Add-on services to boost your bottom line
|Photos by Steve Trusty.|
|With water features like water fountains and ponds, you might decide to offer installation and maintenance or either on their own.|
In order for your business to grow, you must always be on the lookout for ways to profitably realize that growth. You can expand services to new markets, add services to those you already supply, or you could buy a business and merge it into your current operation. Many green industry businesses start out with one person, one truck and one piece of equipment doing one thing. Over time, the business evolves. Successful businesses plan for that growth or, at the very least, analyze opportunities to make sure additional services fit into the business model and can be profitable.
Determine potential, develop a plan
Pete Navarro, owner of Blue Skies Landscape Maintenance in San Diego, Calif., says, “Two important questions to ask yourself are: ‘Can it be profitable?’ and ‘How can I plan to make sure it works if I get into it?’” Navarro started his business in 1979 with one truck, a few pieces of equipment and a willingness to work hard. His core business at the start was residential maintenance that included mowing, edging, sprinkler irrigation inspection and repair, and shrub pruning. In order for his business to grow, he needed to take on jobs larger than the small residential accounts. So, he decided to expand into commercial properties and sports fields. Navarro now has over 70 employees and operates a fleet of 25 vehicles.
Dan Ritchie, owner of Lawn Co in Boise, Idaho, started out providing seed and lawn services for residential properties in 1988. While he didn’t spend much time planning expansion in the first several years, he is more methodical about it now. Before he expanded into snow removal, his first add-on, all he did was locate a snowplow that would fit on his truck—it required a relatively small outlay of cash. His latest expansion is into residential landscape installation. For this, he bought a friend’s operation who wanted to gradually get out of the business, which took several months of due diligence and planning.
Customers dictate expansion
Current customers are frequently the main source of add-on opportunities. They want a service provided that you don’t presently offer, and you try to find a way to do it.
Rick Longnecker, owner of Buds & Blooms in Olympia, Wash., started his business in 2005 providing residential landscape maintenance, including mowing. His move into irrigation maintenance was customer driven. A crew member would notice an irrigation problem and report it to the homeowner, who wanted to get the problem fixed immediately. Rather than have them wait for someone to be called in, Longnecker learned what to do, trained other staff and started offering the service. “Let your customers dictate what they need, figure out a way to supply that need and make them happy,” Longnecker says.
Ritchie says, “In maintenance, you need to provide every service the customer wants that can fit with what you are doing, rather than force the customer to go elsewhere and potentially move the business you had to a new provider.”
Another source of potential add-on business is customer complaints about other service providers. It always pays to have regular contact with your customers and listen to what they have to say. When you hear a complaint about a service they are unhappy with, take a look at it and see if you can do it better.
There are several reasons to consider counter-seasonal add-ons. They can increase your cash flow during your normal off-season and allow you to keep key employees year-round. Those were additional reasons for Lawn Co to add snow removal. Buds & Blooms added lighting to their list of services this year, as Longnecker was looking for something to keep them busy in the winter, grow their business, get new customers and supply a new service to current customers. He also wants to continue to convert more of the new lighting customers to regulars for the core business. Leslie Rosser, vice president at Ferta-Lawn of Bountiful, Inc. in Utah says, “Once the customer knows you do a good job in one area, they are more confident you can do a good job in another. If you properly prepare, an add-on has many benefits.”
Preparation is key
Proper preparation is key to the success of any add-on. You need to make sure you have the ability to perform the service, and training is necessary to do the job. Mistakes can be costly, not only on a particular job, but to your reputation. “You must be well-trained in the path you are planning to add to your repertoire. Get the training before you start. Your business is not the place for your on-the-job training,” notes Navarro.
If you don’t have the background or knowledge, one option would be to buy out another company that provides the services you want to add.
Longnecker says, “We first consider if we have the time to add a service, and then ask if we have the expertise. If we don’t have both, we subcontract it out.” You have to be careful if you consider this option. Your reputation is as much on the line as the subcontractor’s. Longnecker looks for people that he already has a relationship with.
If you don’t know enough about a potential subcontractor, ask for references. Check all you need to for assurance that the job will be done right.
|A rock and water feature can be a nice addition to the landscape,and its maintenance can be a profitable add-on for your business.|
You don’t want to add a service half-heartedly, just to see if it will work. You need to thoroughly analyze it, and then make the commitment. Having said that, there may be equipment decisions that would be best served after some experimentation. You may want to try different pieces to find the right fit. If your dealer will let you try out the options, or multiple dealers will let you try before you buy, that is the ideal situation. Another option would be to rent the equipment to start. You also might want to consider renting seldom-used pieces of equipment.
It may pay to subtract
While it is important to always be on the lookout for add-on services and to seek new business, it is sometimes necessary to discontinue a service—even if it’s the part of the business that you started out with. Rosser reported that while mowing was part of their first core offering, they no longer mow lawns as it was no longer profitable with their evolving business model. A key employee who worked in the mowing end of the operation wanted to start his own business, so they turned that portion of the business over to him and it proved to be a winning situation for Ferta-Lawn, the employee and the customers.
As you grow your business, continue to analyze all the services you offer. If profits are declining in any area, determine why and make necessary changes. Know your customer, know your employees and grow in ways that benefit you and them.
Steve Trusty is a partner in Trusty & Associates, a communications and market research firm in Council Bluffs, Iowa. He has been involved in the green industry for over 40 years.