In “How to boost owner’s income,” from the October 2014 issue of LM, Jeffrey Scott tackles this age-old topic. Here’s a real-life example of how one landscape company owner added to his wallet. For another contractor example, see this blog post.
For five years I worked with a landscape company where the owner initially thought he wanted to build a large company with four division managers and all the trappings. After a few pointed discussions, and many months of failing to make his managers earn their keep, he was forced to clarify his objective from revenue growth to personal income growth. He stopped dreaming of building a big company, and shifted his goal to increasing his earnings (also known as “net-to-owner”) to $250,000. His secondary goal was to reduce his time spent at work.
He restructured his company to:
- Provide fewer services. He streamlined operations to remove work that was “one off” or difficult for him to make a consistent profit on. For him, this meant eliminating hardscape jobs and jobs over $10,000 and to focus on recurring maintenance packages. (Ask yourself: What would you remove from your service line?)
- Fine tune his client type. He initially tried to be a high-end company but realized his bread and butter was in the middle market. (Ask yourself: How focused is your firm on its sweet spot?)
- Right-size overhead. The owner slashed overhead costs, one by one, from four division managers to a single manager who oversaw production and also did sales. (Ask yourself: Is your overhead optimized for your revenue?)
- Pay rewards. He implemented incentives to promote self management and high profit, following concepts from CEO and open-book management guru Jack Stack. (Ask yourself: Does your firm give bonuses for the right results?)
This contractor met his goals, earning the income he wanted while dropping his time at work to four days a week.
What are your goals for personal income and time spent at work? Remember, to raise personal income, set a dollars-based goal and work backwards.
Photo: publicdomainpictures.net/Виталий Смолыгин
