Top 10 Tips
Throughout Caterpillar’s relationship with Landscape Management Network (LMN), we have had the opportunity to learn from many successful landscape business owners — including LMN founder Mark Bradley. In 1999, Bradley started TBG Landscape with an old lawnmower, a used truck and a dream of running his own landscape business. Eighteen years later, his company earns $50 million a year in sales, but with only half the staff of an average company that size. His secret? Better planning, better staff and a constant pursuit of efficiency.
We recently connected with him and asked him to share his top 10 tips for running a more profitable landscaping company. And we hope you find this advice especially useful in 2018.
- Each year, start with an operating budget – It’s easy to make the mistake of running a business hoping to make money, instead of knowing how to make money. An operating budget gives you the numbers you need to:
- Set sales goals that will be profitable.
- Recover all your equipment and overhead costs.
- Base your decisions today on facts and data.
- Estimate, don’t “guesstimate” – Most companies can estimate job costs, but don’t really know their overhead, break even and true net profit on every project they price. You can’t hope to grow a consistently profitable business without an estimating system that ensures every job is priced correctly, and that can be taught and executed by others.
- Turn estimates into job plans – Estimates must clearly identify the man-hours, equipment, materials or other costs that are planned for the job. Once the estimate is sold, use that estimate as a “job planner” for crews. You don’t have to share costs and prices, but the crews must know how the project was planned (and sold) in order to get it done on time.
- Maximize revenue per hour – Knowing your net profit on every job is critical, but so is knowing your revenue per hour. Calculate it by dividing the price of every job by the number of labor hours. Maximizing job revenue per hour helps grow a company’s sales without adding people or overhead. Some simple ways to maximize revenue per hour include:
- Increase sales by doing jobs that use lots of materials (and/or expensive materials).
- Use machines and attachments to save labor hours.
- Share a scoreboard – It’s impossible to attract and maintain a great staff if no one knows how well they are performing at their job. Timesheet and job-tracking software gives crews real-time updates on estimate vs. actual hours, so everyone knows who is coming in on budget and who isn’t. It creates a competitive, success-driven work atmosphere that’s far more rewarding than just putting your head down and working hard every day.
- Don’t be cheap on labor – When business owners don’t have a deep understanding of their numbers, we tend to make short-term decisions that are cost-driven, not profit-driven. For example – you hire staff at low wages because it saves payroll. But this can easily translate into a less-experienced crew. This can hurt your sales in the long run because your jobs go slower, and it may force you to spend more time fixing errors instead of growing the business.
- Don’t be cheap on equipment – You may keep your old equipment because it’s paid for. Or you may buy equipment and tools with the lowest sticker price because you’re saving money. But cheap, old equipment breaks down, which starts a negative trickle effect. Your projects slow down and the schedules get off-track, so you fall short of sales goals and your crews get frustrated. The biggest cost of equipment breakdowns isn’t the repair, it’s the cost of lost production and payroll while working without the equipment. Equipment is usually cheaper than labor (per hour), as it can often perform the work much faster. To grow your business with fewer headaches, make sure you have the right, most dependable equipment for every job.
- Improve your efficiency – Mistakes and problems are more expensive than you may realize. If you’re wasting an hour picking up materials that were missed or forgotten, then you’ve spent an hour of payroll. More importantly, you’ve lost an hour of revenue-producing labor, you’ve lost the revenue for any materials you could have installed in that hour, and you’ve lost an hour of overhead recovery and profit. Brainstorm reasons for wasted time with your crews, then focus on eliminating them. You’ll see your revenue, and profit, grow in a hurry.
- Automate your office – Technology for the office is like equipment for the field. Use software and apps to eliminate paperwork, to streamline estimating and to reduce hundreds of the hours it takes to enter data. You’ll be able to grow your company without adding overhead.
- Learn your numbers, teach some numbers – If you want to run a profitable business, it’s important for you to understand the numbers that drive your success. And once you have a good handle on your numbers, you need to teach your key staff how to understand those numbers as well. Getting everyone on the same page will take some of the stress off you. You’ll also find your staff caring more about the bottom line, instead of just their paychecks.
To learn more about LMN, visit https://golmn.com. And to learn more about the Cat® equipment that can bring value to your landscape business, view our lineup of machines or contact your local Cat dealer.
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