The Grow Show: 5 more steps to overcoming pricing pressures

Lose the loser jobs and improve your margins.

August 17, 2010
The Harvest Group
Business Management


Learn to manage your time, people and resources. The end result: lose the loser jobs and improve your business margins.
Brought to you by The Harvest Group, the Grow Show podcast series will tackle the difficult issues and challenges contractors face day-to-day in their businesses by breaking them down into manageable pieces, and sharing a common sense approach to overcoming them.
Last week’s podcast introduced five steps to overcoming price pressures. Part 2 continues with five more tips to beat price pressures in our marketplace.  These two episodes of the Grow Show recognize today’s business reality and were designed to provide you with tips you can immediately implement in your business immediately.
If you missed Part 1, listen to it here.
Listen to part 2 here. Be sure and follow along with the outline below. 
Without question, the landscaping business is still a challenge but we want you to know you’re not alone with your frustration, questions and concerns.  There are some very common challenges going on in various regions of the U.S.
A quick review of key strategies (from Part One) to combat price pressure:
  1. Identify your best customers and communicate with them often.
  2. Share some of your customer’s resources
  3. Measure your job costs. In fact measure everything you can
  4. Lose the loser jobs: It’s better to lose under reasonably professional circumstances than to drag out a conflicting non win-win relationship
  5. Build an estimating process.
Part Two: Five more strategies
Know your costs. Know your costs. Know your costs.
Step One: Know your cost with your field workforce which includes foreman level and below. Know what it costs you with your foreman and workers with burden.
Burden = workers compensation, general liability, state and federal payroll taxes, health insurance, any retirement contribution.  Burden does not include: vacation and holidays, uniforms and other overhead costs like supervision, sales, vehicles, gas and oil
Step Two: Figure out your hourly average wage. Figure your hourly average wage by taking all costs of labor with burden at the foreman level and below. Then divide by the number of employees to arrive at your hourly average wage.
Step Three: To determine material costs, separate out maintenance materials vs. extra work materials.
Step Four: Now use these figures in your estimates for what it costs you to run your business at the job level.
Hold efficiency meetings – Have regular meetings with your managers and the people doing the work to see how you can be more efficient. Identify areas that can be improved.  If you work together as a team to become more efficient you can be.
Differentiate yourself – If you are doing everything the same as before, you look like the rest of them.
Sell more profitable work – Many companies are just doing the contracted work and not trying to upsell the more profitable work.  
Get more efficient – In addition to efficiency meetings, hold operational audits, otherwise known as the “stop the money burning in the yard – audit.”
Take a good look at yourself:  dispatch, job sequencing , yard arrival, etc. 
Become more efficient because when you do you’ll be able to become more competitive and make more profit.