Mark Bradley will help you understand the numbers of your business.
One of the first things Mark Bradley might say to those attending his presentation at GIE+EXPO is, “Don’t panic! You don’t have to have a finance degree or accounting background to understand this stuff.”
The stuff is a rather simple 10-step system that Bradley, who will speak from 7:30-9:15 a.m., on Thursday, uses in his own landscape company that sets up accounting so it’s useful, builds a plan for profit and calculates the right price for every job. It also sets up estimates for easy job costing, merges payroll and job costing and motivates employees to think like owners.
And Bradley knows what he’s talking about. He started TBG Landscape in 1997 and, in little more than 10 years, grew it to one of the top 100 landscape companies in North America.
The first step? Properly setting up your accounting, which in Bradley’s vision is a useful chart of accounts organized and split correctly so you can track your costs accurately and in a way that helps you manage the future. “That way, accounting becomes more than just history but an actual planning tool,” Bradley says.
After that, Bradley says, you can build a plan for profit, which is more or less the operating budget you start with each year. Ask yourself, what will our numbers need to be this year in order to make sure we’ll be profitable?
Once that’s completed, you’ll have all the numbers you’ll need for creating a pricing system. The operating budget will tell you how much work you need to sell and roughly what your labor, equipment and overhead costs will be.
“From there, you’ll have all the information you need to know how to price a job correctly so you’ll know how much to mark up your crews, equipment and materials to make sure you’re covering your cost and overhead and making the profit you set out to make when you originally came up with the plan,” Bradley says.
Time to estimate. Out of that pricing system comes an estimating system that you can hand to your estimators so all they have to worry about is how many hours the job should take and what equipment and materials should be used.
“If they can focus their time and effort on that and have the pricing system more or less automatically calculate how much to charge for the bid, I’ve taken a whole lot of work out of their heads and a whole lot of variables out of my business, which is maybe the most important thing,” he says.
“When I’m pricing work, I’m in control of that. When other people are pricing work, there’s always that fear of whether they’re pricing correctly.”
With an estimate that details how many hours, equipment and materials are needed, that sets up a job planner for the crews that you can then give directly to your foreman so he knows the hours, equipment and materials information. He can then order his own materials or at least ensure that he gets the right materials in the right quantities to minimize downtime.
“With this information, they will also know how to track their time so that the estimate becomes the perfect framework for job costing: here are the different segments of the job, here is the number of hours we’ve estimated, and when you fill out your time, you’re going to fill it out against these categories and we’re going to watch this,” Bradley says.
At Bradley’s own company, they have a “scoreboard” that allows everyone to track the numbers in real time – all the hours estimated versus actual hours. That way, they can tell exactly where they are as far as what was estimated and what is actually happening.
“That merges payroll and job costing into one neat system – the way the crews are getting paid is the same system that is also governing our job costing so we don’t lose a whole lot of hours,” Bradley says.
“What happens in a lot of companies is you have a clock on the wall or some system for timekeeping and maybe a written timesheet or written daily log. “But there are discrepancies there, so there will always be lost hours to the company’s detriment. So when it’s the same system, and for every hour of payroll you’re getting a cost to something, we have accurate job costing information.”
A different mindset. And that’s where the magic happens, he says. Employees start thinking more like owners. “We don’t make all the numbers in our company public, but a lot of them we do. When (employees) are involved in that level of detail and are aware that not only I can see the numbers but they can, they start to make owner-like decisions.”
And if they’re interested in making a bonus, they’ll make the right decisions because, at Bradley’s company, there is an incentive system that rewards them for performance based on the company being profitable and beating the sales goals set out in the budget.
This may sound complex, but look at Bradley himself: a self-professed non-numbers guy with only a high school education who went from steamfitting to owning a landscape company. But he knew enough about his business to realize how important it is to track the numbers.
“I have become somebody who likes the numbers,” he says. “You need to know the numbers or have someone in your corner who does.
“And in the early part of my career, it was my wife. If you like running a business, you have to have some numbers awareness.”
While he doesn’t profess to be the most exciting speaker, he says what he brings to an audience is real-life information.
“It’s very real because I’m involved in the day-to-day operations. I will give real-life examples and a completely honest breakdown of our company and our challenges and problems and the opportunities we’ve created.”
You can register for the talk here.
The author is a freelance writer based in Cleveland.