From 2021 to 2023, I acquired six commercial landscaping companies. Each had annual recurring maintenance contracts ranging from one to five years. While I don’t have the exact figure, an educated estimate is that approximately 30% of the contracts we acquired were unprofitable.
Yes, you read that right. If we acquired $1 million in recurring revenue through individual contracts, $300,000 worth of those contracts were losing money.
Sometimes owners don’t even notice—or don’t care—that a property loses money in the long run, as long as it provides steady monthly cash. Maybe it pays upfront or has a short conversion cycle. Either way, the long-term damage is hidden.
How Does a Contract Lose Money?
There are several ways a contract can become a money-loser:
- Poor estimating from the start (most common)
- Costs rising faster than prices (second most common)
- Property logistics changes (e.g., a neighboring property didn’t renew)
- Scope creep or scope changes
- Lack of upsells or add-ons in a given year
- Poor property management or execution
Before—sometimes after—closing, we would sit down and analyze the unit economics of each property. We’d flag a batch of contracts we were concerned about and try to diagnose the root cause. If it was an internal issue, we’d fix it. If it was external, we were often faced with tough decisions.
Easy Fix? Not Quite.
Just cancel the bad contract, right? In theory—yes.
In practice—very difficult.
In commercial landscaping, canceling a contract before its expiration is playing with fire. You risk damaging your reputation with the property management company—companies that might oversee 100+ properties in your market.
Now you’re stuck:
- You can’t get out of the contract without reputational harm
- You can’t fix it internally with the options available
You’re left to either build around it, try to slow the bleed, or eat the loss and apply the lesson to the next one. I’ve even seen companies intentionally understaff a property to make it profitable. That almost always ends in them being fired by the customer. You have to understand unit economics and economies of scale.
The worst part of a recurring contract?
If you misprice it, you’re stuck.
But if you land a recurring contract that’s profitable?
Make the money printer go brrrrrrr on the 1st of every month.