With the season in full swing, now is a perfect time to perform a company checkup. Sure, you say, I am too busy and can’t find the time to analyze things now. Actually, this is precisely the right time, when all departments are going at full speed and you can evaluate performance and results much better than when things slow down. I call this the Profit Checkup. Here are a few important processes you should check up on to increase your profit.
Employees are the key to your company’s success and you should observe how all your people are performing during this extremely busy and stressful time of the year. One underperforming employee on a crew, in the office or shop can drag everyone else down, and these underperformers are easy to spot now in this busiest period.
“You should observe how all your people are performing during this busy time and it’s easy to spot underperformers now,” says Mike Mason, COO of The Lawn Pro, Louisville, Ky. “I’ve found through the years that eliminating underperformers sooner rather than later has always served the company well.”
Your company should be operating at full strength now. Be on the lookout for problem areas and get them fixed immediately. Time is money and a few minutes wasted here and there will multiply into hours as it spreads throughout the company.
Check out the time your crews take reporting in to work, getting out of the yard and returning at the end of the day. Each of these processes should be efficient and without wasted time or effort. Check out your office staff, review how they interact with clients and make sure they’re not creating unnecessary work for themselves or anyone else in your company.
Be sure your staff understands what you expect of it. Give all employees job descriptions that clearly explain their job responsibilities. Communicate the potential for advancement when they exceed expectations.
Monitor productivity
Spring is the ideal time to evaluate crew productivity. Labor is your highest cost item and is the first place to look for opportunities to increase company productivity and efficiency.
Most contractors assign a labor budget and schedule crews based on the amount of time projected to complete jobs. Revisit your labor budget now and look for ways to reduce time and effort in completing jobs. The green industry is extremely competitive and using a two- or three-year-old labor budget just won’t cut it today. Involve managers in looking for time savings, and have the managers challenge their crew leaders. Look at every minute from the start to the end of the day and you’ll find ways to save time. This results in two positive things: first, reduced job costs that add up to more profit and, second, more time to perform additional jobs.
You are always better employing fewer people and them a higher wage ratherthan adding more inefficient labor. A poor performing employee earning $12 per hour will cost the company more than $5,000 annually. Worse yet, poor performers upset good employees.
Successful businesses get more out of what they already have instead of adding to an unproductive labor force.
David Novak, chairman of Yum Brands, owners of Pizza Hut, KFC and Taco Bell, authored a best-selling book on business titled “Taking People With You”. In the book, Novak emphasizes how important people are in successful business operations and suggests owners get inside the heads of their managers.
Mechanize to reduce labor
Manufacturers today offer equipment that produces better and faster results. These more productive units can reduce your job times. Equipment costs are a fraction of your overall business costs, so be sure you’re getting the highest production from your equipment fleet. A systematic maintenance program can sustain the performance and increase the productive life of your equipment and vehicle.
When you’re performing maintenance, always use the widest cutting decks the property allows and be sure your crews know how to efficiently operate the equipment. The fastest growing segment in maintenance equipment is stand-on mowers. If you regularly travel from job to job or work on properties with tight conditions, stand-on mowers will increase your productivity and profits.
Gross margin checkup
Spring is a good time to review your gross margins per service segment, too. Your profit & loss (P&L) reports should show your gross margin (GM) per service segment. In successful operations, the highest revenue services are also the highest GM percentage providers. Your gross margin percentages are the most important numbers in the business. Know your numbers. Concentrate on raising your lower percentage gross margin services.
Rick Cuddihe is president of Lafayette Consulting Co., a PLANET Trailblazer, and he works with landscape contractors to improve their businesses. Contact him at rick@lafayetteconsulting.com.
