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Ft. Lauderdale, Fla.— Having a Master’s in Business Administration degree is not a necessity when dealing in the green industry. But a fair amount of business smarts is a must for owners to grow their green profits and find lasting success in the landscape world.
That’s what attendees of Lawn & Landscape’s School of Management conference in Ft. Lauderdale, Fla., were reminded of again and again.
And while there was no sign of a business textbook or a comprehensive final, a classroom of attendees scraped through a 90-minute business course – taught by business consultant Arnold Grundvig – to beef up their management skills. Although diplomas were not the end result, “students” came away with pages of notes and a better grasp of their role in the growing industry.
Grundvig, author of The 90-Minute MBA, shared the following business basics:
Beware of Embezzlement.
Banking surveys show that one in four business owners are being embezzled. And since there is no way to cut that risk as long as employees are in the picture, contractors need beware.
“The strategy is to eliminate the opportunity and to make it more difficult to cover up the theft,” Grundvig explained.
He noted that as many different people as possible should handle money within a business. Specifically, he suggested giving the vault combination out in two halves – requiring two people to be at the vault together. Planned conspiracy is required to break down a two-person system.
“Having a system in place reduces the chances of embezzlement significantly,” Grundvig expounded.
Creating a system to guard against embezzlement can prevent a company from reaching bankruptcy as well, Grundvig noted. Although stories of embezzlement may not seem all that common, they frequently lead to bankrupt devastation. In fact, one in three businesses that declare bankruptcy get there through embezzlement.
“It’s a situation where desperation meets opportunity,” he said. “Anyone can become an embezzler.”
Understand Profits and Cash.
Business owners must remember that cash pays the bills, not profit. Thus, cash management is key to a successful bottom line.
As Grundvig explained, managing income means tracking how much a company expects to receive and how much it expects to pay out. That information should be added to the appropriate spreadsheets – and monitored carefully.
Some contractors may prefer to pull in a money-minded professional to handle the details of company finances.
“Accountants are worth their weight in gold as long as they’re not bean counters,” Grundvig noted. “You need to have a good accountant – one who has insight from the numbers he crunches, not just one who hands you a stack of numbers.”
Control Costs.
Running a cost-conscious business means keeping expenses in check. And with the cautious economy, that may require changes in a company’s budget.
“If you are looking for a short-term way to control costs, cut your overhead,” Grundvig outlined. “If you’re looking for a long-term fix, increase your revenue.”
In short – cost can crush a company if they go unchecked.
Grow Up.
Growth is a key factor in long-term success.
According to bank surveys, two businesses in five make it through six years. And for those companies that grow by more than 10 employees, that failure rate drops to less than 22 percent.
So, growing means surviving.
But remember: A company should not just grow for the sake of growing; it should grow based on a perceived opportunity.
Sometimes such opportunities come cloaked in crisis, Grundvig averred. And often business owners don’t become creative until they are forced to.
Sell Up.
A company should maximize its possible revenue from every customer by offering multiple services.
“Sell more to existing customers,” Grundvig asserted. “Up the money you make on every call.”
He encouraged contractors to upsell their services from day one. That means offering every available service from the initial phone call, rather than waiting to add more in the future.
Keep Employees Happy.
Employee satisfaction is key to a pleasant work environment. Business owners should consider three factors that generally determine employee satisfaction:
1. A good working environment (the definition of that varies within industries and among businesses)
2. Good, adequate tools
3. A backlog of work to do
Notice that money is not a factor in creating satisfaction in the workplace. As Grundvig noted, employees are not as consumed with thoughts of cash when they are satisfied with their work.
“Employees need to be treated like volunteers,” he shared. “Thank them for their work. Listen and pay attention.”
Know How to Hire.
“Do you know how to hire?” Grundvig asked the roomful of contractors. He then offered a few tips to improve the hiring process:
1. Three people should interview candidates during the hiring process: the owner, a supervisor and a would-be coworker. To follow up, the owner should interview them again.
2. The best interview question is: “Can you tell me about yourself?” Just listen. If the candidate says something the interviewer would like more information about, the skill of reflective listening can be used to get more insight. Reflective listening refers to the practice of repeating a word – as a question – said by the interviewee to encourage further discussion about the topic. This generally encourages the job candidate to go into more depth about the previously mentioned subject without uncomfortable prodding.
3. The last part of the interview should have the interviewer asking the potential employee to describe – in detail – a typical day on the job. This is the time to be sure the candidate understands exactly what is expected.
Bank On It.
“If you need one bank, you need two,” Grundvig asserted. He recommended every business have a backup, allowing for various options when the time comes to ask for a loan.
When going to meet a banker, a contractor should “dress to impress,” he noted. Grundvig also suggested taking a personal financial statement.
The author is Assistant Editor – Internet for Lawn & Landscape magazine and can be reached at aanderson@lawnandlandscape.com.