Written by: Xander Kirby (@green_industry_guy)
Landscaping is a tricky industry. I have been in business for 7 years, and for the first time, in 2022, I realized my profit was $71,000 less than I budgeted for. What changed? I wasn’t job costing. Here’s what happened.
An Honest Look into My Shortcomings
I am going to be extremely transparent and honest here, because I believe the key to a better green industry community is one in which we are real, authentic, and helpful with our stories of shortcomings or mistakes.
I have made up quotes and prices based on a price sheet from the beginning of my business. Sure, I knew around the man hour rate that was normal to charge and was making large profits on my profit and loss statements. But as many of you know, 2022 brought forward a lot of price change variables that we had yet to see before.
Gas prices were changing daily, materials were doubling in cost month over month in some cases, and fleet repair costs were soaring. I have 15-22 employees throughout the year, so payroll can also become a place that catches me with overtime and raising costs as well. The real issue that finally caught up to me was that I wasn’t JOB COSTING.
Why Job Costing is Critical
Each job is different and each customer has a different need. Not every sod job, irrigation installation, and mulch refresh looks the same.
I thought for the longest time that I knew my numbers. Well, after making the same top line revenue as the previous year, but $71,000 less in profit, I quickly realized that I didn’t know my numbers like I thought I did.
This is when I stopped our way of quoting towards quarter 3 and started to challenge my team. We needed a platform that would enable us to know our numbers, see where we were bleeding money, where we could save, and actually cost out each job based on our true overhead expenses and our desired profit margins. LMN has totally changed the game for us in regards to how we quote projects, and manage jobs.
My Advice: Start Job Costing Today
If you aren’t running your business on a job costing model, I challenge you to think about considering this way of doing business. Sure, you may be making good money, but what if job costing took you from good money to great money? What if you had extra money in the company to give year-end bonuses? What would it look like to truly have confidence in your pricing? I hope this helps you see what profitable can be.
Book a demo to learn more about how LMN can help your business earn more profit through job costing.
