Nick Nykorczuk, president of Creative Pavers Inc., in Gibbstown, New Jersey, says that planning is everything. He points to a saying that he thinks sums it up: “Planning is bringing the future into the present so that you can do something about it now.” Nykorczuk says this saying holds a lot of truth for the landscape industry since there are times when everything is moving 90 miles an hour, and also times when things really slow down. “In those slower times, planning on how you will grow your business for the future will allow you to take the time to come up with ideas, solutions, different methods of attack and contingency plans,” Nykorczuk says. “This way, when you are hit with a roadblock or an issue, you will have already mapped out how to handle it.” Turf spoke to a variety of landscape business owners like Nykorczuk, as well as landscape business consultant Ed Laflamme of The Harvest Group, about how to plan for a more profitable year. Collectively, they shared 18 different tips on how to be more profitable in 2018.
1. Measure everything. There’s no way to really know how you’re doing unless you’re measuring everything, stresses Laflamme. If you want to know where you can improve, you must have a way to measure how things are going.
“Measure everything you can possibly measure,” he adds. “But, most important of all, you must measure the estimated hours versus the actual hours on the job. That’s extremely important. Without that, it’s difficult to tell where you’re making money. You must create a system to do it, whether it is manual or computerized, and you have to follow through on actually doing it.”
2. Take time to reflect. As 2017 comes to a close, take the time to look back on the year. Start by setting time with your team to discuss the year, says Doug McDuff, president of Landscape American Inc., in Wrentham, Massachusetts. Did you meet, exceed or fall shy of your goals in terms of revenue, gross margin and net profit?
“Discuss wins and losses and create some action plans moving forward to correct any issues,” McDuff adds. “This will help lead the discussion into 2018 and what the team can do to ensure growth and profitability.”
“Reflection and evaluation are key,” agrees Michael Pasquarello, landscape architect for Elite Landscaping in Berlin, New Jersey. “Identify not only problematic issues that were dealt with in 2017, but highlight achievements so these can be emphasized throughout the company culture for the upcoming year. Pitfalls should be discussed with solutions that can be implemented as part of policy for the upcoming year.”
3. Take a break. In addition to taking time to reflect, also use the off season to take a little bit of a break. There is a lot that goes into planning for a new year, but don’t forget to also take some time to rest, says Nykorczuk.
“It may be challenging to pull yourself away but take some time off if you can,” he says. “Being refreshed is the best way to prepare for a better 2018 season.”
Whether it’s a vacation or just a “mental health break” where you take a little bit of time off from thinking about the business, that period of rest can ultimately help you be a better boss.
4. Don’t rule with an iron fist. Andrew Pelkey, co-owner/COO of North Point Outdoors in Derry, New Hampshire, says that one lesson he’s learned with managing employees is how much they value being treated like part of a team. They don’t want to work in a job where they feel like they’re operating under a dictatorship. Quality of life at work is valuable to millennials, he adds. And if you want to make more money in 2018, you absolutely need to have a team of people who want to work for you.
5. Focus on your vision. You have to know what you want your company to be in order to get there, says Giuseppe Baldi, general manager for Baldi Gardens Inc., in Arlington, Texas. What do you want it to look like next year and even farther into the future? That’s your vision, says Baldi. “You need to have at least a three-year strategic plan for what you want to happen and what you need to do to get there,” Baldi adds. “Every decision that you make, you need to compare that against the plan and ask yourself whether it aids you in making your vision a reality.”
6. Look closely at your customers. Another way to make more money in 2018 is to look closely at your customers, says Laflamme.
“Identify which customers are making you the most money,” he adds. “Who has the disposable income and is willing to invest in more upsells? Make sure your account managers are systematically walking the properties to look for areas that can be improved that they can suggest to the owner. I have some clients that for every million dollars of base contract they have, they sell another million dollars in enhancement work on those same properties.”
7. Plan ahead for material purchases. Dean DeSantis, president of DeSantis Landscapes in Salem, Oregon, says that planning ahead by looking at the backlog for 2018 (all jobs both installation and maintenance that are already sold) helps save money on material costs. “We schedule meetings with our key suppliers to show them the work that’s already on the books and ask them to commit to pricing for 2018,” DeSantis says. “Suppliers want to lock up business and I want to hedge my purchases against future price increases.”
8. Evaluate your equipment. You need to have good, working equipment, says Laflamme. It may sound like a given, but even some big companies can fall into a rut, he warns. And that’s a hidden loss because you can’t see it overtly. If a piece of equipment breaks down, it’s unbillable time.
“Contractors need to make sure they’re up to date on the latest equipment as well,” he adds. “New equipment comes out all the time. When these pieces come out, contractors must ask: Could that piece save me time? Some of the equipment can reduce one man on the crew and that’s huge.”
9. Set goals — and track them. Having tangible goals for 2018 that you share with your team will help you have something to go after, says McDuff.
“Target three to five specific goals and match them up with key indicators that can be tracked,” he says. “For instance, if you want to improve your gross margin, a key indicator might be your field labor as a percentage of sales. Set your target and continually track this goal throughout the season and make adjustments as necessary.”
10. Look at ways to save time. Time is everything in this industry and looking at ways that you can be more efficient in 2018 will be a key to profitability.
“Offer incentives for people if they save you time on jobs,” suggests Laflamme. “Whether maintenance work or landscape construction, if you can meet or beat the budgeted hours, you need to reward people. Create a system to do that and people are going to work harder, smarter and faster.”
11. Create a budget. We recently did a survey of our readers and found out that more than half of respondents did not use a budget. If you don’t already have a budget, make that a goal for 2018.
“Operating a business without a budget is similar to operating a car without headlights in the middle of the night,” warns Chris Darnell, business development and marketing manager for Bluegrass Landscaping & Maintenance in St. Louis. “Yes, the car will run, but it will be a dangerous ride. Our budget is a major piece of our plan. It allows us to forecast sales and expenses, compare them to prior years and plan our growth strategy. It is a tool to assist with making decisions and helps us to stay on top of seasonal curves.”
12. Learn from your losses. If you lose a job, use it as a learning opportunity, says Laflamme. Understanding where your company stands amongst the competition is valuable information. It can help you determine if you’re pricing your jobs correctly or if you’re going after the right target customer.
“Find out from the property manager how much you lost the job by,” says Laflamme. “Ask: ‘Were we at least in the ballpark?’ They would be willing to say ‘yes’ or ‘no’ to that question. Then ask: ‘Infield or outfield?’ Once they answer, try and find out the percentage and then write this down so you have it for next time you compete against this company.”
13. Treat people right. Chris Lee, president of Earthworks Inc., in Dallas/Fort Worth, Texas, says that treating both the clients and your employees right will go a long way toward profitability.
“As simple as it sounds, that’s the key to growth and success,” he says. “I look at it like a three-legged stool in a sense. One leg consists of your commitment to always do what’s right for your clients. The second leg is your commitment to always do what’s right for your employees. The third is your commitment to always do what’s right for your business. It’s not always easy to keep the legs the same height, but when you do, you create a very stable platform for growth. When you emphasize one or two over the others, at some point you’re going to fall off the stool.”
14. Examine your culture. In terms of treating people well, a lot of it comes down to culture. Laflamme says that a lot of companies neglect their culture, even though that’s a huge contributor to their overall success. A company with a strong and positive company culture is a place where people want to work. And happy workers are better workers.
“Culture starts at the top and works its way down,” Laflamme says. “Companies with positive cultures, when they all get along, they’re friendly and happy and produce more. People who are happy with their jobs produce 100 percent, and if they’re not, I think you know the story.”
15. Create route density. Laflamme says this may sound like an obvious one but it’s not always practiced. Route density for maintenance work is going to have a tremendous impact on your overall profitability. If you’re not already trying to keep your routes tight, look to improve in the new year. “You can be very deliberate in doing that,” Laflamme adds. “Work to get referrals. Work to market areas you’re already in to create more density. When you have density, you can reduce your price and be more competitive.”
16. Be innovative. “Your salespeople have to be innovative and think about how they can save your clients money without sacrificing profit,” says Laflamme. “That will help them get a job at a bigger gross margin. For example, I had one client who went to meet this engineer on a large property. They took a ride around to see what winter work needed to be done. The engineer had a large parking lot that he needed plowed. My client asked him how many cars needed to park there. He determined it was only half and he suggested only plowing half of the lot. The engineer said he was the only one to bring up that point, and he got the job. He charged a little more for that half because he had offered the client an innovative solution that saved them money.”
17. Don’t wait; do it now. The sooner you start planning for the new year, the better, says McDuff. Don’t wait until the dead of winter to start thinking about these things. Get a jump on them now.
“We all get caught up in the off-season projects — especially if you do snow work — and working on your profitability plans can keep getting pushed off,” he says. “Do it now, while your team is engaged and your employees are active so you can put certain behaviors into action before next year gets underway.”
“Do not rush the planning process or wait until the last minute to start,” agrees Baldi. “You need time — and lots of it — to think things through.”
18. Finish strong. Even as the year comes to a close and you’re about to go into off season, don’t take it as an opportunity to slack, says Pasquarello. Finish the year strong.
“Ensure that the same level of service is being performed now as it was in the spring when you were fresh off the starting block,” he says. “It is these end-of-year services that stand out in a customer’s mind when deciding whether to continue services for the following year — and, more importantly, possibly adding on additional services and projects in the new year.”