From a very young age, fear has held us back from doing things we know will help us grow, personally and professionally. Whether it was learning to ride a bike, asking a girl on a date, or starting a business, we’ve all let fear prevent or delay our growth. When it comes to your landscape business, fear can have a very real impact on your bottom line. In this post we’ll show you how it pays to overcome these three common fears: Paying More for Better Staff, Financing Your Equipment and Charging a Premium for your Services.
This isn’t just a company problem, it’s a green industry problem. As one of the lowest paid trades with seasonal fluctuations in available employment, it’s no wonder it’s so hard to attract talent. And without talent, it’s no wonder many owners are wearing multiple hats and juggling priorities. What impact would investing in better foremen have on your business?
First, assume you raised the hourly pay for your foreman by $5/hour in an effort to attract better, more responsible talent to your company. In a 2,000 hour season, a $5/hour raise will cost you $10,000 more in wages and approximately another $1,500 in payroll taxes and deductions, for a total cost of $11,500.
Next, assume that foreman’s talent could increase his/her crew’s productivity by a conservative 10%. That 3-person crew generating $300,000/year in production would now generate $330,000. If you did $30,000 more work (a 10% increase in sales), you’d need to spend about 10% more on materials but your equipment costs and your overhead costs would remain the same.
This 10% is easily obtained, when you consider a good foreman will also cut wasted time, download our spread sheet and do the math for your self, simple reductions in wasted time can save thousands in annual costs
Finally, if this example played out in reality, you could expect an increase in net profit of $8,500 per crew (see table below). If you had 3 crews, that’s over $25,000 added to your bottom line.
|Sales Revenue||+ $30,000|
|Wage Expenses||– $11,500|
|Material Expenses||– $10,000|
|Net Profit||+ $8,500|
Now that we’ve broken down the numbers, you should really fear the consequence of paying less for talent: untapped profit, avoidable overtime and project mismanagement, to name a few. Recruit the necessary talent for key positions in your company and watch profits soar.
Old school wisdom in our industry preaches the need to own your own equipment in order to really start making money, i.e., without payments, your equipment is essentially ‘free’. But it’s only ‘free’ when you ignore fuel, maintenance and insurance costs (read: NOT free). And what happens when you need to replace your equipment?
Instead of fearing the commitment that comes with equipment payments or financing, consider the cost of doing work without being properly equipped.
|Excavation – Half a Day with Mini-Ex + 2 Power Wheelbarrows|
|Labor||15 hrs (3 men x 5 hrs)||$50/hr||$750|
|Power Wheelbarrow||2 Days (2 x 1 day each)||$50||$100|
|Excavation – 2 full days when done by hand|
|Labor||30 hrs (3 men x 10 hrs)||$50/hr||$1500|
It’s clear that equipment will greatly increase your sales capacity, or opportunity to produce more work. At the end of the day, It’s really about choosing your fear:
In order to achieve consistent and sustainable growth, you’ll need to transform your mindset from focusing on the negative, “What if a recession hits?” to focusing on the potential, “What if we could increase our sales capacity?” Change truly does begin at the end of your comfort zone.
One of the biggest concerns in our industry is ‘lowball’ competition. These are the companies that price their work at a loss because they simply don’t know what they’re doing. In some misguided effort to keep costs competitive, landscapers are afraid to take on the costs of better staff, better equipment, and better technology. They wrongfully, assume this strategy helps them stay competitive.
Fact: A recent Unilock® study followed a series of leads right through to the final invoice. In 80% of the cases, the customer did not select the lowest priced job.
If you fear being outpriced, spend some time looking at other markets. Thousands of companies get outpriced and yet, achieve tremendous success, e.g.. Starbucks, Nike, Ritz-Carlton, DeWalt, 3M. These companies thrive in competitive markets and through recessions. Despite hundreds of cheaper options, they don’t worry about price. Instead, they focus on marketing themselves as premium brands.
To position your company as a premium brand, you’ll need to Invest in your company’s image. A strong brand*—*supported by a solid marketing plan, reassures your customers that they’re getting premium service.
Great marketing can beat cheap pricing. Don’t fear pricing your services to match the quality you deliver Instead, be protective of your brand and reputation and you’ll close premium deals.
Fear often prevents us from doing things that would make our lives better, easier and more enjoyable. Running your landscaping business is no different. From the first time you asked for a sale to the time you watched your first foreman drive away on their own, growth happens when we push past the fear. Years later, the challenges may be bigger and the fear of failure more pronounced but the rewards are also far greater. Go after the people, equipment and pricing your business deserves and your bottom line will thank you.
If you are new to LMN and want to explore how LMN can help your landscape business – check out our Workshops.
If you are an existing customer who wants to take their knowledge of LMN to the next level, we invite you to explore our Webinars and Certification Programs at the LMN Academy.