So you want to start a lawn care business. You’re convinced that you have what it takes, and you just want to go for it. Before you can put up a service that entails lawn maintenance, you first need to decide whether you’re going for the residential or commercial market. You can always choose to do both, but it will be better for you to focus on one segment first, especially because you’re still learning the ropes.
Questions to ask before you begin
In order to decide whether it’s a commercial or residential lawn care business you want to build, you need to look at the business environment and see if you can survive. To start with, you can ask yourself these questions:
- What does the competitive landscape look like in your area? How many residential lawn care companies are there? What about commercial lawn care companies?
- Is there enough demand for a lawn care business? Do you live in an area that has many upper-middle class housing developments, or are there more commercial properties that you can potentially tap?
- How much capital do you have to begin with?
- What is your equipment and current manpower capable of?
- How are you when dealing with people? Do you prefer to deal with simple, one-to-one transactions with the actual owners or are you okay with talking to multiple people and decision makers?
Building and maintaining the business
Answering the preliminary questions will give you an idea about which side you’re leaning towards. You also have to understand the differences with regards to setting up and maintaining the business, especially cost-wise. Here are some key considerations.
- Setting up a commercial lawn care business is typically more expensive than a residential one. With commercial lawn care, you need to invest in bigger and better equipment because you’ll be working with much larger lawns. That also translates to maintenance costs, especially once your business grows larger. When working with residential properties, you don’t need expensive equipment so you don’t need too much capital when you’re starting up
- Profit margins tend to be lower with commercial deals, but it’s a low-margin high-quantity setup because the dollar value of each commercial contract is higher than what you would get with a residential one. The value of one commercial deal is equivalent to several residential deals, but that also means much more is at stake. If you lose one commercial contract, your revenues will significantly go down until you replace it with another one.
- Residential lawn care is simpler than dealing with commercial clients, and this translates to labor as well. With commercial deals, chances are they’ll hire you for more than just cutting their grass, and the service could very well extend to landscaping, trimming trees, planting flower beds, and even fixing irrigation systems. This also means the workers you hire will need to be more skilled.
Building your customer base
Even if you’ve set up your business, it won’t run by itself. You’ll need customers to keep you busy, and here are the considerations you need to think about when it comes to building your customer base:
- The estimating and bidding process will be a lot simpler with residential customers, because there’s only one decision maker, and chances are you will be directly communicating with the owner. With commercial contracts, on the other hand, there will be more than one decision maker and most of the time, you don’t even get to talk to the owner. The good thing with commercial deals though is that they’re so used to cold calling, and there’s no stopping you from offering your services
- Landing any kind of customer deal is a challenge, especially if you’re a new player on the market. With commercial accounts, initially, it will be difficult to make your pitch and convince them to switch to you, especially if they already have an existing lawn care provider that they’re satisfied with. Residential customers are easier to convince, and they’re not so picky as long as you offer the deal that they want
Building your reputation
As your business grows, so does your reputation. The dynamics of how word-of-mouth works typically vary between commercial and residential, in the following ways:
At the end of the day, it’s not really a question of which is better between commercial and residential lawn care. What you need to determine is which option is better for you. Even if they both entail cutting grass and maintaining the lawn, there are key differences to their operations. As the business owner, you have to be aware of these differences to assess what you can best offer.
Whether it’s commercial or residential, the important thing is you’re aware of the expectations you need to set for yourself, the challenges you are bound to face, and how to make your business model work.