Many business owners and managers belong to industry-related peer groups or advisory boards. They find a group of their peers sharing their knowledge and experience to be very beneficial to their company's success. Beyond that, in almost all cases, they make new friends with similar interests.
For these groups to function as they should, they should be comprised of owners and managers of businesses that do not compete with each other (obviously), of approximately the same size in terms of revenues and services rendered and, most importantly, peer group members must genuinely be interested in improving their companies' performance and willing to share. Members discuss challenges or issues and get the advice of other successful operators - both what worked for them and what didn't.
Among landscape and lawn service business owners and managers, the discussions often focus on financial benchmarking, employee motivation, productivity and operational efficiencies. But financial performance is generally the hottest topic at most of these meetings. Groups benchmark their P&L reports and learn how to increase revenue and reduce costs by comparisons among group members. But sometimes a peer group member offers up a unique issue that generates a broader discussion that, hopefully, results in valuable guidance for all.
For example, a company owner recently shared that he was having trouble funding expansion even though his company was profitable. The problem was the debt on the company's balance sheet owed to the company's previous owner. The bank was concerned with the debt. After discussing this issue with the group, it was suggested that this debt could be removed from the balance sheet because it was personal debt due to the relative.
The business owner heeded this advice. The personal loan was still due the relative, just not listed on the company's balance sheet. Consequently, the owner generated a significant increase in the company's worth and the bank approved the funding.
Whatever the particular subject, you can count on several members having good advice and suggestions because they have dealt with that subject. Again, it's vital that every member participates and relates his or her experience and knowledge, so that all members benefit.
For example, another successful company owner shared how he uses a leasing company to provide employees and manage their payroll. This reduces the cost of the company's insurance and workers' compensation expense and streamlines its payroll and administrative expense. Other peer group members may or may not go down a similar route, but at least they know it's doable and that one of their group members is having good results with it.
Because discussions most often focus on matters related to increasing revenues and reducing costs, they can deal with any number of issues that affect either of these. Increasingly, given the uptick in the economy and the difficulty of finding, attracting and retaining valuable employees, owners have been talking about labor and operation efficiency matters.
5 Reasons for Participating in a Peer Group
1. You can benchmark your results compared to other similar businesses.
2. You learn from other owners dealing with the same issues.
3. The group becomes your "unofficial" board of advisors.
4. Receive problem-solving advice.
5. You are held accountable for improving your company.
A group of advisors tackling employee retention and motivation issues can benefit everyone and will provide ideas for keeping valued employees. Group members also discuss better ways to increase employee productivity because contractors have a high labor burden.
Members know that in- creasing productivity starts with them and they discuss ways to communicate to employees the importance of completing jobs on time and under budget. Members know that efficient operations, when combined with productivity increases, mean more profit and growth. They freely talk about techniques to streamline processes and eliminate unproductive actions.
Peer groups should have a "bill of rights and requirements" that members adhere to and respect. One of the sacred tenets of just about every peer group is that what is shared within the peer group, stays within the group. Confidentiality is a must. Also, new members must be approved by the existing members and vetted before joining.
How often should a peer group meet, you might be wondering about now? There is no set rule.
It's been my experience that peer groups are most effective when members meet personally several times annually, and participate with conference calls during the busy season. Members should regularly keep in contact with each other discussing ongoing matters of interest.
Finally, remember that even though it's instructive for members to share their past experiences, the sole reason for being a member of a peer group is to learn how to be better business owners now and into the future. By sharing all members teach as well as learn.
Rick Cuddihe is president of Lafayette Consulting Co., a PLANET Trailblazer, and he works with landscape contractors to improve their businesses. Contact him at email@example.com.