Those involved in the professional snow and ice management industry have often heard that you really should make sure to have good documentation records.
I am not sure what those that don’t document think, but I have heard a lot of reasons: I don’t have the time. My guys won’t do it. It really doesn’t matter. It does matter, and at ASCA, we hold proper documentation as an industry standard. But I want to be clear, it is not ASCA that is forcing this documentation; it is our country’s legal system. The truth is, 45 percent of professional snow contractors report that they incur at least one slip and fall lawsuit each year. It is not a matter of if a professional snow and ice management company gets hit with one of these. It’s a matter of when.
Now here is the problem when the inevitable occurs. I recently had a conversation with a snow professional and we were talking about these lawsuits. He told me of a conversation he had with a judge a while ago. The judge told him point blank: “It doesn’t matter who is right or wrong, it only matters what you can prove. Unfortunately this is the society we live in today.”
This statement reinforces the fact that more than 50 percent of slip and fall lawsuits are lost or settled due to documentation. ASCA supports this industry. Much of what we promote is in an effort to protect this industry and our members from frivolous lawsuits.
As you continue to evaluate your business, look at your risk management practices and how you can help protect yourself. The legal community has forced documentation as a key to success in the industry.
The author is executive director of the Accredited Snow Contractors Association. Email him at firstname.lastname@example.org.
In 2009 when the recession was full-blown, 40-year-old Eichenlaub landscaping took a 25-percent revenue hit. But owner Dan Eichenlaub kept his team intact and reverted to a carefully laid plan that had been reviewed by his benchmarking group.
“We knew what to do when we realized the leads weren’t coming in,” he says. “
We began to make changes before we spent a lot of money – as soon as we knew we weren’t going to sell the volume, we said, ‘How do we control overhead and bring money to the bottom line so we can stay alive?’”
The next year, Eichenlaub recovered and the company began rebuilding its business. In 2011, the firm set a record, exceeding its highest revenues by 10 percent. “We’ll do that again this year,” Eichenlaub reports. Eichenlaub says today, “Having a plan allowed us to weather the storm – that was a hurricane. It’s knowing what to do and when, and that’s why benchmarking is so important.”
Any company that wants to go from good to great needs a solid plan, a timely and accurate set of numbers and a basis for comparison. “If you don’t have a bar set, you can’t raise the bar,” says Chris Angelo, president, Stay Green, Santa Clarita, Calif.
Set the bar. “That’s our baseline and we push ourselves to exceed those while maintaining our core values and the integrity of our operating systems and processes,” Angelo says.
Stay Green participates in a peer group called Next Level Network, and Angelo has been active in similar groups. “Over the last half decade, we have gone through some pretty challenging times and the industry, in general, has had to get leaner and create more value for clients,” Angelo says.
“The landscape peer group has been particularly valuable during this downturn.”
Numbers talk. Stay Green has continued double-digit topline growth annually, increasing its bottom-line profitability by 100 percent year after year. Sales went up 10 percent in 2012, with 26 percent overall growth and an 89-percent increase in profits.
At ArborLawn in Lansing, Mich., Jerry Grossi shares how participating in structured and informal benchmarking groups over the years has done more than help him keep numbers on track. He has tried new products suggested by peers, and more significantly, transitioned the sales process from mainly direct telephone to Internet. “We are improving the efficiency of bidding work,” Grossi says.
The sharing is reciprocal. “We can move quicker by sharing information with others,” Grossi adds.
Benchmarking groups are helping businesses grow in the toughest economic times because they provide a network of professionals with similar goals and business structures. By comparing numbers, operational processes, marketing efforts, sales models and other business drivers, the groups’ participants drink from a rich brew of ideas. They learn what works and what doesn’t – they share lessons and avoid mistakes. Most of all, they hold themselves accountable to working their own business plans and reaching financial targets. “None of us is making a plan in a vacuum,” Eichenlaub says.
Building a group. Constructive feedback and focused business discussions keep Eichenlaub on track when he creates his annual budget and engages in short- and long-term planning for his company. He knows he’s not alone in the process. “I can compare my plan to others,” he says. “Are my numbers in the right place? Was I dreaming when I said I was going to sell $10 million worth of work?
“Plus, we talk about issues that will impact the plan,” he continues. “What if we fall into another recession? How will fuel costs in 2013 impact the business. And it’s (about) trends – what’s happening out there. Is the housing market really recovering?”
This dialogue with peers has been especially beneficial – and that brings to light the importance of who those peers are in the group. Eichenlaub belongs to LandOpt, a group of regionally-based landscape firms with revenues of at least $1 million and a keen interest in improving all business practices. The total network is diverse in terms of commercial vs. residential clientele, service offering, etc. But Eichenlaub says the different groups within the network assure that participants are in like groups. For Eichenlaub, this means primarily residential, landscape management and renovation. “There are enough businesses that look like mine, so it works,” he says.
Grossi began benchmarking about four years ago when another landscape professional asked him if he was interested in sharing numbers. For some time, it was just the two of them and their key managers trading numbers and sharing ideas. Then, they invited others to join. Today, Grossi and six other firms meet several times a year and their sessions are guided by a facilitator. The geographic diversity of the companies involved assures no competition among members.
The same is true in the group Angelo belongs to, called Next Level Network. This select group of regional landscape firms is focused on innovation and high performance. Angelo says it’s a strategic alliance among six of the best privately owned businesses in the industry.
“Being geographically diverse allows us to feel less threatened,” Angelo says, adding that the group swears confidentiality. “We are not crossing boundaries or finding ourselves bidding against one another. We are not recruiting each others’ team members. So, that has allowed us to ‘get naked’ and be completely transparent – to put it all out there so we can be pushed, challenged and receive some proper feedback so we can grow as leaders and grow our businesses.”
Indeed, confidentiality is a key success factor for these peer/benchmarking groups. And so is company involvement. Peer learning is most effective when key managers are involved, too. Bringing in critical team members – sales, production, etc. – gets everyone on the same page. Angelo shares how Next Level Network holds its third annual Next Level University in early November. This year, 120 attendees from the six firms – from account managers to CFOs and managers on down the line – will come together for three days of workshops and peer training. “That is truly taking it to the next level because all of us as owners and CEOs of our organizations are believers, and now we are getting our people on board,” Angelo says.
Grossi and Eichenlaub also involve key team members in their peer benchmarking activities. “It’s not just one person at the top who is communicating – the lines are very open so with every role, we can figure out what are the best management and trade practices we should be utilizing to move forward,” Eichenlaub says.
By the numbers. You can’t change what you don’t measure. Eichenlaub says this fact is the crux of why benchmarking is so critical for business success. “Benchmarking is a tool – it’s a way for me to grow and compare my business and see where we’re at and how we should change,” he says.
By tracking his numbers carefully and comparing those with peers, he can gauge where he is on the roadmap. Is he headed toward the destination he outlined in his plan? Or, is he stalled at a dingy rest stop?
In order to properly benchmark with others, a standardized method of calculating numbers is absolutely necessary. “Some people put vehicles and equipment below the gross profit line so their gross profit might be 5 percent vs. someone who puts truck and equipment above the line and reports a gross profit of 40 percent,” he says.
In other words, where those numbers fall on the chart of accounts is critical. What line items are included matters. How the balance sheet is generated is a big deal. A standardized method helps groups compare apples to apples. How specific a group gets when sharing depends on its members preferences.
Grossi’s group uses PLANET’s Operating Cost Survey as a benchmarking tool. He says the group doesn’t necessarily swap numbers in terms of sharing pricing or dollars and cents on budget line items. They’re more concerned about hitting those percentages and margins.
Angelo, on the other hand, says his group really digs deep and gets down to the nitty-gritty of those numbers. They focus on sales, but then break that number down by service line. They aggressively study their balance sheets and cash flow statements. “I’d say that novices focus on the income statement – how big are your sales and bottom line. We really push ourselves on long-term solvency and reducing risk, so that is managed on the balance sheet.”
He focuses on debt-to-equity ratios and fixed assets, working capital.
“We all have very strict accounting rules and systems where we are getting all of our financial data within 10 days of the close of the prior month, or at the end of the prior month, so we are able to respond faster if there are any lagging indicators,” Angelo adds. “We keep leading indicators in front of us so there are no surprises at the end of the month when we review financial statements.”
Accurate information gathering is the foundation of these peer groups. Without the correct numbers, there’s nothing to compare. The numbers are meaningless.
Use the charts on pages 14-15 to measure your company against industry averages.
And having a peer group, or an industry mentor – another firm like yours willing to swap information and share ideas – can go a long way toward keeping your operation running smoothly regardless of the climate Mother Nature or Wall Street brings.
“Anyone who wants to take their company from good to great, or maybe even to just exist, needs to start figuring out their numbers and measuring them,” Eichenlaub emphasizes.
How we did it
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.
|Click the table above to view the full Industry Overview report.|
The experience we have gained over the last 30 years gives us confidence that our industry stands stronger today than ever before. In fact, our extensive field work during the past 12 months reveals consistent customer feedback that landscape contractors see a slightly more stable business climate in 2012 than the previous several years.
The current environment does not come without inherent challenges, which include pressure related to rising fuel prices, low consumer confidence, regulatory changes and low competitive pricing. To help offset these challenges, individuals have been forced to work harder and do more with less. Their efforts have not been in vain. A high percentage of companies believe that the recent turmoil has forced them to become better business practitioners than in the past.
We see the same improvements within Exmark. Much like the successful customers we serve, a bright future for Exmark will be fueled by our cornerstone values, which include meaningful customer interaction, collaboration and understanding. Exmark holds close the belief that hard work and ingenuity are prerequisites for business growth.
In the report that follows, you will gain even greater insight into the current state of our industry, including key data related to contractor spending, profit analysis and budget management. This includes tear-out budget charts for core service segments such as irrigation, maintenance, lawn care and design/build. In addition, you will learn about the importance of technology and its impact on your business, as well as the benefits of setting up a peer group to share best practices and benchmarking metrics.
Exmark is dedicated to providing our customers with the most durable, innovative and reliable equipment possible, through a dealer network committed to servicing the most important businesses within our national economy: the professional landscape contractor. Collectively, we will continue to find opportunities to help our customers become more efficient, productive and profitable in all aspects of their business, and to earn their trust daily.
Please stop by your local Exmark dealer to learn more or contact us directly at www.exmark.com.
What do you think is the most difficult part about budgeting?
Our challenge has been with the amount of growth we’ve had over the last couple of years. Setting up a budget is fine, but we seem to exceed our (goals). So our budget needs to be constantly tweaked to keep up with our growth pattern.
– Matt Boelman, vice president, Perficut, Des Moines, Iowa
Predicting the workload – recovering overhead and deciding how much equipment you need and how much profit you want. We always like to start with the profit first instead of last when figuring out our budget.
Another challenge in our market is the predictability of snow. For example, last year we did $1.5 million less in snow than the year before. Even though we do not budget for snow, we have to be prepared.
– Todd Pugh, CEO, Enviroscapes, Louisville, Ohio
The most challenging part of budgeting for me is projecting overhead when considering hiring a new key staff member. For example, if I am in need of a commercial landscape salesperson (which I am actually looking for), I will need to put this salary into my overhead. But you really don’t know how that individual will perform in that position. So in a sense, you have to look at it as an investment that may or may not pay dividends. This is where it gets tricky because a salesperson will need some time to become established with your company, so at first they may not be able to bring in the sales needed to cover their salary. However, if they are good, after some time they should be able to help your company grow and cover their salary. That is the chance you take when budgeting for a new hire, and that’s why it’s so important to get the best talent that you can, even If it means making an investment and taking a chance.
– Steve Rak, Southwest Landscape Management, Columbia Station, Ohio
What do you wish you understood better about your numbers?
Individual department financials and how those relate to our overall company financials. We have divided our company into service segments and we try to run individual financial reports. But it’s tough to relate the value of each client through those numbers. For example, if we have a client that we do 5-10 services for, when we look at individual financials, some of those services may not be where we want them to be (with profit margins), but as a whole, the value of the contract may exceed the profitability we want to see. So, being able to evaluate and judge that has been difficult.
– Matt Boelman, vice president, Perficut, Des Moines, Iowa
Looking at the company as separate divisions is still something I struggle with. As we have grown, it has been a lot more difficult to look at the company as a whole from a pure numbers standpoint. Having said that, I still believe in a holistic approach to managing the numbers of an organization. At the end of the day, the company is either profitable or not.
– Steve Rak, Southwest Landscape Management, Columbia Station, Ohio