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The Year-Round Event Vulnerable Business

The year-round event vulnerability business model manages despite the uncertainties imposed by Mother Nature. For example, lawn care and landscape companies that operate in hurricane and flood zones have to manage their cash flow around these forces of nature. For instance, they may have to manage extended accounts receivable when dealing with insurance claims. Or they may find themselves supporting their communities by allowing homeowners to pay their bills themselves instead of submitting claims, so that homeowners’ insurance rates stay low. They may have to manage lost production time when the business is forced to shut down for extended periods of time due to extreme storms or if the crew loses access to the facility due to unsafe conditions and is therefore unable to work. Being prepared for the financial impacts of Mother Nature is essential in this business model. 

Because you provide more than one service, you fall into the three ring circus blueprint.

Your Challenges

Equipment

Newer businesses that use this blueprint tend to overbuy equipment, such as skid steers, mini-excavators, lawn mowers, lawn applicators, mini skid steers, oversized dump trucks, and ride-on leaf blowers. Depending on your scalable business model, your overall equipment costs could range between 5% and 15% of your sales. These costs include not only direct costs but also leases, insurance, fuel, and maintenance. 

Pricing

In this business blueprint, the pricing of services and materials is typically incorrect. The correct and full labor burden is not identified, and the labor margins and mark-ups are not at the proper percentages to produce a high enough profit. As a result, businesses often cannot cover the costs of their day-to-day operations, including their labor costs. The inability to connect with true labor costs creates challenges in recruiting and retaining good workers. In addition, not everything that should be included in job estimates is being included, which throws off the calculations. 

Labor

Crew size can be a big issue in the three-ring-circus blueprint. You can start bleeding profit fast if there are too many people on a crew and the labor is not being tracked. Field labor should run between 20% and 35% of your sales. When field labor hits 30% or more of your sales, there is likely an issue with project management. 

Overhead

Compared to the one-trick pony, the three-ring circus requires two to three times as much overhead to run and manage. You need equipment for each type of service, and each of these services is seasonal. Space is required to store the equipment, in addition to insurance to cover it. For each season, you need to ensure you have a properly trained crew on hand to provide the services you offer. It’s no wonder that the owners of this business blueprint sometimes feel like circus ringmasters. 

Season Affected Services

You may face challenges with your cash flow due to your need for more capital resources. You may have an excellent opportunity to produce revenue in a particular year if the season is not interrupted by Mother Nature. But the following year, several interruptions may demand capital to support you and your crew even while you're not producing revenue.