Tony Ricketts, CEO of Lawnline Marketing, and landscape industry consultant and LM contributor Jeffrey Scott hosted a webinar on scalable growth strategies for multimillion-dollar lawn and landscape businesses. The Dec. 15 webinar included plenty of practical data and tips for measuring and scaling growth in the coming year — in the areas of finance, marketing and recruitment in particular.
Scott identified net profit and gross profit as the key performance indicators that landscape and lawn care companies should focus on. However, they should be aware of the numbers and how they might not tell the whole story.
For full-service landscape companies, based on a survey of Scott’s clients last year, the average net profit was 10 percent.
Compare that with the high end: High achieving companies reached 19 percent net profit and Scott’s top client reached 30 percent net profit.
“Always aim to be the high achiever,” Scott advised. “Don’t get confused by the average metrics you’re hearing on the street, they’re much lower than what’s possible.”
“Five percent net profit is the new zero,” he added. “It doesn’t get you anything after you buy equipment and pay Uncle Sam.”
As far as gross profit margin, Scott’s average client reported 48 percent gross profit margin without equipment or burden. The high achievers reported a 58 percent gross profit margin and the top earner reported 66 percent.
Scott cautioned that a good gross profit margin doesn’t necessarily lead to a good net profit, and vice versa.
“I have clients who have killer gross profit margins, but their net profits are not that strong —what that means is they have too much overhead,” he said. “Just because they hit high gross profit, it doesn’t mean they’re making money.”
Put your money in marketing
Ricketts touched on an often-asked question: How much should a landscape company spend on marketing?
He advised that in an ideal scenario, a company should spend 2-3 percent of its total topline revenue on marketing. For a company making $5M per year, that’s $100,000 to $150,000 marketing spend.
That budget needs to include:
• People – Your marketing agency or in-house marketing hires
• Ad spend (Google ads, Facebook ads, etc.)
• Creation of assets (video producers/editors, photographers, etc.),
• Printing
• Direct marketing
• Marketing tracking
• Other marketing costs such as swag or vehicle wraps
Rules for recruitment
Ricketts and Scott reviewed methods for marketing and recruiting new clients, but also stressed that a good recruitment strategy is essential for scaling your business growth.
Companies should use an applicant tracking system (ATS), Ricketts advises. An ATS allows HR people to manage all applicants in one place, whether they come in from the website, social media or job sites. These systems allow you to work with your team and have discussions about applicants and ensure that applicants aren’t falling through the cracks.
“(Good recruitment) starts with the job description,” Ricketts says. He recommends these tips for posting jobs:
• Use all variations of keywords in the job description (e.g., lawn care, lawn maintenance, lawn mowing, or general labor, crew, etc.)
• Syndicate your job: Make sure your job listing is present all over the internet, on sites such as Indeed, Glassdoor, social media, Google Jobs
• Include all the cities/towns surrounding your area in the location of your job description — not just in the city where you’re headquartered.
