Top 10 Tips for Running a Landscaping Business
In 1999, Mark Bradley followed his passion. He went into business for himself, founding TBG Landscape with an old lawnmower, a used truck and a dream running his own landscape business. Just 18 years later, his company earns $50M/yr in sales, but with only half the staff of an average company that size. His secret? Better planning, better staff, and a relentless pursuit of efficiency.
While his landscape business grew, other challenges emerged. Mark needed software – so he could make instant decisions with facts, instead of guesswork. So he founded LMN – software built specifically for landscape contractors, and LMN (www.golmn.com) is now the most widely used business software in the landscape industry with customers in North America, Europe, Australia, Asia and the Middle East.
Having shared success and mistakes with thousands of peers, Mark shares with us his Top Ten Tips for running a better, more profitable landscape company.
1. Each year, start with an operating budget – “For too many years, I ran the business hoping I’d make money, instead of knowing how to make money. An operating budget gives us the numbers we need to:
- Set sales goals that will be profitable
- Recover all my equipment and overhead costs
- See into the future – and make sure our decisions today are based on numbers and facts instead of hope and guesses.
2. Estimate, don’t Guesstimate – Most companies can estimate job costs – but don’t truly know their overhead, break even, and their true net profit on every job they price. You can’t hope to grow a consistently profitable business without an estimating system that ensures every job is priced correctly, and that can be taught and executed by others.
3. Turn Estimates Into Job Plans – Estimates must clearly identify how many man hours, the equipment, and materials or other costs (including colours and sizes) that are planned for the job. Once the estimate is sold, use that estimate as a Job Planner for crews. You don’t have to share costs and prices – but the crews must know how the job was planned (and sold) in order to get it done on time.
4. Maximise Revenue/Hour – Knowing your net profit on every job is critical, but so is knowing your revenue per hour. Calculate your revenue per hour by dividing the price of every job by the number of labor hours. Maximising job revenue per hour helps grow company’s sales without adding people or overhead. More people = more headaches… it’s much easier to increase the revenue per person. Some simple ways to maximise revenue per hour include:
- Increase sales by doing jobs that use lots of materials (or use expensive materials)
- Use equipment and work tools to save labour hours
5. Share a Scoreboard - It’s impossible to attract (and keep) great staff if no knows if they are doing well, or not well, at their jobs. The LMN timesheet and job tracking app gives crews real-time updates on estimate vs. actual hours – so everyone knows who is coming in on budget and who isn’t. It creates a competitive, success-driven, work atmosphere that’s far more rewarding than just putting your head down and working hard every day.
6. Don’t Be Cheap on Labor – When business owners don’t have a deep understanding of their numbers, we tend to make short-term decisions that are costdriven, not profit driven. For example – you hire staff at low wages because it ‘saves payroll’. But cheap staff don’t care about their jobs, don’t put much effort into their work, and make plenty of mistakes and bad decisions. This hurts your sales (because your jobs go slower) and forces the owner to spend their time fixing mistakes instead of growing the business.
7. Don’t Be Cheap on Equipment – You keep your old equipment because it’s paid for and you have no payments. Or you buy equipment and tools with the lowest sticker price because you’re saving money. But cheap/old equipment breaks down – which slows your jobs down, so you fall short of sales goals, you mess up your schedule, and you frustrate your crews. The biggest cost of equipment breakdowns isn’t the repair – it’s the cost of lost production and payroll while you worked without the equipment. Equipment is usually cheaper than labour (per hour), it does work much faster and it’s far less headaches. To grow your business with less headaches, make sure you have the right equipment/tool for every job.
8. Improve Your Efficiency – Mistakes and problems are more expensive than you realise! If you’re wasting an hour picking up materials that were missed or forgotten – you’ve spent an hour of payroll. But more importantly, you’ve lost an hour of revenue-producing labour, you’ve lost the revenue for any materials you could have installed in that hour, and you’ve lost an hour of overhead recovery and profit. Brainstorm reasons for wasted time with your crews – then focus on eliminating them. You’ll see your revenue (and profit!) grow in a hurry.
9. Automate Your Office – Technology for the office is like equipment for the field. Use software and apps to eliminate paperwork, to streamline estimating and to eliminate hundreds of hours (and mistakes!) entering data. You’ll be able to grow your company without adding overhead.
10. Learn Your Numbers, Teach Some Numbers – If you want to run a profitable business, you, not your accountant, needs to understand the numbers that drive your business. And once you have a good handle on your numbers, you need to teach your key staff how to understand those numbers as well. Getting everyone pulling in the same direction will take stress off your plate and you’ll find your staff caring more about the bottom line instead of just their paychecks.