Breaking down the monthly process of running a successful landscaping business...
Every year presents a new opportunity for growth and success. This year is no different. With the right people, planning, systems and processes in place, you’re armed with the necessary resources to see your business thrive. Not sure how and when to implement and develop your resources? In this article we’re breaking down the year, month by month, and outlining the steps involved in planning your business better and working smarter to ensure you’re on the path to profitability.
Below is a diagram of the business model for your reference. Note that each month contains a different initiative that, when followed year after year, will keep you on track to accomplishing your business goals.
January: Create a Budget
It’s the start of a new year, which means it’s time to set the wheels in motion for the upcoming year. Now is the time to sit down and create an operating budget. An operating budget will allow you to support your opinions with actual numbers and will insert an element of logic and thought into your business plans, which is absolutely necessary when trying to set accurate goals. Keep in mind that your operating budget is not meant to predict the future. It’s to be used as a compass, directing you through the upcoming year and providing you with the information you need to make good business decisions to reach your business goals. When you use your budget as a planning tool rather than a forecast that hangs on a wall, you’ll make your projections become reality.
Your budget should plan the following expenses:
• Sales
• Labor
• Equipment
• Materials
• Subcontracting
• Overhead expenses.
Make sure your budget is profitable. If you want to earn a profit, you need to plan for profit. Your operating budget should be forecasting a healthy profit. A 10% net profit margin is a good benchmark – but, depending on the year and the state of the economy, that can be lower or higher.
February: People Plan
Don’t wait for the snow to melt to start the hiring process. It’s common practice in the landscaping industry to equate springtime with hiring time. But really, you should be hiring long before the warmer weather hits. Think of it this way: when you hire new employees in April, you have to send them off to work immediately. Not only is there not time to train your new employees on your company’s systems and policies and no time to align them with your company culture, but you miss out on the best people because they’ve already been swooped up by your competitors.
When you hire in February, you have plenty of time to follow the proper hiring process, which includes running new hires through a working interview and orientation to ensure they’re a good fit for the job and a good fit for your company. When you hire in February you have the opportunity to find and hire the best people! Yes, you’ll have to pay your new employees for an extra couple of months, but the costs of hiring earlier are far outweighed by the earnings you’ll receive due to highly-trained, efficient and productive workers.
March: Create Systems
March should be all about getting the right systems in place. In other words, it’s time to do a little housekeeping. Imagine your office, yard and shop looking and running like the Home Depot. Every department has a label. Every department has categories that are labeled and every item in each department is labeled. There is a return section. This concept allows for customers and employees to always follow the same system to easily find what they are looking for. You can and should set up your business in the same way.
Systems are critical to enable individuals to communicate in complex organizations using the same language, methods and paperwork so that predictable, repeatable results can occur. Without systems and processes, everyone would do what they want, when they want, on their own schedule, using their own methods and crafted forms. Systems also eliminate waste and prevent waste from re-occurring in the future. When your systems and processes are linked and flow together, your team works more efficiently because they’re able to communicate and eliminate the waste in the overall system. Less waste and more production means your company achieves a higher capacity.
Take the time now to get the tools needed for timekeeping in order, to create job binders, to ensure the paperwork shelf is sufficiently stocked, and to determine how estimates will be transferred to your field personnel (i.e. a material management system). Create standardized systems for estimating and scheduling work, for daily operations and for continuous improvement. By the end of March, you should be ready for the busy season ahead with your systems in place.
April – June: Run
Take what you got and run with it! This time of the year is busiest time for landscapers, so do as much work as you can in these months. You just spent the past few months getting the leg work in order. Put it to good use! Run according to the budget and systems you put in place in the beginning of the year.
July: Assess Progress
Take a step back from your busy schedule and analyze how your business is running. Look at your budget verses your actuals - this includes your sales, labor expenses, sales to labor ratio, overhead spending and material spending. Look at these numbers and make sure you’re on track. A simple report that shows sales and the percentage of sales spent on labor, equipment, materials, subs, and overhead is all you really need to get started. You can drill into problems as they surface (look for ratios that are too high!).
August: November: Run, But Run Smoother
Thanks to the adjustments you made when you assessed your progress in July, your company should be running smoother. No more waiting until your accountant gives you a statement to fix problems. Fix problems as they happen instead of finding out about them long after it’s too late.
December: Strategic Planning
As you approach the closing of this year, you should already have your mind set on the year to come. Take the time to reflect on your experiences this year, how can you take what you’ve learned and apply it to the next year? Start by looking at your company now and determining what is good to keep in place for another year and what needs to change.
Ask yourself the following questions:
• Who are your key people returning?
• Are you growing or holding steady?
• What’s the economic forecast for the upcoming year?
• Do you need to fill any key roles? Have you lost any key people?
• What equipment could make you more productive next year?
..And just when it ends, it starts up again! Begin the whole process again next year. Know this: the only thing that stays the same is change. Get used to it. Every change is opportunity to be better, bigger, faster… you can seize every opportunity with good planning.
Like what you've read here? Read more articles about running a successful landscaping business on the Landscape Management Network.
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