Marty Grunder on Benchmarking

Benchmarking is something all smart business owners do. I’ve been doing it since I started my company more than 25 years ago. There is a formal way to do it and an informal way to do it. I’m going to share with you how I informally use benchmarking.

In my mind, formal benchmarking means you look at the industry averages and compare your company’s performance to the industry standards. Many of these numbers are available from PLANET. If you’re not a member, you should be. I want to share with you the main areas that I benchmark my company and the ones I work with across the country. None of these numbers I’m going to share with you are anything other than my opinion. The numbers are the ones my work and research have shown me are good for my company and my consulting clients to try and beat. I hope this helps you.

1. Revenue per employee in a design/build firm should be at least $80,000/full-time person employed. I have found that you must do at least $80,000 per full-time employee. If you are not close to that number, you’re not going to be profitable. Highly-profitable firms do as much as $135,000 per employee. How do you stack up? If you are in the maintenance business, you ought to be at $60,000 per employee. If not, you’re either not very efficient or need to raise your prices.
2. Revenue per truck should be at least $125,000/truck. I love using this number. I often use it to size up the competition. I can get a ballpark feel for what a company’s volume is just by counting how many trucks they have. Or I can at least tell what the maximum amount of sales the company is doing. I use this number for my own personal use to see how efficient my landscaping company is, and I use the number to share with my consulting clients to help show them areas they can improve. How do you stack up?
3. Sales professionals in our industry need to sell at least $500,000/year to pay for themselves. That’s the minimum; they ought to be able to do much more if your company is focused on client satisfaction. Good salespeople in our industry sell more than $750,000 a year and the best sell more than $1 million. I’ve even run into a few salespeople in our industry who sell more than $2 million a year. How do you stack up? How do your salespeople stack up? 
4. Smart landscapers spend between 1.5% and 2.2% of their gross sales on marketing. Notice I said smart. I’ve run into companies spending much more than this and I just don’t think that’s smart, and I’ve seen landscapers spending much less than this and I don’t think that’s smart, either. Sadly, a lot of landscapers can’t even tell you what they’ve spent and have not organized their approach to marketing.

Take a couple of moments this month and see how you stack up and drop me an e-mail with your findings.

Marty Grunder is a speaker, consultant and author; he owns Grunder Landscaping Co. See www.martygrunder.com; mail marty@gie.net.