©iStockphoto.com/Victor SoaresA back-to-the-basics state of mind and creative business attitude will go a long way toward maintaining steady revenues in an extremely tough market. Now that customers have responded to economic woes by slashing unnecessary services from their budgets, only lean-running, focused operations will survive.
But that’s the way it always should be.
“Everyone is being pulled in a thousand directions, and they have to emphasize the basics,” says Jim Huston, president, J.R. Huston Enterprises, Englewood, Colo.
Huston created the profit-and-loss charts of accounts you see in this annual Benchmarking Your Business Report. Borrow a page from this playbook (charts on pages 5-6) and get your business on track to weather the storm in 2010.
Huston says the emotional pressure from this economy can tempt business owners to “chase rabbit trails,” but the key to success is simple as it ever was.
“Price it right, produce it right and produce enough of it,” Huston says, reciting his mantra. For landscape contractors, this means estimating jobs properly, achieving maximum operational efficiency and marketing to generate sales.
The last part – “produce enough of it” – is what landscapers are struggling with this year and next. In response, some will go back to the drawing board to reduce costs in areas such as labor and materials. And the equipment wish list is on hold at many companies.
But not all businesses are struggling. According to Lawn & Landscape’s 2009 Benchmarking Your Business Survey, 67.1 percent of respondents expect to increase sales revenues in 2010. Only 9.2 percent expect a decrease, and 23.7 percent plan for no change in revenues.
And certain regions are more burdened by the economy than others. For instance, Aaron Jung, owner, Horticultural Impressions in Plantte City, Mo., says construction is “relatively good” in his area, and while the average size of design/build jobs has decreased, the phone is still ringing.
Because each region of the country is experiencing a different kind of recession – some hit harder than others, Huston strongly advocates double-budgeting.
“We don’t know what will happen in 2010,” Huston says. “Some business owners are actually doing OK, some are on track. Others are going into 2010 saying, ‘We hardly have any (business) sold,’ and they are working off backlog of what they sold a year ago.
“Plan for a repeat of 2009, but have two budgets,” he emphasizes.
Create two documents: a set of numbers portraying a best-case scenario and a less-optimistic budget that outlines expenses in a worst-case scenario.
In the long- and short-term, budgeting will help you:
- Make difficult HR decisions. “If you have good, analytical data and you know where your business stands, that information can help (ease) the emotional aspect of making tough decisions,” Huston says.
- Adjust in a dynamic market. “We need a solid foundation to measure performance and know quickly if we are on target or not,” Huston says.
- Estimate jobs appropriately. Knowing the true cost of doing business will ensure that you price for profit.
The author is a freelance writer based in Bay Village, Ohio.