Each company has four jet engines that propel profits. Mathematically, there are four ways to make your landscape company’s bottom line soar. Your strategy for 2015 needs to address all four of these profit engines.
1. Margins
You can drive profit by selling your work more profitably on a consistent basis and by altering the mix of business so it averages out at a higher margin. This takes confidence, market savvy and good processes to ensure your sales time is protected and your sales confidence is bolstered. It also requires a strategic look at your service mix: cutting some services and adding others. Also, many firms use software to figure out their “hourly rate,” but then they run into areas where sporadic and sometimes deep undercharging occurs. You need to be prepared for this error and prevent it from ruining your year-end margins.
2. Efficiency
There are many ways to improve efficiency in the field that your team needs to buy into to grow the bottom line. All key positions need to be lined up with clear roles, responsibilities and results. The difference between below-average and above-average firms can swing by more than 10 gross margin points.
3. Overhead
You can rein in overhead by taking a good look at how people and processes are used to meet your sales goals. Healthy sales goals with a more conservative overhead budget will drive the bottom line. This tactic requires a fresh look at your tired, old budget, better use of technology, good negotiating skills and a solid understanding of industry benchmarks.
4. Volume.
If you can pump up the sales volume without increasing overhead, you’ll throw off more profit. There are some clever high-margin ways to do this with existing clients, subcontracted (referral) work and by not chasing every lead.
Take action
Your 2015 plan for profit needs to address all four of these jet engines from a perspective people, processes and data. Do you have the right people in the right positions? Are they supported by the right processes? Is each person looking at the right metrics–they differ from role to role! To implement these strategies smoothly, you need to understand your own role as owner, and how you drive all four of these profit engines through your own leadership behaviors.
Jeffrey Scott and Landscape Management present a two-part webinar series, “Planning for Profits in 2015,” on Nov. 20 and Dec. 4. Attendees will learn strategies and tactics for achieving high profits in 2015. For more information or to register, visit LandscapeManagement.net/profits.
Photo: PublicDomainPictures.net/Lynn Greyling
