Landscaping business - cut your cost base now! - LJN Blog Posts

I am sure, as a business owner, that you are keeping a breast of the wider picture when it comes to planning your business? It pays not to live a hand to mouth existence and even if it is just kept inside your head rather than being written down, you must try yo take a six-12 month view on where your business is going and more importantly, what it is going to cost you to deliver that all important hour of your precious time. Try to think on the lines that your sales (i.e. the labour that you sell to a client) is, unless you have been astute enough to tie a client into a twelve month contract, something that can fluctuate dramatically and that can be accentuated by a 'whipsaw' effect in a worsening financial climate. If you are working on a hand to mouth basis and a client suddenly cuts your hours down by half a day, or worse, cancels your services altogether, the financial impact is instant. The major problem that will be immediately impacted on your business and ability to trade profitable is your cost base. Costs are not something that can be slashed overnight and, like a large oil tanker in the sea, a change now will not take a effect for a considerable time. You may have a vehicle on a lease or hire agreement or perhaps pay rental on a storage yard and it is likely, unless you are near the end of the agreement, that these costs will be fixed at a set monthly rate. Let us assume that a van costs £150.00 per month and that your daily rate is also £150.00? You lose a day a week at £150.00 which equates to £600.00 per month and suddenly you have to find four months rental from existing clients or fill the gap very quickly. The economy is now going to go into an even more depressive stage where many jobs will be lost and some businesses will close. The signs have been there for two or more years that this would happen yet only now, some managers are reacting. Look very carefully and very quickly at how you can reduce costs and bank some fat to your balance sheet before a contract loss or blip in sales reduces your profit. Further reading - Housing recession and business opportunities

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