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How to Create Predictable Profit for Your Landscaping Business – Part 1 of 3

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Business Advice

If you’re like most landscapers, you’re wondering if you’re anywhere near as profitable as you hoped to be. You’re probably also wondering if you have enough money in the bank to keep your business operational through next season. And guess what? You’re not alone. Many landscapers still find themselves wondering why they aren’t making as much money as they had hoped or planned for. And do you know why? The hard truth is this: most landscapers don’t have a clear enough plan for profit to begin with.

Have you ever asked yourself the below questions?

  • Do I have a clearly defined annual budget?
  • Do I have an annual strategic plan?
  • What is my clear revenue goal?
  • What are my monthly and weekly sales targets, and production targets?
  • Is my staff clear on their target deliverables (i.e. what they need to produce to help us achieve our sales and production targets)?

Don’t be ashamed if you haven’t because you’re not alone. We have found that many landscapers don’t have a clear understanding of the process required to build a profit-driven plan, let alone how to effectively execute on one. So, with the help of Breakthrough Academy, we are drafting this article series on how to create predictable profit for your landscaping business through the creation and execution of a one-page strategic plan. We are also co-hosting a live webinar on the topic, which will give you the opportunity to deep dive into the subject with us and ask any questions you might have.

Make sure you watch Building Your 2020 One-Page Strategic Plan, where we will walk you through the step-by-step process and give you the resources necessary to creating an effective one-page strategic plan.

The Three Parts to Building Predictable Profit

There are three parts to growing profit predictably that you need to be aware of, so that 12 months from now, you can kick back in your chair and say, “Yep, I made the net profit I planned for.”

  1. Building a budget and strategic plan
  2. Defining weekly goals for all people in your organization
  3. Tracking your actuals and keeping your staff accountable

In this article, we’ll address part one: building your budget and strategic plan. We recommend you grab a notepad, so you can take notes along the way, and jot down any questions you have – you’ll have an opportunity to ask us in the Q & A part of the webinar. Alright, let’s get you started on learning the best way to create predictable profit for your landscaping business!

Building a Budget and Strategic Plan

Whenever we put the words “plan” and “profit” in the same sentence, the first thing most contractors think of is… budget. Ironically, most contractors we’ve met do not have a clear budget in place for their company. But the truth is, having a detailed, well-thought-out budget is a critical first step in developing “the right plan” to driving a profitable season.

How to Build a Profit-Driven Budget

Once built, your budget will give you the numbers you’ll need in order to align your entire staff’s performance towards creating profit. Keeping that in mind, here are some key steps to building your profit-driven budget:

  • Start with net profit – Your budget is a tool to help you figure out how to make the money you want to make. You can use LMN to outline your net profit goal, every variable and fixed expense in your company, and then, based on your expenses, the revenue needed in order to hit that net profit goal.
  • Tweak the numbers – Now you can play around with your numbers. Is that amount of revenue within reach for your company? Are there opportunities to reduce expenses? Approach this like a puzzle, but be realistic. How do you make Revenue – Variable Costs – Fixed Costs = Desired Net Profit. Be prepared to tinker. It’s probably a tough puzzle, but it deserves whatever attention is required to figure it out.
  • Get really detailed – Don’t miss anything. LMN helps a ton with this. Every number that goes into a budget should have a detailed note that explains why this number is what it is, and what you are going to do to make it a reality. It seems easy to simply add your skilled carpenter wage into the budget at $26/hour or call your vehicle and equipment leases $46,000. But remember – these are just meaningless numbers if you don’t have a detailed note on exactly how you plan on making them happen. If you don’t already have one, make sure you get your free LMN account here to help you with this.

Once you have your budget in place, you’re all set for the next step. But you should know that having a solid budget is only the starting point. Think of a budget like a shovel on a jobsite; it’s necessary to have. You can’t move dirt without it. But if you don’t have a design and detailed plans, you won’t know where to dig and how deep to go. Ultimately, it’s impossible for the person using the shovel to know if they’re on track to complete the desired project, let alone when they will be done.

Of course, you’d never send a crew to a jobsite with a shovel, no project plans, and say “go!” Yet, without realizing it, many business owners do exactly this in their own businesses. A well-defined, strategic plan for your company should be developed on an annual basis, using the numbers you’ve identified within your budget.

How to Build a Strategic Plan

Simple and concise strategic plans are the foundation of success for any organization. You should be able to put what truly matters on one page and use this as a vision to guide your decision making. It should be developed based on your why as an entrepreneur, your company’s core values, and your high-level numbers (like profit and revenue goals). Below are the key elements to an effective strategic plan, so that you can eventually pair this with your budget to hit your desired net profit numbers.

  • Determine your why – Everything you do should be driven by the whole reason you started this business in the first place and the reality you are trying to create. That’s your why. And it should be front and center on every strategic plan you build.
  • Develop a Big Hairy Audacious Goal (BHAG) – This is a big and exciting goal that you want to achieve in the next five years. Make it specific and make it measurable – use the SMART goal structure for guidance on that. It should also guide your annual goals in the years leading up to it.
  • Develop your company’s core values – These are the things that you stand for and that you want your company to stand for. They will help you make tough decisions and prioritize challenges along the way.
  • Set your annual goals for next year – Choose no more than three and consider making some of them revenue or profit based (remember that budget you put together?). What are some good steppingstones to that BHAG of yours? Make sure your annual goals drive you towards accomplishing it.
  • Break your annual goals down into quarterly goals – Think of these as milestones along the way to your year-end. Considering any seasonality in your business, what portion of each of your goals will you have to complete in each quarter in order to “cross the finish line” next December?
  • Determine your annual initiatives – These are projects that must get completed in order for your annual goals to actually materialize. For example: if you know that you need to increase the efficiency of your production crews in order to produce the amount of work necessary to hit your revenue goal, then an annual initiative might be to create a production manual that helps to systemize your crews and their work.
  • Lay out your key performance indicator’s (KPI’s) for the year – Consider how you will measure your progress towards your quarterly and annual goals. What related numbers must be hit in order to stay on track? For example: if your net profit goal relies on a minimum profit margin being hit for every job produced (hint-hint… they all do), then that minimum profit margin should be one of your critical numbers.

Above is a screenshot of a one-page strategic plan template for business owners. We’ll provide you with a copy of this and teach you how to fill it out during the live webinar, so make sure you register and attend.

Next Steps to Building Predictable Profit

A finished strategic plan is simple to understand, but not to create. It can take a lot of work to think through and consolidate down into something you can put on one page and use to chart your course for next year. Don’t worry if you’ve never done this before – register for our webinar on December 12th and we’ll not only give you the resources you need to make this a reality, but we’ll also walk you through this crucial process step-by-step. You’ll also have the opportunity to get answers from us on any questions you might have.

But don’t just hold off on the webinar and expect us to deliver a magic bullet. We are here to guide you down the right path, but this process will require quite a bit of time and your focused attention to do right. So, make sure you check back in on the LMN Blog next Friday, where we will deep-dive into part two: defining weekly goals for all people in your organization. This part of the planning process is crucial to achieving your desired goals – it will provide a starting point from which you can break down your annual goals into monthly and weekly goals that will keep your company on track to achieving your deliverables and initiatives, and on time.

Make sure you register for the webinar on Thursday, December 12th from 12 – 1:30pm EST, where we will walk you through the step-by-step process and give you the resources necessary to creating an effective one-page strategic plan.

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