get to turn the screws on who used to be a friend that I gave all my customers spraying to over the years.........Freakin sheister

I am finaly looking at this way........I provide full service maintenance.........it should include sprinkler and shrub spraying and I get to do it myself instead if giving those service fees to someone else.

All in all this year has been developing nicely......where I thought I would be able to operate with 1 less man.......I am considering now taking on the extra full time person.......or try to get my 2 part timers to work more. 1 of my part timers only works 1 day a week.

[Stonehenge]

This season I've been surprised by a few things -

First, with as overbuilt as our area is (see this graph), I'm a little surprised that we're seeing the interest we are. It's not up to 2002-2003 levels, but it seems quite a bit better than 2006. I can attribute that to a few things, but I may reserve the description of those things to the Gold Oaks.

Second, I couldn't beleive how badly we got lowballed last week. Thankfully it was all brought out before we made a site visit, but it was crazy. A small paver job where the "winning" bidder was charging in the neighborhood of $6/sqft for excavation, prep, lay - the whole thing. I didn't think that even newbies to the business bid that low anymore. I wanted to call the guy and tell him that he should have at least bumped his price to $8/sqft - he still would have been lower in price by at least $4 per sqft versus any other competition, and would have been able to put a few more beans into his pocket.

Oh, well. He won't be in business too long with those prices. Some have to learn the hard way sometimes.

Lastly, I was surprised at how inefficient one of my competitors is. We watched from down the street as they turned a 2-man, 1-day planting project into a 4-man, 3-day planting project. This is 5 years after I saw them on another site where they did a $5,000 scape job where they used 6 employees and worked for 7 or 8 days. Not a wonder their suppliers were threatening legal action for unpaid bills. With this site being around and most of my local competitors knowing about it, I would think that inefficiencies like that wouldn't exist anymore. I hope they learn the things they need to learn before they have big families they need to feed.

[Mac]

family guy, im seeing almost the exact same thing. Im finding it tremendously hard to land new maintenance accounts because of this cheap-o compnay coming in for dimes on the dollar to mine and existing contracts. I have not lost existing work to them but they are winning almost everything they bid. The best part, they have a 45 minute drive one way to get from their shop to my area... i know for certain they are not making money.

Maintenance is getting very saturated here. I think it is because so many factorys locally are laying people off. Im shifting gears in 08 and planning to all but discontinue maintenance and pursue an industry segment with higher entry barriers. Im getting excited actually.

[agla]

Lowballers are often people who look at everything in terms of wages. They subtract the cost of the materials from the price of the job and divide the rest by the hours they worked directly on the job. Then they think "Wow, I made $30 an hour, that's twice the money I made at my job that I got fired from". It takes a while before they catch on that it took a whole week to do that job and even they have overhead.

But, this is America and I have nothing against someone going out and trying to make it.

[johnkeegan]

...you've got that pegged exactly Agla. And in this type of seasonal business, they often forget there are 3-4 months they can't make that $30/hour and they can no longer get $300-$400/week unemployment in the winter if they are their own boss.
I get calls from alot of guys with one foot in the door and one out. In late February they call looking for a job because they are broke and then by late April they feel frisky when they get a few side jobs so they then feel they no longer need a job... And then they call again in late summer/early fall.

[Dragonfly]

Biz is great. I am within 100 K of last years sales. Growth will be somewhere around 100 % or more, trying to keep a handle on it. This is after raising prices. Bottom line is fat right now. There are so many ways to increase sales its not even funny. I used to worry about low ballers. There is one thing they can't produce. QUALITY.

[TrickyDick]

Lowballers are often people who look at everything in terms of wages. They subtract the cost of the materials from the price of the job and divide the rest by the hours they worked directly on the job. Then they think "Wow, I made $30 an hour, that's twice the money I made at my job that I got fired from".

Sometimes. Sometimes Lowballers are just smarter and/ or tougher than thier competition. It's like Wallmart- Come in with low prices- undercut competition- competition folds- raise prices. Plus these guys (the smart ones) can grab a huge market share fast by pricing way low and being super agressive and once they're there....nothing keeps the phone ringing like having 50 trucks on the road all the time.

[Mac]

to add to that, lowballers oftern cut corners wherever possible. I drove by an account i was virtually promissed that they got and there is so much that is called for in the specs but left out in actuality.

However, to counter the walmart theory, there will never be a market where one company has driven everyone else out of business... there are plenty of people to step in and start a new one when one company goes under due to price competition. I believe that there certainly is a niche that these low cost providers are filling but ive always believed if you win on price, you will also loose on price when someone else comes in cheaper.

I dont understand why this business is so attractive that so many people want to join in... we only work 8 mos a year, have to hold billable rates same or lower while watching expenses rise, are very subject to the weather, and can not afford to hire quality employees. Does that sound like an attractive business to get into? I know I dont want to stay in it forever.

[EpicInterlock]

I second Dragonfly.....my company is growing like crazy. It's definitely due to the quality and the customer service end. When I first started out, I only had about 6 jobs, and actually owed money on my credit card, but my quality was very evident. Now, only 6 years later, with no advertisments at all, except for lawn signs on my current jobs, my phone is ringing off the hook, and I've already signed on 14 new jobs bigger than $6,000, with the biggest job I've ever signed before ($20k plus) before I've even started working.
Yippee!!! Talk about persevering and never giving up!
Finally paid off.

[spiderlily]

I've seen one big change this year and it is probably a good trend. In the past, we have always worked for people older and much wealthier than we are. This year we are getting jobs from people younger than us, and people who appear to be middle class.

[Mac]

spider, would you mind elaborating why you believe this to be a good trend? I dont have a take on it but would like to know why you think it is good.

[Hamons]

For me 07 has been an exciitng year. - s far.

Sales are up as well as profit.

Best part is - I can tell you exactly how much sales are up. Thansk to many of you nd lots of work on my part, I am now doing a great job tracking my costs, tracking my income and knowing how much I make on every job.

Also, i now have very efficient and powerful systems in place for answering phone calls -- tracking those and tracking and maintaining leads throughtout the selling process.

Also my estimates have become more accurate as I a very specialized spreadsheet that I designed based on members here and after james hustons book.

These estimates are written with a much larger man-hour figure charged.

07 will be a VERY good year -- but 08 will be even better I imagine!

[spiderlily]

Mac, I guess I think it is good that the market is getting bigger. Dual income families with young kids, at least in my area, didn't used to seem to spend much on a landscape. They were more likely to just live with what they had, or do it themselves. Now, they hire and value professional help. I've read that this generation is less likely to "do it themselves", and now I am seeing it in our business.