Business Plan: Larry’s Lawn & Tree Service



Larry’s Lawn & Tree ServiceBusiness PlanAugust 9, 2012Mary ChapinBellevue UniversityMSM 520Executive SummaryLarry’s Lawn and Tree Service (LLTS) will mow and trim your lawn, cut down and remove trees, trim trees and shrubbery, and do miscellaneous yard work all while providing exceptional customer service and quality work at extremely reasonable prices.LLTS owns quality commercial equipment. Larry will quote a price per mowing and will then regularly mow your residential or business lawn at that quoted rate for 2 years. Additional miscellaneous yard work can be added for a reasonable hourly fee. Snow removal is also offered to lawn customers. And on top of all that, tree trimming and tree removal are also jobs LLTS will take on. Because LLTS is a sole proprietor business as well as a local business, you will always get excellent service.LLTS is financially sound. All business equipment is 100% paid for and in excellent working condition. As the equipment ages, it is traded in for new equipment. The company has the necessary financial security to handle normal daily operating expenses and unexpected repairs or replacement costs. There are no monthly costs for storage as all equipment is secured at the proprietor’s residence. Since the business is owned and operated by Larry alone, he sets his own hours and can ensures regularly schedules work and odd jobs are carried out on as promised; weather permitting. The business started by working for the state of Nebraska, mowing lawns for elderly clients, far below what normal rates would be. The business grew yearly, as Larry began to make a name for himself, to include residential and commercial businesses in addition to the state lawns. After 5 years, the business was able to sustain itself without the low income state lawns. Since Larry has a ‘regular’ full time job, he does use part-time help on occasion but it is kept at a minimum and no benefits are expected or given. LLTS continually receives calls for more business and therefore, if he so chose, he could acquire enough lawns to mow on a regular basis to operate the business on a full time basis.There are several other lawn businesses in town. Some are in the business part-time like LLTS, some are owned and run by a sole proprietors and some are large full time businesses with several employees. No other lawn care business in town though will compare to the service you will receive from Larry’s Lawn and Tree Service.Market AssessmentLLTS operates out of Nebraska City, NE, a town of approximately 7,500 residents with several large industries. The population of Nebraska City is well mixed with those who can easily afford lawn care and also the very poor. There are several schools in town, many banks, a hospital, a fire department, and several nursing homes. There are currently 5 lawn care services in town and a few more in the surrounding smaller towns. The smaller cities surrounding Nebraska City have far less industry and businesses. The average town outside of Nebraska City only has the usually post office, a few bars, a bank or two, and a small grocery store and gas station; if they are lucky. Therefore, other sources of business are gained from the smaller surrounding towns. Having been in the business for over 20 years, LLTS has built a solid reputation. The company has grown so much that Larry regularly has to turn down customers that are referred to him by hid customers or businesses who know his reputation. Customers know they can trust Larry to do what he says he will do at the price he quotes. He can be depended on to get the job done when he says he will get it done. LLTS has several competitors in town. There are a handful of small lawn care businesses as well as a few of significant size. LLTS reputation has kept him in business for over 20 years; where other small, independent owners have only lasted a few years. The larger businesses have more several trucks, employ many employees, and have much deeper pockets than LLTS. Despite of this, LLTS has been extremely competitive with these businesses. Many of the other lawn care services have had to depend on out of town business to stay afloat. LLTS has taken on jobs out of town but has never had to depend on out of town jobs to remain in business. LLTS regularly reviews the strengths, weaknesses, opportunities, and threats to the business to determine if it is viable to actually stay in the business or not. Although a season of drought can be very discouraging, since LLTS is a part-time business for Larry in addition to his regular job income, he is not solely dependent on the lawn care business for his income and sustenance. S.W.O.T. ANALYSISSTRENGTHSCash business - 30 day credit onlyDebt freeNo regular monthly costsSet own workloadHonestFairLikeableWEAKNESSESEquipment breakdownsSeasonalWeather dependentOwner’s ageOPPORTUNITIESExpand to full time (independently)Expand to full time (with part-time help)Sell equipmentSell customer listTHREATSWeatherEconomyNew upstarts Competitive AssessmentThere are no other businesses in town that offer the exact same services as LLTS but there are several businesses that offer variations of the same services but to different degrees. There are some companies that exclusively do tree work. There are a few lawn mowing services that are full time. There are a few lawn care business that offer full lawn care services; beyond just mowing. Dave & Sue’s Lawn ServiceDave and Sue’s lawn business is part time, which is the same as LLTS, but they do not provide any type of tree work or additional yard work or lawn care needs besides mowing. Dave & Sue’s customer base is largely retired residential folks, who are live on a fixed income and have a limited amount they can pay for mowing. Dave is retired and operates his business more as a hobby than a business. No billing is done by Dave and Sue’s. Dave and Sue are very personable and have very low rates. They have less expensive equipment, which is not commercial quality and therefore less expensive for upkeep. They prefer to mow less often than LLTS and they have a hard time keeping, good, reliable part-time help.Dave and Sue’s Lawn Service is not a threat to LLTS due to the quality of work produced by LLTS as well as his reliability. Zillow Lawn ServiceZillow does mowing, weed prevention, fertilizing, power raking, and aerating. They are a full time, full service lawn care business. Their customer base is mainly large companies such as OPPD, local businesses, and residential customers who are in the upper class category.Zillow has a large, reliable full time staff and are a well-established company not only in our city but in the surrounding cities as well. Offering diversified services, they own more different types of equipment than LLTS and it is all commercial quality. Unfortunately for Zillow, due to the size of the company, their overhead is very high. And because they have such high overhead, they have to charge higher fees and raise their prices on a regular basis. Another weakness for Zillow is because of the company size, the owner is rarely present when jobs are done and a lot of customers want to see the owner of the company working or at least supervising the employees.Although LLTS does lose some business to Zillow, it does not lose enough to affect his business. LLTS is much more reasonable priced and Larry as the sole proprietor is much more personable. Larry is on-sight, doing the majority of the work himself. His part-time help works alongside Larry approximately 50% of the time.Lumberjack Tree ServiceLumberjack Tree Service is one of the two major tree services available in the area. They do not mow lawn or do any other type of yard work but stick strictly to cutting down trees and removing tree stumps. Their customer base is both residential and commercial. Lumberjack Tree Service has a huge advantage in that they have a connection to the local utility company; therefore, they get many jobs referred to them. They have large specialized equipment, a knowledgeable full time staff, cover a wide area, and most importantly, advertise. None of the other lawn care or tree services in the area advertise. But again, to their disadvantage, because of their size, they have a very high overhead so their prices are much higher than what LLTS would charge to do the same tree work due to his low overhead.Lumberjack has a large customer base and a good reputation. Their full time status and array of equipment give them great credibility. This does take potential business from LLTS but LLTS has done less and less tree work with each passing year. Market StrategyLLTS started out by mowing lawns for the local Social Services Department. By providing quality work and excellent customer service to these customers, he built the business up to a reasonable, part-time, sustainable size, gradually adding other customers along the way. He then bought out another lawn service and acquired not only the equipment but the customer list. His wife helped with the mowing during the early years so he did not have to pay for additional help. His children also helped with the business as they got old enough to pick up sticks, clean out bushes, and do various types of yard work and mow. Larry never intended to work his lawn business full time and therefore did not have a strong need for a large marketing or advertising campaign. He has signage on his truck, at a nominal fee, and has maintained signage on his work truck throughout the years. Not wanting to turn down customers, he has not advertised in the local newspaper or phone directory.Although today the internet is a strong and very powerful tool for networking and marketing, LLTS has always relied upon good old fashioned ‘word of mouth’ recommendations. His customers have told their neighbors and friends how pleased they are with his service and he has picked up many new and happy customers this way. He has also worked closely with the local lawn mower repair shop and fertilizing company and both have recommended his services over and over again to people inquiring about lawn mowing service. Being part time, he has even had to turn down customers but has always recommended a friend in the business when he could not take on any more customers himself. Operational RequirementsLLTS operates out of Larry’s residence so there is no storage, rental, or mortgage cost for the business. A small utility building sits on his property that houses all of the normal equipment for the lawn and tree business. His trailer is parked in the yard during the few winter months and he drives his truck to work on harsh winter Nebraska days. Depending on the weather, the mowing business generally starts around April 1st with spring clean-up and ends by November 30th with fall clean-up. This leaves only a four month break before the next season starts. LLTS has two riding mowers, the same style and size, three different size walk behind mowers, a ? ton puck-up truck, and a trailer to haul the equipment on. To assist with other aspects of the business he owns rakes, two leaf blowers, one edger, two string trimmers, several gas cans, three chain saws, and various other miscellaneous tools. According to Porter (1996), “competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” When LLTS first started, Larry also had equipment to power rake and aerate lawns as well as a tiller to till lawns and gardens. This set his business apart from all other lawn business in town and helped him gain a healthy clientele. As Ng, David, and Dagger (2011) stated in their paper on word-of-mouth advertising, “Word of mouth is arguably one of the most important factors in the success of service firms.” Larry’s customers from the Human Services Department were satisfied customers and told their friends how pleased they were with his services. People looking for some of the specialty jobs he did would ask the Chamber of Commerce and the lawn repair services for recommendations and they would all recommend LLTS. After the business grew big enough to maintain itself part time, Larry was able to cut back to just mowing lawns and providing tree service. Larry has a part-time helper but does not provide any benefits (except free lunches and drinks while working). Larry’s helper is usually available whenever he is needed. This is important since Larry works full time at his full time job. Since the lawn business is very dependent on the weather, Larry cannot always mow lawns on his days off. If necessary, Larry can drop off his mowers at key locations and his helper will mow while Larry is at his full time job. Larry does not usually take time off during the mowing season but if he needs to be away for any reason during the season, he will mows all of his lawns in a few days so that they will not have to be mowed while he is away. But if necessary, his helper is usually available to mow while he is out of town.Financial RequirementsSince LLTS has been in business for over 20 years now, he has in his inventory all of the necessary equipment needed to run the business. He did not purchase all of this equipment in one year but gradually over several years as the business grew and the need for more equipment became necessary. A list of major equipment and costs can be found in Appendix A. From time to time, pieces of equipment are stolen from his trailer while he is mowing or the while the trailer is sitting unattended on a job. And then naturally, equipment wears out over time and needs to be replaced. Overall, his major pieces of equipment total cost are approximately $45,000. All equipment is paid for within a few months except for the riding mowers and pick-up truck. These large items are paid over a 3 to 5 year period, making one payment in November each year. This allows for easy, affordable payments as well as depreciation each year on all major equipment, including a computer. “The growth budget is a plan that lays out not only how the organization intends to find growth, but how it proposes to fund that quest” according to Charan (2004). This is an important aspect of business if you want to grow and most businesses do want to grow. For LLTS, when the business needed growth, he advertised in the local newspaper and in the phone book at minimal costs. He has always had a sign on his truck as well. Providing tree service is a special niche that usually only large companies provide, and at a large cost as well. For LLTS, to grow his business, he chose to do tree work in the beginning when he started out. This work came from his existing customer base as well as through recommendations, people who knew him, and of course, by word of mouth. There is always plenty of tree work to be done after a storm comes through and it helped out the business in the beginning with that extra income. LLTS still provides tree work but is very selective.LLTS survival is very much dependent on the weather; much like farmers, only on a much smaller scale. Nonetheless, if a very dry or drought season occurs, LLTS does not make much money. An expense and income chart is in Appendix A based on the past 5 years. It could probably be based on the past 20 years because overall, the expenses generally come out to between $15,000 and $20,000 a year and the income comes to between $30,000 to $40,000 a year. On a good year, the major repairs will be less and maybe no new equipment will need to be bought but overall, the numbers generally stay the same from year to year. Larry has about $1,000 give or take a few hundred each month for spending money. It’s more of a hobby for him than anything and gives him the opportunity to work outside; which he dearly loves to do.Management TeamThe management team of LLTS consists of Larry and his wife, Mary. Larry grew up on a farm so he has always liked working outside. He also had lots of experience mowing the lawn on the family farm as well as for neighbors. His wife has always been a business type person and so Larry does the manual labor type work and Mary takes care of the billing and taxes. Larry is very skilled at mowing and trimming, tree work, trimming bushes, and getting mowers unstuck from ditches and other various places. It might sound like an easy job, but many of his helpers throughout the years have been unable to keep up Larry’s pace and string trim. It is hard to find good help when all your help wants to do is mow with the riding mowers. If a helper cannot keep up with the pace Larry sets or cannot physically do the majority of different tasks, Larry cannot keep that person employed. Larry does not ask anything of his help that he is not willing to do himself. Although it would be easy to always mow the lawns that use a riding mower, he uses the push behind mowers even more than his helpers. Mintzberg (1998) referred to this type of leadership style as someone who connects with his employees and does not place himself above them.Mary learned how to type in high school, while taking several business courses. She has always enjoyed doing office type work ever since. She has a Bachelor’s degree in Management and is working on a Master’s in Management. She has always done the books for LLTS. This includes tracking what work is done daily and then sending out billings at the end of every month. LLTS has built up his business to a point that he has been able to limit his customers to good, regular paying customers. Being a part time business, it would not be worth the time and effort to have customers who are unable or unwilling to pay monthly. He even has one customer who pays for the entire season upfront at the beginning of each season. This customer receives a discounted season price and is not charged per mowing like all other customers. This allows the customer to save a few dollars and allows LLTS to start out with some cash flow at the beginning of the season.In a video by Ivan Seidenberg, he refers to Porter’s Five but he adds one more aspect to managing well and that is to execute well. In so many words, he says a strategy is only as good as it is executed. Larry has always been good at planning out each day’s work and then executing it. If the weather interferes with a day’s or week’s mowing, he adjusts and moves on to Plan B.ReferencesMintzberg, H. (2004, November). Enough Leadership. Harvard Business Review. p. 22. Seidenberg, I. Strategy Doesn’t Compensate for Poor Execution. Retrieved from, S., David, M.E., Dagger, T.S., (2011). Generating positive word-of-mouth in the serviceexperience. Managing Service Quarterly (21)2, 133-151.Porter, M. (Nov/Dec 1996). What is strategy? Harvard Business Review (74)6, 61-78Charan, R. (2004). Profitable growth is everyone's business [pp. 97 - 107]. Retrieved from . ................
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