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 someone 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.
Fear #1: Paying More for Better Staff
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?
Let’s take a look at the math.
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 spreadsheet and do the math for yourself, 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/Expense Type | Outcome | |
|---|---|---|
| Sales Revenue | + $30,000 | |
| Wage Expenses | – $11,500 | |
| Equipment Expenses | N/C | |
| Material Expenses | – $10,000 | |
| Overhead Expenses | N/C | |
| 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.
Fear #2: Financing Equipment
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.
Let’s dig into the real costs of ‘free’ equipment:
- Sharing equipment: Instead of transporting equipment back and forth between sites, the driver could (and should!) be working on billable production work. Every hour spent transporting equipment costs $50/hour plus the materials that employee could also be installing in those hours. A half day spent transporting equipment represents about $400 in potential sales/production opportunity, lost!
- Moving materials: If it takes 3 crew members 1 hour to move material from the truck in the front to the backyard, that’s 3 (man) hours wasted moving material that could have been done in mere minutes with a skid steer. At $50/hour of lost productive time, with no materials installed during that time, this represents a cost of approximately $300 in lost billable time.
- Losing jobs: Properly equipped crews can complete tasks faster. A backyard excavated with a mini-ex and 2 power wheelbarrows can be done in less than a quarter of the time when compared to a crew without equipment.
Scenario A ‘New School’: Financed Equipment
| Excavation – Half a Day with Mini-Ex + 2 Power Wheelbarrows | |||||
|---|---|---|---|---|---|
| Labor | 15 hrs (3 men x 5 hrs) | $50/hr | $750 | ||
| Mini-Ex | 1 Day | $200 | $200 | ||
| Power Wheelbarrow | 2 Days (2 x 1 day each) | $50 | $100 | ||
| Total Price | $1,050 | ||||
Vs.
Scenario B ‘Old School’: No Equipment
| Excavation – 2 full days when done by hand | |||||
|---|---|---|---|---|---|
| Labor | 30 hrs (3 men x 10 hrs) | $50/hr | $1500 | ||
| Total Price | $1,050 | ||||
- In the ‘New School’ scenario, the work costs 33% less, reducing your price on the bid.
- The ‘New School’ crew who finished in half a day gains a full 1.5 days of production opportunity. By the time the ‘Old School’ crew finishes their excavation, the ‘New School’ crew might just be finished the entire job and already on to the next one.
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:
- Being stuck with equipment you can’t afford in a sudden economic downturn OR
- Losing jobs and profit each and every day because you don’t have the necessary tools to do the work faster and cheaper.
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.
Fear #3: Charging a Premium
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.
Let’s focus on improving the following key marketing tactics:
- Branding, e.g., business name and logo
- Website and social media presence
- Print material, e.g., business cards, brochures, stationary
- Sales materials, e.g., Powerpoint, proposal package.
- Age and cleanliness of your trucks and equipment
- Job site organization
- Uniforms for sales and field staff
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.
You got this (and LMN has your back)!
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.
