Landscape business profit & lossChances are, you started your business because you’re passionate about landscaping. Not because you are passionate about accounting. While you know that staying on top of the financials, and making better decisions is key to your profitability, it may be a struggle to do so.

After all, very few landscape company owners have a strong business background. You know a lot about your trade and about producing and maintaining spectacular landscapes but you may not know a whole lot about maintaining financial reports.

Because of that, you may be worried that you’re not turning enough profit for your business. You want to be able to track numbers more easily and make better decisions based on priorities—and on data. But you may not even know where to start.

The first step to making a landscaping business profitable is to have a better understanding of your landscaping profit and loss, and what impacts it the most.

Understanding your profit and loss can be incredibly useful when it comes to keeping a good pulse on your business—knowing where it is succeeding and where it is struggling. Armed with that information, you can take the steps needed to be more profitable.

Let’s look at four areas that have a big impact on landscaping profit and loss for your business, and how they can be improved upon.

1.Better Estimating to Improve your Landscaping Business Profit Margin

Accurate estimates are so important when it comes to your company’s profitability. But there are a lot of areas where estimating can go awry. Whether material is accidentally left off of the estimate or labor hours were miscalculated, when estimating errors are made, it means a direct hit to your landscaping business profit margin.

best-green-industry-software-landscape-buisness.pngMany landscape business owners who have been in the industry for a long time do “gut estimates.” They have a sense of what they should charge and they run with that. While experience is obviously valuable and can even be accurate a lot of times, at the end of the day, it’s still a guess and not a fool-proof method. In order to truly ensure you are making a landscaping business profitable, you must use hard data to generate your estimates.

Spreadsheets are also used frequently for estimating. Justin Boren, vice president of business development for Grass Groomers in Reynoldsburg, Ohio, says that prior to using landscape business software, the company would do all of its estimates using Excel spreadsheets. But he says that tracking data on paper isn’t always effective.

“We did our estimating and proposals using paper spreadsheets,” Boren says. “But when you track data on paper, it’s easy for things to get missed. Even worse, sometimes you forget to do it. We might have had all the information from a job but nobody ever entered it into the spreadsheet. Things would get busy and it would be the first task to be pushed to the wayside. That often meant we weren’t getting accurate numbers.”

Of course, when you put no data in, you get no data out and there’s simply no way to keep track of how things are going. Boren stresses the importance of keeping up with data in order to make accurate estimates.

2. Mistakes and Callbacks Kill Profitability

Efficiency has a lot of impact on your landscaping business profit margin. The more efficient you are, the more profitable you will be. However, mistakes and callbacks are a huge blow to your efficiency. Anytime that you need to return to a job site because of a mistake, you are losing time and money. In order to be making a landscaping business profitable, you must be employing efforts to reduce callbacks.

The following efforts could help.

Employee Education

Landscaping company meetingBetter education and training for your technicians should result in fewer callbacks. If you’re getting a lot of callbacks, you may need to re-think how you educate your people. Do they need refreshers? Would creating checklists or job task overviews help ensure everything is getting done?

Well-Maintained Equipment

If your techs are well-trained and doing everything they’re supposed to be doing, your callback issue could be related to the equipment they’re using. Prevent this by regularly servicing equipment and making sure that everything is operating as it should be. Creating a system where you can track what’s been serviced and what’s due can be helpful in this effort.

Realistic Expectations

Sometimes callbacks are a result of unrealistic customer expectations. If this is the case, none of the internal changes that you make are going to be effective in reducing callbacks. Instead, you may need to do a better job of educating the customer. If they believe a certain service is going to work overnight, and it’s actually going to take several weeks, you need to be more clear.

3. Identifying the Winners (and Losers) in Landscaping Profit and Loss

research-button-sales-survey.jpegKnowing which jobs are bringing in the most profitability is key data that you need for your landscaping business profit margin. But perhaps even more important is also identifying the losers to know your landscaping profit and loss.

Boren, of Grass Groomers, says that the company has always been profitable—but they walked a dangerous line by not knowing exactly where that profit was coming from.

“We knew we were making money, but we didn’t know which jobs were winners and which were losers,” Boren said. “Even though we were coming out ahead, we still had jobs that were losing money. Ultimately you want to get rid of those losers and turn all of your jobs profitable.”

Of course, it’s important to look at the big picture. When evaluating “winners and losers,” Boren says they look at all of the profit centers. For instance, one account may not be as profitable on the maintenance side but if they do a huge snow business with them or maybe they spend a lot on enhancements, Grass Groomers would definitely want to keep that account.

However, when they identified jobs that were not profitable, Grass Groomers either increased their rates or politely declined the business. As hard as that can be to do, Boren says it’s a necessity.

“You don’t want crews on site unless you’re making money,” Boren says. “It’s a liability just to be on site and if you’re not profitable, why even put your business at risk?”

4. An Ineffective Billing System Hurts Business

grassgroomers.pngBilling can also have an impact on landscaping profit and loss. If you are forgetting to send bills for an add-on service or failing to include everything you did on an invoice, it’s going to take a chunk out of profitability.

Boren says that prior to using landscape business software, it was more likely that bills could “fall through the cracks.” They wouldn’t get sent out quickly. Grass Groomers needed a streamlined way from projects to get done from start to finish with no opportunity for anything to get missed.

“Landscape business software has been the key to streamlining that process,” he adds. “We are able to see a project through until the very end when it goes right into billing. As a result, we’re able to be certain everything is getting done.”

How Landscape Business Software Impacts Landscaping Profit and Loss

landscape-estimating-software-team.jpegKnowing that they needed to make some changes in order to get a better grasp on their profitability, Boren says that Grass Groomers implemented landscape business software to help run their business. The result has been a much clearer picture of how their business is performing. Boren says that landscape business software has made it possible to be much more precise in their review of landscaping profit and loss.

“Truthfully, we would not be able to be as profitable without landscape business software,” says Boren. “It has allowed us to dial-in our job costing in a way that simply wasn’t possible with paper spreadsheets. We are now estimating hours and tracking them continuously. And we are constantly evaluating the profitability of all of our jobs and making ongoing decisions about their contribution to the bottom line. The level of accuracy is not even comparable to what we were doing with paper spreadsheets.”

If you are struggling with your financials, then you may not have the right tools in place for your business. Or maybe, like Grass Groomers, you know that you’re profitable, you just don’t have the precise data that you need to take your business to the next level.

Landscape business software can be the support that you need to go farther. It can help you to make smart decisions that will ensure profitability. With software doing the heavy lifting and crunching the data, that means you can spend more time doing what you know and love—landscaping—and spend less time worrying about the financials.

If you’d like to find out more about how Asset can give you a clearer picture of your profit and loss, and make you more profitable, then give us a call at 800-475-0311 or contact us for a free demo.

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Image Sources:  Grass Groomers, Neave Landscaping

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