By now, business owners have settled into a new status quo – a recessionary mindset. They're doing more with less, budgets are slimmer, operations are leaner, meaner.
And, they've got gumption: Gotta keep on keepin' on. Firms that have remained profitable during the last four years have adapted their companies to run swiftly during slow times.
Welcome to the new normal.
And 2012 doesn't look much different for budgeting, according to Jim Huston, green industry financial consultant and president of J.R. Huston Enterprises.
"I think people are getting used to the economy more than anything," he says of the economic outlook. Huston will have traveled to all 50 states this year.
"They're saying, 'OK, we have to survive this thing. We can handle it.' But they are not seeing any dramatic improvements in the economy."
With another year of budgeting ahead, here are a couple of key areas Huston suggests focusing on as you allocate dollars for 2012 and beyond.
Prime productivity. Labor productivity is a key indicator of a company's overall health, Huston says. "When I talk about labor productivity, I'm looking at how much revenue a field worker can generate in a year," he says, noting that subcontractor costs should not be figured into this number as this expense can distort the reality.
How much does a crew of 10 people generate per year? Break that down further: How much does each person generate per year? How many sales per year, per person?
"Really scrutinize that number and make sure you understand what is happening, and compare your productivity to years past and also to what other companies are doing," Huston says. (The Benchmarking Charts on pages 14-15 reveal a 25 percent average for labor burden.)
This number will tell you just how much "work" you're getting from each person.
"And it can be a great way to measure the result of equipment you're putting out in the field," Huston says.
Take revenue, subtract subcontractor costs from that number, divide that revenue by the number of people working in the field.
Then, break that out further to find out sales per person, per hour to find out how much each man-hour is costing you.
Why is this important? Huston tells of a company that recorded $57 of revenue per man-hour in 1990. In 1995, productivity jumped to $75 of revenue per man-hour. Today, the company's revenue per man-hour is $111 – almost double in 20 years.
Technology and equipment are mostly responsible for the progress, Huston says, but so is the company's commitment to hiring people of good character and training employees to properly use equipment to make the most of all working capital.
"There is no magic bullet," Huston says.
Fine-tune your fleet. Putting the right equipment on the job can make a huge difference in productivity, Huston says.
Companies that make investments in machines that can help them work harder and smarter are seeing a bottom-line pay-off.
But an investment is required. Compared to 2011, Huston says that equipment as a line item has gone up from 8-12 percent of the budget, to 10-14 percent.
"The workforce is becoming more equipment intense," he says.
Revamp marketing. Advertising dollars were between ½ and 1 percent of sales last year, but Huston says that market conditions justify a greater marketing spend – 1-2 percent of sales.
While commercial operations generally don't use traditional advertising methods, Huston notices that many of these firms are brushing up their capabilities pieces redesigning websites and re-creating brochures.
Huston also sees more truck wraps today – transforming plain vehicles into billboards on wheels.
The $1,500-$2,000 cost gets companies noticed.
"People are getting a lot of mileage out of that," Huston says.
Check, one two. Really scrutinize the numbers this year, Huston says.
Compare the data you have collected the past few years. Check your work. Can you validate your assumptions?
"Look at what you've done in the past, the trends – and I think 2012 will be more of a repeat," Huston says, adding optimistically that 2013 could be a turn-around year depending on election results.
Earlier this year, Lawn & Landscape editors – with the help of independent firm ABR Research – surveyed more than 600 of our readers and conducted dozens more personal interviews to pull together the 2011 Benchmarking Your Business Report. Read on to learn more about what companies across the country pay their employees, spend on equipment and how they’re budgeting for 2012.
Throughout this report, we’ve separated the country into three regions, to give more specific results for businesses in those states.
This map will show you where your state falls in our definitions.
What budgetary line items will you watch carefully or allot more dollars to this year?
"I've got some new employees coming in, and I'm going to spend money training them," says John Newlin, president, Quality Sprinkling Systems Services, Cleveland, Ohio.
With fuel coming in 1 percent higher than budgeted for in 2011 at MSM Landscape Services in Southern California, Mickey Strauss says he'll watch this line item by managing how trucks and machines are fueled. Supervisors will do the fueling. "My guys don't have free reign over gas cards," he says.
Lawn Dawg will buy up to 20 vehicles this year, and that includes customizing the trucks and outfitting each with a ride-on spreader and necessary tools to perform the company's lawn care services. After holding out in 2011, next year's spend will be larger than usual, says Jim Campanella, president of the Nashua, N.H.-based firm. "We were definitely conservative this year, but our numbers are going to be phenomenal, with an excess of 20 percent growth that we expect to continue in 2012, so we are going to staff and purchase equipment accordingly for 2012," he says.
Updating design software will position Earth, Turf & Wood in Denver, Pa., to compete better and work smarter come spring. "We're looking to make a significant software investment in the next six months that should take us to the next level," says Jarod Hynson, president.
"It's easy to short-sight the cost of maintenance," says Blake Crawford, CEO, Crawford Landscaping, Naples, Fla. "But what's really important for my partners and I is that we maintain a preventive maintenance schedule because that's how we can make the most of our equipment investment."