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The last area of a budget business owners want to trim is labor. That’s when numbers get personal. Labor is the largest expense for most landscape businesses, especially for smaller organizations. It’s also a risky expense because you’re dealing with humans, and because a tremendous amount of resources is poured into training and developing the best cast to represent your company.
But sometimes, you’ve got to let all that go. Especially if the numbers tell you so.
Jim Huston, president, J.R. Huston Enterprises, Englewood, Colo., tells of a business owner who made the tough decision to lay off his general manager, who had worked at the company for 10 years. “With revenue being down, they felt the organization could get along without this position,” Huston says, emphasizing that a solid analytical base (such as the P&L charts on pages 5-6) can back up these difficult choices.
People are one of the most “adjustable” expenses on a budget – much more so than a building mortgage or lease, insurance or equipment loans. “Many business owners hold on to office staff too long in periods of rapidly decreasing revenue,” Huston observes.
Eric Brand reconfigured his crews mid-2009. He now runs five two-man crews rather than six three-man crews. He discovered that an extra person on a crew made a job less cost effective. “We realized that on 90 percent of jobs, a two-person crew was the way to go,” he says.
Brand, owner of P & L Landscaping in Merrimack, N.H., also moved to a four-day workweek. This was an adjustment for employees who would clock 50-plus hours per week.
“I feel more obligated to make sure the company survives and that they are still employed vs. maintaining 50-hour weeks and soon we are out of business and can’t support them,” he says.
Five percent of survey respondents are considering a four-day workweek for 2010. Twelve percent of companies currently operate this way.
Salary freezes and reconsideration of paid holidays are other ways that landscapers are tightening labor costs without shedding manpower.
Chris Eckl, president, Earthtones, Atlanta, offered slight raises to field workers but held pay steady for salaried employees. They understood his decision. “It just doesn’t make sense to be throwing raises out there this year when everything is so tight,” he says.
Other “people business” that worries landscape contractors going into 2010 is the availability of skilled labor. John Polito, owner of Greener Image in Garland, Texas, draws from a pool of construction labor to staff his maintenance crews. “With construction down, the work pool has stabilized,” he says, meaning there are plenty of quality employees to hire.
“But if the housing market comes back, labor will be a real concern for me,” Polito continues. He gives workers an option to be employees or independent contractors. When they opt for the latter, Polito saves money and workers can gain more hours without driving overtime expenses.
Polito is spending more time in the field these days, noting that he “took off the seat belt” to inspect jobs to ensure customers get what they are promised. With so many low-bidders out there, he doesn’t want to give clients reason to choose a competitor.
Meanwhile, for companies that are cutting their employee bases down to bare minimum to weather the economic storm, work hard to develop strategic alliances and to network with companies that provide different green industry services. These partners can evolve into a valuable referral base, says Judith Guido of Guido & Associates. She knows of companies that have released 70 percent of their workforces.
Guido also recommends evaluating up-and-comers on your team who will keep business operations running in tough times and provide a growing bases of leaders.
“Your ‘A team’ – your top producers – will wear more hats,” she says. “But there is technology that can streamline and minimize the amount of people it requires to perform certain functions, everything from back-office technology to salesforce automation technology. There are tools to help you really analyze and understand your numbers.”
Even the most personal side of business – your people – requires that foundation of numbers so decisions can be properly analyzed.
The author is a freelance writer based in Bay Village, Ohio.