Slow down. Build a sales process.
“In this business, there’s so many pieces to the puzzle; there’s so many moving parts. They get inundated and don’t know where to turn,” Ed says. “They’re just running in circles. They just don’t stop and think about what needs to be done in a methodical way. These guys are trying to do everything, and feeling pressure from all sides.”
Ed Laflamme and Bill Arman
Determine your costs and build gross profit margin into your bids.
“The common thread is none of them know how to estimate and price a job. I’m just amazed how they arrive at their pricing,” Bill says. “They have a basic concept: They guesstimate how many hours and multiply it by their charge-out rate, but they don’t know their costs.”
Separate your divisions to find unprofitable work.
“Virtually every company we come across, 99 percent of them, the P&L is worthless. It’s like a big pile of spaghetti. We have to pull all the spaghetti out and put the meatballs on the side,” Bill says. It’s only when an owner can analyze the maintenance, enhancements, irrigation and lawn care divisions separately that he or she can identify where the problems are. “Drilling them to separate profit centers lets you know which sides are making money and which aren’t,” Ed says.
Pay attention to your vehicles and fix those dents.
“Your trucks are a marketing tool,” Bill says. “What happens is they defer maintenance, then it starts accumulating then it’s impossible to make your fleet look good because it costs $20,000.” Thinking a truck is just a way to get to the job is short-sighted. “They don’t realize what their customers are seeing, what the public is seeing,” Ed says. “The impression to the customer is bad, and the people who are working for you don’t like it. It’s a bad impression, culturally.”
Get better customers.
“I use a pond analogy. I can look in a lake and see if there’s fish. An active, live pond has freshwater coming in, stinky water going out. Don’t let your pond get stinky,” Bill says. “You have to have good work coming in. A lot of these guys will hang onto these low margin jobs because it contributes dollars to cover the overhead. … They work more to make less money. It’s a dangerous thing.”