Landscape contractors looking to grow their businesses by adding new services must be careful. Adding a new service takes planning, discipline and patience. When done correctly, contractors can often keep 40 cents of every new dollar they bring in. When done incorrectly, they may find that they actually spent $10 for every new dollar they brought in.
Here are some important questions to ask yourself when researching whether or not to add a new service.
1. Does the new service require a high skill level?
If it does, and your people aren't used to doing it, it's harder for you to quickly gain a competitive advantage. Without a competitive advantage, you have to work especially hard to promote, sell and manage this new line of business in order to start seeing a payback in two or three years.
Some contractors have benefited from hiring a new employee who already had vast experience in a certain service area.
2. Does it fit my existing marketing material?
A new service that is more of an add-on to an existing service, such as aerating to lawn maintenance, isn't nearly as hard to implement as a new service that is completely new and different. Introducing a new service as an add-on to your current program reduces cost and simplifies the marketing effort.
3. Do my current customers want the new service?
You might think that your current customers want a new service, but you're far better off to actually ask them. And remember, thinking you should add a new service and actually saying they'd order it from you are two different things.
While you're out selling, ask 50 customers and prospects if they're interested in the potential new service and when they'd want it. This will be the first step—and the basis—for whether or not you move forward.
4. Who'll push the new service, and who will manage him or her?
Ask your current employees if they have time to perform the additional work. Once you identify who could deliver the new service, find out if they're actually jazzed about performing it. Include them in your research so that, together, you can spot potential challenges and opportunities—and act as a sounding board for each other. Set goals and create a plan to achieve those goals.
5. Do I have benchmarks to measure?
Commit in writing what you are willing to put in, and what you hope to get out. That way you can make an honest assessment of how you're progressing toward that goal.
6. Do I understand my fixed costs?
For example, if you do not keep your employees on through the winter, do not include that in your analysis. The first thing to consider is why you even want to get into this new service in the first place. Trying to do too many things with too few resources is a recipe for disaster.