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The Grow Show: Increasing profit margin

Industry News

How to understand your customers and motivate your employees.

| February 7, 2011

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The Grow Show is brought to you by The Harvest Group and is a regular podcast series focusing on the difficult issues and challenges contractors face day-to-day in their businesses. The Harvest Group includes Bill Arman, Ed Laflamme, Steve Cesare and Cindy Code.
 
This podcast series is designed to provide the lawn and landscape professional with targeted ideas that you can immediately implement into your business. The goal of The Harvest Group is to help you become more efficient in your business and, most importantly, more profitable.
 
For the foreseeable future, The Grow Show will continue to provide specific tips for business efficiency and increasing gross margin. Remember, if you missed any of these podcasts, you can listen to them at www.lawnandlandscape.com or at www.harvestlandscapeconsulting.com.


1. Customer Selection Criteria System
•    Get the right customers under the right conditions.
•    Have 5 to 7 criteria in place to do business with a customer. These act as a “green” light or GO, or as a “red” light NO GO/STOP.
•    These guidelines should be iron-clad in order to work with the customer.
•    Put them in writing and ask yourself if these criteria will be met before doing business.
•    Examples: Do they have $$ and pay their bills on time?
•    Have they shown some loyalty to service providers?
•    Do they understand the value of a well-cared for landscape to their business?
•    Shared values: win/win mutually beneficial relationships.
•    Specifications are clearly written with little ambiguities: what is extra vs. ongoing maintenance?
•    They are “head-counters” vs. performance-based thinking with no way to make $.
 
2. Selective Deletion of Loser Jobs Process – “The customer is always right, but you may not have the right customer.”

You know you have the wrong customer when:
•    When it’s more take than give and take.
•    When they shop out your extras, or perform them with their people or others.
•    When they “shop” price regularly and go out to “bid.”
•    When they pay your invoices slowly and you have to “chase your money.”
 
Review jobs and customers on a regular basis and determine your game plan for them.

3. Rewards and Recognition Program – It’s not all about the money, but it helps. Remember that systems drive behaviors.

What behaviors do you want to drive?
•    Safety
•    Teamwork
•    Serving the customer
•    Great new ideas that help the company increase the ability to take on capacity and growth
•    Innovation
•    Quality
•    Productivity; gross margin

Getting Started:
•    Start with suggestions and ideas to get more productive.
•    Improve your work quality and consistently deliver, plus one.
•    Improve efficiency while delivering quality.
•    Reward quantity of work produced by base wage ranges.
•    Reward     quality of work produced (by customers expectations and by internal standards) with a balance of meeting or beating the direct costs budget.
•    These need to be measured objectively, regularly and easily administered.
•    Try for at least a quarterly process to recognize and reward those achieving the goals set forth with quality of work and the efficiency of the work performed.
•    Get the crew leaders/foremen to understand the importance of delivering quality consistently, and to deliver it productively.
•    Target your foremen level with these rewards along with your crew members.
•    Consider offering a bonus system for your foremen based on the workload they have and the metrics established around quality and productivity or gross margin.

The sooner you get your crew members thinking like this, the sooner you will have your whole team looking for ways to work more productively.

 

 

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