how to compete

[ROYCE]

Attach is from TCIA. Maybe when you're asked to come talk with a prospect about a job, you can open with the compliment that you're impressed that they are contacting you because they are being smart about how important it is to have the job done right and they expect you are providing them with a solid investment in their property (i.e., money well spent). A lot of people feel really good about someone who makes them feel like they're expert in just calling you in the first place, and may make them listen better without doing the hard sell. Maybe give them a copy of this to remind them as they do their research that you want to be sure they get the best quality and maybe they'll decide you get the job because you're looking out for them.

A friend of mine actually picked the more expensive quote because the arborist whom I suggested to her made her feel good about how her property would look when he would get done. And he answered phones and showed up. If you're swamped with work and cannot fit anyone else in for several weeks, still call the person back and say that you appreciate their call and your schedule is tight as a Scotsman's purse (!), and that you are looking X weeks out. If they say they can wait, ask them to give you a quick call back in X weeks and be sure to return that call no matter what. I have had friends who became very frustrated at not even being acknowledged if they left a message.

And Treehumper is right, if you have someone in the crew who has a solid tree care background and is a good schmoozer, you might want to train them up for doing sales and estimates. Or can you afford to recruit a retired arborist who's sold his business but still likes to be involved in the industry who can work a 5-10 hours a week doing the customer service and sales for you, provided he's on board with your way of working? I'm a big advocate of working smarter instead of harder.

Your attachment says for immediate press release. I know a number of years ago the TCIA used to send out articles just like the one you posted for tree companies to publish in their local papers. Is this still happening? Is that something I could publish in my local paper for customers in my area to see. I am a member of the TCIA and the article really helps to establish the difference between reputable companies and the non-reputable companies.
I would enjoy it much more if I could publish it in my local paper, and then put the name of my company at the end to the article. That would get me some business. But, would take the credit away form TCIA and that is not right, I know.

 

[sherwood7]

Also if u have to buy work, do it on the small easy stuff. Nothing worse than working a large technical job knowing it's not going to pay.

 

[wyoclimber]

I just got to deal with a similar situation. I'm an experienced climber and I've always had a pretty good brain for technical rigging. About 18 months ago I went out on my own. As far as skills go, I'm the best in my area, as far as equipment goes, I have a an '82 F-250 with a dump bed. I recently bid a job that was three large cottonwood removals, two in a brick patio (meaning absolutely everything must be rigged). I bid it at $3000. Gives me three days to brush out the trees and a morning with my crane guy to pick the stems. The customer was ecstatic with my bid and approved me on the spot. A few days later I get a call that they are going with another company (the oldest in our area and the one responsible for the extremely hazardous topped rotten cottonwoods I deal with on a regular basis). They came in at $1920. The guy who did the bid didn't even get out of his truck to look at the trees. The customers waffled but in the end, decided to save the thousand dollars. I told them I hoped everything went well and if they needed anything in the future to give me a call. I could have badmouthed the other company, but I chose to take the high road. I could have dropped my price but I don't work for free and it would then have looked like my original bid was gouging rather than fair. I do hope everything turns out well with the job, I don't want anyone to get hurt but honestly, in the long run, things will probably work out better for me. If they raise their price after the job, the customer knows they are bidding dishonestly. If they break things the customer knows they are not competent. If they do it right but take the financial hit, it just hurts their bottom line. Give your bids fairly and stick to them. Do your best, sell your competency and safety and most people will go with you. If they don't they might learn their lesson the hard way.

 

[boreality]

I like my business model of staying a one man service with a groundman that just does groundman stuff. Once you start expanding it can gobble you up. These call backs and followups are great when that's your primary job but following 10 hours in the hot sun stuck to the side of a tree if you return one call it leads to more work when you've already done more physical work in one day then most do in their lifetime. Every returned call leads to at least a halfday or evening shot. I ignore many calls as they are an overwhelming amount and do my best to serve the area. I'd do better to return all calls, bid high and work less. With no hard feelings from the people that went with a cheaper bid. No call back makes them bitter, a high bid makes them question themselves. Now I'm starting to lose my popularity while still providing the best tree service not phone service by far. "Do you have a chipper" is still the sign of a real pro in the customer's view. Why can't they see the value in quality work? It should and does sell itself. Would a pickup truck one man/helper show even meet qualifications for TCIA credentials? Here's how my season goes. If I've got work for Monday the rest of the week fills in every time. Why sell harder? I'm working a market of 2000 pop. and try and meet my commitments promptly. Different if I could cast my net wider and dick around bidding more and working less.

 

[Mangoes]

Generally Variable costs (COGS, direct expenses) vary relatively little in arboricultrure. Labour is our largest expense and can only be cut so far. The variable cost of equipment can only be managed so far. Used (nee cheap) equipment usually requires frequent repair, new equipment taxes capital but not usually repair expenses etc.

The most significant variance will likely be Direct Costs (Fixed Costs, Overhead) and how each co. manages them. A larger, refined company can efficiently do exponentially more with nominal increases in Direct Costs/OH. There is a significant tendancy for the one-man-band to unwittingly subsidize the OH demand with their time, which is frequently not fairly compensated for. i.e. if you work 8hrsX5 to earn your 2500 then work saturday and sunday. You should be billing the co. $750/day at time-and-a-half. But we dont - we think its fair exchange for the $500/work day. Notwithsatnding all the other holes which can be punched into the model and lifestyle demand.

Bigger co's arent working cheap because their unethical. They out compete by speading their (efficiently managed OH) over a greater number of hours (units) sold, and at that point the variable costs are the only significant variable in their budget.

If a one-man-band applies two days of admin/OH demand onto 3 days of production their daily rate ($500 example) goes from $500/day to $833.........but they cant sell that, so off to work on Saturday.

Caveat - all opinion based on (negative)learning experience and a tolerant wife who could have justifiably divorced me a few years ago

 

[boreality]

No matter how efficient and professional a large company will suffer from office politics, worker turnover and communication gaps. That's why the one man band produces a higher quality product yet appears in the consumer's view less professional. Tough sell, could go the way of the small everything else.

 

[treehumper]

One of the biggest complaints I've heard from clients of small businesses is the lack of follow up. Whether it's simply returning a phone call or sticking to the schedule, this to the client reflects a lack of professionalism. People do business with companies for reasons that often have nothing to do with the actual product of service and everything to do with how the business is run. These are the things that give rise to trust and rapport. We do business with people we like and/or trust. Here's the trick, return the calls promptly, treat the client with respect, when it comes to scheduling, under promise and over deliver.

Sure, the more people in an organization the greater the likelihood of office politics, worker turnover and communication gaps. These problems though are just as possible in a small business when it's poorly run. As Mangoes points out the OH, which includes the cost of the aforementioned, are spread over more billable hours and is seen as part of the cost of running the business. There is no wishful thinking that they can avoid it. That would be like a restaurant not accounting for breakage of dishes. Whatever your business model, run a business not just a tree service.

 

[boreality]

Don't make me repost that Hammer Time video. We all do our best and a bit extra. Work is a four letter word. But so is play, even word.

There's truck loads of small two, even one man tree care businesses out there. The big guys dis the little guy and the other big guys and vise versa. All part of getting pumped for another summer as we get older and it gets less fun. That climbing part is the fun part though wish that was all there was to it.

 

[treehumper]

Yeah, I do agree with that, Boreality! I love inspection climbs, where I'm paid to get up there and just look all over.

 

[hl_tree]

While I understand the idea of making money in volume (1% profit on 1,000,000 vs. 10% on 100,000) I would still love to know how guys like myself who are running 2 - 5 man operations charging a premium are hardly getting by, when other guys who are running crews of 10 - 20 are flourishing with new equipment but charging roughly half the rate. Let's face it, you can only shave the costs so much before you are paying the customer for the job.

That said, I sat down with a financial guru client this weekend, and they gave me a few ideas, but also pointed out that they went to a high end fashion store which was having a 45% off sale, and the store was still empty. A sign of the times they called it. They did recommend sticking to my guns on pricing, not to lower it, that people who are looking for Walmart conditions will always go to Walmart, and those who are looking for Tiffany's will always look for Tiffany's, no matter the state of the economy.

 

[ROYCE]

While I understand the idea of making money in volume (1% profit on 1,000,000 vs. 10% on 100,000) I would still love to know how guys like myself who are running 2 - 5 man operations charging a premium are hardly getting by, when other guys who are running crews of 10 - 20 are flourishing with new equipment but charging roughly half the rate. Let's face it, you can only shave the costs so much before you are paying the customer for the job.

That said, I sat down with a financial guru client this weekend, and they gave me a few ideas, but also pointed out that they went to a high end fashion store which was having a 45% off sale, and the store was still empty. A sign of the times they called it. They did recommend sticking to my guns on pricing, not to lower it, that people who are looking for Walmart conditions will always go to Walmart, and those who are looking for Tiffany's will always look for Tiffany's, no matter the state of the economy.

I agree with you on this. I believe that the people who want good quality tree care, timely service, professional appearance, will pay a little extra for it. However, there will always be the people who are searching the lowest dollar. I don't want to work for them. I want to work for the customers who value good work and are willing to pay a little more for it. Those people are out there. Not everyone is a cheap-o that is only looking for lowest price.
I am designing my whole business around those idea's. It's just hard to find those type of clients in a market that is saturated with poor companies.

 

[treehumper]

They are that kind of a client because they see the value of the product. It's up to the company to differentiate themselves from the cheap-o's. What are you presenting to these people to help them understand that value they will get when they spend the money?

When you see a large company selling their product at 1% profit then they are making money in other ways. Large retailers do it on their shelf space and through the terms of payment on their products. They buy with 90+ days to pay the supplier then sell it quickly. They then take the money and invest it before having to pay the vendors. As for shelf space, vendors will pay a premium to have their products shelved in the positions that most consumers will pick from.

Most tree co's are unsophisticated in how they make money.

 

[southsoundtree]

One little tip from Dr. John Ball, don't talk about your customers' 'trees', talk about their bigleaf maple, their douglas-fir, their western redcedar, their lombardi poplar. A 2 year old can identify a tree as a 'tree'.

Show them some knowledge and experience that sets you apart.

'So I hear you need a canopy raise on your western redcedar and hemlock. These are less drought tolerant trees, so I suggest that when we canopy raise these trees, that we use the mulch produced to help with drought-stress. Let's talk later, too, about irrigating during drought, especially with the increased sun exposure under the tree in the critical root zone.'

A little extra info, and leaving them wanting more. Separates you from the drive-by tree guy.

 

[ROYCE]

One little tip from Dr. John Ball, don't talk about your customers' 'trees', talk about their bigleaf maple, their douglas-fir, their western redcedar, their lombardi poplar. A 2 year old can identify a tree as a 'tree'.

Show them some knowledge and experience that sets you apart.

'So I hear you need a canopy raise on your western redcedar and hemlock. These are less drought tolerant trees, so I suggest that when we canopy raise these trees, that we use the mulch produced to help with drought-stress. Let's talk later, too, about irrigating during drought, especially with the increased sun exposure under the tree in the critical root zone.'

A little extra info, and leaving them wanting more. Separates you from the drive-by tree guy.

good info, and so true.

 

[rfwoodvt]

While I understand the idea of making money in volume (1% profit on 1,000,000 vs. 10% on 100,000) I would still love to know how guys like myself who are running 2 - 5 man operations charging a premium are hardly getting by, when other guys who are running crews of 10 - 20 are flourishing with new equipment but charging roughly half the rate. Let's face it, you can only shave the costs so much before you are paying the customer for the job.

Something to consider is that we all have a pretty common fixed overhead. the more guys in the field you have, the more hours you are able to bill, the more hours you can divide the fixed costs across. Your fixed costs are your costs regardless whether you actually do any work such as plant, insurance, equipment etcheter.

For example if you have fixed over head of $10,000 per month but can only bill 10 hours per month then your hourly rate just for your fixed costs will be $1000/hour. If you can bill 1000 hours per month then your hourly rate needs to make $10/hour to cover them.

Your variable costs also contribute to the hourly you must charge as well but those tend to not get diluted or concentrated based on billable hours in the same way.

This is why you are seeing the larger crews able to run lower hourlies to the customer. The downside, of course, is they need to drum up enough business to make that work. This is also why the larger companies tend to lay off more workers more frequently in the off seasons.

That all is probably clear as mud, but hopefully helps.