Joe'S Landscaping And Equipment Rental Business

Joe's Landscaping and Equipment Rental Business

Introduction

At 50 workers, Joe's company is successful enough to keep him busy six days per week. Joe seems to be very hands-on, and his daily landscaping and tree-trimming efforts, as well as his renting of landscaping equipment, keeps him quite busy. Joe's company appears to be at a point where his organization is as large as it can get and still be operable with his own set of hands. The vision that is needed must be determined by Joe, himself. Does he want the company to remain small and for him to remain personally involved in the daily tree-trimming and landscaping operations? Does he want to continue handling the renting of his own equipment? Or is he willing to relinquish those duties to others to focus his efforts elsewhere?

Vision

For the sake of this discussion, this paper assumes that he wants to grow his company. Given that assumption, the first recommendation is that he hire full-time field managers to handle the field work, which will allow him time to focus on managing, sales, fee collection, and other administrative tasks, which he so desperately needs.

Immediately, Joe's company faces two serious problems, however, before it can grow. Joe's first concern is employee turnover due to the seasonality of the work. It can be assumed that business is slow in the winter months because of the weather and also because of the holiday shopping season. There is likely not much business to be had and even less need for employees on the payroll. It is not surprising that employees are often forced to quit, completely or temporarily, in order to find income elsewhere. The good news is that with a constant influx of new employees, his staff is being paid low pay rates. Unfortunately, the turnover seems to be a direct result of the seasonal nature of the landscape business and is completely unavoidable.

Joe's second problem is his collecting of debts owed to him by clients who do not pay promptly for services rendered. This lack of payment can leave shortfalls in his cash flow and paralyze him in his ability to pay his company's own bills. Not only will this cause substantial financial injury and costs to Joe's company, it can lead to larger issues such as eventual bankruptcy, closure, or the inability to qualify for company-saving loans or assistance.

Ground Trades Xchange, an online forum for business owners and managers in the landscaping business, had much to say about recouping debts from delinquent clients. One contributor offered, "Our contracts are designed so that we get 25% down and 50% the first day on the job. Almost all residential, though. And then 18% past 15 days. This probably doesn't work for commercial work, but it works beautifully for us." The notion of a down payment before services were rendered was confirmed by Fugate (2005) who advised that small business owners who rely on the timeliness of payment to maintain the operations of their organization first obtain 25% to 50% up front. She notes, "Even if your client is a little slow to pay, you won't go hungry. An advance can also be a helpful clue to your client's solvency or lack thereof--after all, if the company has trouble coughing up this first payment, do you really want to work for them?"

Another contributor to Ground Trades XChange wrote that putting a lien against his delinquent clients resolves "about 95% of the issues" he faces in collecting monies due. Others offered resolutions that were state-specific such as a mechanics lien, available to organizations in the state of Ohio after an account is 45 days past due. Another suggested contacting a client's home owners' association. He relayed that home owners' associations were happy to put delinquency notices in their newsletters, which served as a great deterrent for its otherwise negligent residents. Others suggested taking delinquent clients to small claims court or by contracting with collection agencies to obtain the funds.

Legal and Regulatory Issues

Two of the largest legal and regulatory issues that Joe is likely to face, according to Ground Trades XChange, are staffing and liability for equipment rental. According to a majority of the contributors on the forum, most of the workers used are either day labors or seasonal immigrant workers who provide questionable working papers. Though these owners suspect potential fraud from these desperate workers, they find their low-cost labor and willingness to accept seasonal work essential to their organization's survival. One wondered aloud, "If we didn't have immigrant labor I think we might have to shut down our business." Joe's company, should he employ similar labor practices, might run into immigration or employment problems at some point if he isn't selective in his hiring practices.

The other concern was over the potential for liability for the renting of do-it-yourself landscaping equipment. One solution for eliminating liability, according to a similar equipment rental organization (Pat's Peak, n.d.), is to require renters to sign an Equipment Rental & Liability Release Agreement. The organization's posted agreement requires that a renter "will not use any of the equipment that is rented to me during this transaction until I have received instruction on its use and I fully understand its use and function." This clause would not only require Joe and his staff to educate his renters on the correct use of the equipment, but it mandates that the client utilize the equipment in the correct and appropriate manner. Further, the renter must "accept full financial responsibility for the care of the equipment while it is in my possession," saving Joe expensive repair costs. Another important clause would cover renter's safety. Pat's Peak, though a ski and snowboarding equipment rental company, underlined the importance of accident or injury by having the renter "voluntarily agree to assume all risks of death or injury" that may result from the use of the equipment, as well as release all directly and indirectly involved from liability and indemnify its "providers for any loss or damage, including any that result from claims or lawsuits for personal injury, death, and property loss, and damage related in any way to the use of this equipment." This may save his company from potential liability and damage lawsuits that could wipe out his company.

Advisors

Joe's company would benefit greatly by seeking the advice of an attorney and a financial