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The winter months provide an excellent time for many contractors to step back and analyze their businesses.

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January 3, 2020

Travels with Jim follows Jim Huston around the country as he visits with landscapers and helps them understand their numbers to make smarter decisions.

Jerry was a new client. He had been in business for over 30 years with his full-service landscape company in the northwestern United States. Annual revenue was in the $2-3 million range. He had been operating at just over break-even for many years, and he knew that he needed to make some personnel changes as well as upgrade some of his software. In addition, his middle managers were under-staffed and constantly in crisis mode. As a result, Jerry and his company were unable to take advantage of a very robust economy. Jerry wanted me to review his operation and give him recommendations regarding his staffing, software and pricing. In addition, he wanted me to benchmark his company and compare it to other companies both locally and nationally.

Pricing: Jerry’s pricing per man-hour was pretty accurate. However, like so many green industry contractors, he wasn’t focusing on the revenue that each maintenance, enhancement and construction crew needed to generate each day. I recommended that he and his managers track every crew’s daily performance to ensure that they were achieving their daily revenue goals.

Staffing: One of the reasons why Jerry’s company was operating at break-even was because his company wasn’t structured properly. Jerry was overworked, and his current managers were insufficient in number. This caused two problems. First, maintenance accounts weren’t properly and consistently monitored. Hence, customer satisfaction was down.

Second, because the current maintenance manager was overloaded, he didn’t have time to sell enhancements. This really hurt profitability because enhancements were (and are) one of the most profitable services that a company provides. The current manager was also too busy to pursue new maintenance accounts.

The solution was to train up and promote a current crew leader to the position of project manager. The project manager would be responsible for selling and managing smaller installation jobs and maintenance enhancements.

This would lessen the load on the current maintenance manager and free up his time to manage existing accounts and sell new business. It would also ease Jerry’s workload and allow him to focus more on his own tasks.

Benchmarks: Company general and administrative (G&A) overhead costs were at 28% of sales, which was 3% above the desired 25% industry standard. However, making the aforementioned management adjustments should increase revenue and bring G&A overhead costs in line. Daily revenue averages for maintenance and installation crews and for the irrigation service technicians were low. The 4-man maintenance and 2-man enhancement crews needed to aim for just under $1,400 and $1,000 (excluding materials) respectively per day. The irrigation service technicians needed to bill $600 each per day (excluding materials).

Software: The company was already in the process of implementing a business software, and I recommended that they fully implement it for managing their installation projects. To manage maintenance accounts, a different business software would be a good fit.

The company’s current software would work well with both programs; however, I recommended that the chart of accounts being used be revised to show revenue and direct costs (materials, field labor, field labor burden, truck and equipment, rental equipment and subcontractors) for each division.

Implementation. Jerry knew that during the season he was facing the “tyranny of the urgent” and that he needed to detach himself from the daily minutia and gain a more comprehensive perspective for his company.

So, he and I implemented a budgeting and benchmarking process to compare his business to similar ones. These tools also gave us the ability to review all of his pricing and to establish daily, weekly, monthly and yearly revenue goals. They also gave us the ability to make the necessary management personnel adjustments.

The winter months provide an excellent time for many Green Industry contractors to step back and analyze their businesses – to gain perspective of what worked, what didn’t, and make necessary changes.

It’s a great time to make long-term adjustments that can significantly improve short-term performance. Short-term crises aren’t fixed with short-term (quick) fixes. Take time this winter to do some long-term planning and amplify your vision. Throughout 2020, you’ll be glad that you did.

Contact Jim Huston at jhuston@giemedia.com