Benefits of Landscape Design Software

Benefits of Landscape Design Software

Design software can save you time, give you more flexibility and increase your sales. So why aren’t you using it?

 

Drawing by DuChene Design Solutions using DynaSCAPE Design and Color

No one likes change, but, like death and taxes, it’s one thing you can count on in life. You can’t stop it, so why fight it, right? But fear of change is exactly why the use of design software is not as widespread in the design/build industry as perhaps it should be.

Patrick DuChene knows firsthand the benefits of design software. As the owner of DuChene Design Solutions, which provides design services to landscape design/build companies, he has been using it since 2006. At that time, he was running a large landscape design/build division and had multiple responsibilities. He felt that hand-rendered designs were starting to become a drain on his time.

Check out the full article in Turf Design Build magazine: http://www.turfdesignbuild.com/technology/landscape-design-software-benefits/

Case Study – Earth Turf Wood – Accuracy

Case Study – Earth Turf Wood – Accuracy

Case Study: How Earth, Turf, & Wood estimated and managed a 6-month-long backyard paradise project, accurately and profitably

Company President, Jarod Hynson, says that DynaSCAPE Manage360 was the tool they needed to handle such an ambitious project and keep it in the black

THE CHALLENGE

Have a look at the gorgeous backyard paradise project showcased in this YouTube video and ask yourself this: if it had been your landscape company’s project – which required six months, two full-time crews, numerous additional contractors, and almost 150 labor codes – how would you have managed it?

More to the point, how would you be able to estimate it, track it, and complete it in a way that remained profitable, bringing the same profit margins in at the end that you had estimated at the beginning?

That was the challenge that faced Jarod Hynson, President of Earth, Turf, & Wood in central Pennsylvania. Landing a job of that size was another high in his company’s impressive list of achievements – one of their top five largest jobs to date, he says – and managing it required a significant amount of time, attention, and accuracy in order to keep the project on track and profitable through all of the requirements and change orders that a job of that size involves.

THE SOLUTION

Luckily, he had some help. “We used DynaSCAPE’s Manage360 software extensively for this project,” said Mr. Hynson. “We tracked every minute of every day in it, for production.  And we estimated the whole thing with it, from the beginning.”

In fact, it’s because his company had been using Manage360 for several years already that they were even able to take on such a large job. “I wouldn’t have done anything of this size without having a program like Manage360 to help me deliver the proper estimate,” he said. “On a project of this size, if you don’t have the estimating down right, you could literally cripple a company. I hate to say it, but you may not survive a project like this! You get so far upside down and all of a sudden there’s 20, 30, 40, 100 thousand dollars worth of hours and material that you didn’t account for in your estimate? That’s right off your bottom line. It’s extremely dangerous.

“We had a tremendous amount of man-hours slated for this job, and when we went into it, we leaned heavily on Manage360 to make sure that we came out the other side where we were supposed to come out. Because it’s like setting off in a rowboat across the ocean and hoping that you’ll find England eventually.

“And with Manage360, we did! At the end, we were very, very close to our original estimate of hours. We ran over in just a couple of areas, and that’s only because we didn’t have accurate data on two fairly new installation techniques that were kind of a pilot program. So we had to guess on those two work areas, and they were the only ones where we ended up going over in hours. But, now we’ve got accurate data on that kind of work too, to formulate new kits for future estimates.”

THE BENEFITS

Change orders made easy

A key feature of Manage360 that helped Earth, Turf, & Wood to stay on top of this backyard paradise project was the software’s Change Order module. “There were a significant number of changes, mainly upgrades, in this project, so we used the change order module quite heavily.  Not only did it allow us to maintain a certain profit margin that we needed to have on the job, but it also really helped us calculate the schedule, based on man-hours that we added with each of the change orders.”

How does it work? “Our landscape architect meets with the customer to discuss the requested change, and then we attach a production kit to it and formulate an estimate, which we can turn around quickly for the customer’s approval. We don’t start anything new on the site without a signed change order.

“We learned, over many years of doing it, that much of a pain in the neck as they can be at times, if you develop the habit of issuing a change order for every change request, it keeps everybody on a level playing surface. Even if it’s just a color change. It takes all of the unknowns out of the production, especially when it comes time for the final invoice. Because the final invoice should just be an affirmation of all of the change orders and the original contract that was issued for the job. Once the customers get used to our process, I think they appreciate it, because they know exactly where they’re at, cost-wise, on the project.

“And the software really helps us. At any point, we can go into Manage360 and see what change orders were approved and what change orders are pending. And it’s very accurate, because you’re using the same production kits that you used to formulate the original estimate for the job. So there’s a lot of consistency that flows through from the original estimate right through all the change orders.”

 

Accuracy, accuracy, accuracy

Like the real estate maxim about the importance of ‘location, location, location’, what Mr. Hynson points to most about Manage360’s value to his business is its accuracy.  “We’ve been using Manage360 probably for about four years now, and I would say in the last two years, we’ve really got this thing dialed in. To the point where we are within probably 1% of estimated man-hours in production versus actual. It’s extremely accurate. I just looked at a spreadsheet the other day to see how close we were annually on estimated vs. actual, and we’re very, very close.

“It’s extremely difficult to estimate a job of this size accurately.  That’s why we get many different sets of eyes on it. It’s a very big number at the beginning, and an even bigger number for the customer by the end, but when we dissect it, we know it’s right – it’s all there in the software. It’s all attached in man-hours.”

Timesheet__Crew_3_-_James__Wednesday__16-Sep-2015_What he means by “having Manage360 dialed in” is that in his opinion, its estimating accuracy is a result of them having monitored each job, compared estimated vs. actual, and adjusted the production kits when necessary. “If you’re not willing to commit to the timesheet and to tracking all of it, you’re just creating estimates. At the end of the project, you won’t be able to figure out why you’re over hours, and why your production is taking so much longer in the field than you originally estimated. It’s because you haven’t gone back in and adjusted those kits. You haven’t tried to find out what the true hours and materials really are on these things. Until you’re willing to commit to that, you’re never going to get your estimating right, because you’re never comparing. You’re just spinning your wheels.

“It frustrates me to no end when I hear Manage360 users who say they use it just for estimating. How in the world do you know if your estimates are right if you’re not tracking it in production on the back end?  Because that’s where you have to go back in and readjust your kits. Sure, it’s painstaking for a while. It takes months to get to that point. But once you get it there, it will dramatically change the way your company operates, and your bottom line.”

 

Detailed monitoring capabilities

Manage360 provides his crew with other project monitoring advantages as well. “We’re very strict about not spending customer deposits before they’re earned, and with Manage360, at the end of each week we can go in and look at the analysis tab on the job, see how much revenue was generated on that project the prior week, and then take that into account on our cash flow statements.

“Of course, this requires drilling it into the crews in the field that every minute of every day has to be assigned to a work area or cost code. It has to be. From punch in time to punch out time, every minute of every day has to be put somewhere. Then we enter that information – all the crews’ timesheets – into Manage360. On a daily basis.”

So there’s a fair degree of discipline required? “There is. You have to be committed to it. You really do. It’s like if you buy a brand new vehicle and you don’t maintain it, the pieces are going to fly off of it in no time flat. To get the most out of the program, you have to commit to a process. Whatever you put into it is what you’re going to get out of it.”

 

The time savings are significant

Preparing an accurate estimate for a job of this size could take some companies days, but Mr. Hynson said that with Manage360, “we had some fairly accurate preliminary numbers on the original contract within 3 hours. It doesn’t take long when you’ve got all the production kits and the history. It’s just a matter of assigning different kits to different work areas.

“People are blown away when I say that with Manage360 I can sit down and estimate, say, a half-million dollar project in just a few hours and be very accurate with it. It comes down to tracking and being diligent. There are companies that would spend weeks with it and they still don’t know! We base our numbers on 15 years of experience, and we track every minute of every day, so it’s not like we’re guessing.”

 

Your professionalism shows

3D Rendering of part of the project

3D Rendering of part of the project

Asked if the software helped them with their relationship with their customer throughout the six months of the project, Mr. Hynson replied, “Yes, I think so; they knew that we were very detailed and very accurate with what we proposed for them, and how we were willing to execute it. The customer could see that we’re very professional, and that that level of professionalism was going to be there from Day One all the way through to the end.

“The software also ensures that our change orders have the same margins as our original contract. We’re not a company that’s looking to make a ridiculous amount of money on change orders. We’ll treat you fair. Whether we add it in now or we add it in later, it’s going to be the same price. I believe very strongly in that.

“The customer appreciated that. And they were extremely happy with the final product.”

 

Good for jobs of any size

Mr. Hynson had one other piece of advice for landscape companies looking at Manage360. “I don’t want it to come across like it’s just a program for large projects. The best thing you can do is start with very small, five, ten or fifteen thousand dollar jobs and use the program for them. Get comfortable with it, and eventually grow into some bigger projects. I would say it’s a great program for all sizes of projects.”

For more information:

About Earth, Turf, & Wood: www.earthturfwood.com

About DS|Manage360: www.dynascape.com/manage360

Find out how you can achieve the same results!

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Landscape Specific Software

Landscape Specific Software

landscape specific software

Five Questions to Ask About Landscape Specific Software

by Dan Weaver, Account Manager, DynaSCAPE Software

ppi_cloud_based_project_management_softwareHave you ever created a landscape design plan and wondered if it was possible to automate a take-off to a full cost based estimate and proposal for your clients? If you answered yes, you are not alone. There are thousands of landscape companies across North America that share the same frustration. The cumbersome task of manually creating the plan, labelling the plan, re-creating the list for takeoff, comparing the list with your excel spreadsheet, entering formulas, square footages and hoping that you are accurate enough to make a profit, just isn’t the best practice. This process is time consuming and more importantly, isn’t accurate and detailed enough for landscape companies to know exactly how profitable their job can be resulting in lost profits and money left on the table.

The big question is are you accounting for all of your overhead? What about labour burden? What about all the extra little costs involved when leaving the yard in the morning, travel time and many other general conditions? Are you recovering all of these often forgotten expenses? Are you accounting for these expenses on your estimates and charging for them? In a lot of cases, NO! This process can be difficult to track and include on a basic spreadsheet and needs to be organized in one system.

Over the past 3 years, I have spoken with thousands of landscape business owners, contractors, designers, architects and estimators and all of them agree that this process needs to be automated and improved within the industry. These professionals are actively seeking a solution to speed up this process and work flow that will allow their companies to be more competitive, professional, profitable and efficient.

Here are a few things to think about when implementing a new system that will help your landscape business follow best practices:

QUESTION 1: Do you have the right tools?

RightToolsThere are many programs on the market that contribute to the day-to-day operation of your business. These products can vary from accounting packages, cost book systems, POS, CRM sales management, inventory management, design software and estimating software. The challenge is selecting the right product for your unique business needs. A lot of these programs are great for some industries but are often shared among several industries and are not specific enough for your operation. This raises the biggest problem when using multiple mass market software products. Often these tools cannot be tailored to your company’s operations and just don’t check all the boxes required to successfully run your operation. By using multiple systems that don’t communicate, it makes everyday tasks difficult to complete and can waste your time. Double entry ring a bell? How about losing data from one system that doesn’t import correctly to another? This is what happens when you use software not designed for your industry.

 

QUESTION 2: Do your systems communicate?

CommunicateWhen selecting software to help solve your pains, you should always ask the question about integration. Software can be very tricky to connect to everyday mass market/industry products like MS Word, Excel and accounting programs like QuickBooks. By having an all in one system that handles specific green industry best practices that “play nice” with other programs, is crucial. More importantly, how about integrating your specific landscape software so that everything operates smoothly and communicates under one platform. There are very few systems on the market today that streamline the green industry’s design process, to a full cost-based estimate right through to final invoice. I encourage and stress the importance of this integration when choosing the right program for your business.

 

QUESTION 3: Are you practicing the right systems/procedures?

When you invest in a software program that is specific to your industry and integrates as an all in one business management and design solution, you will have the advantage over your competition. You will experience a large list of benefits for your landscape business. One worth noting, is the creation of systems and procedures your business will adopt from implementing the all in one solution. Software like DynaSCAPE Manage360 and DynaSCAPE Design, has been created from professionals like you that include built-in industry best practices. By utilizing the system and its built-in best practices, the program will guide your company to follow these practices that are proven to help streamline your operations, become more efficient and profitable.

 

QUESTION 4: Why is it important that both the Design program and Estimate communicate?

Integration1By using a professional design solution that integrates with a cost based estimating platform will allow you to automatically label your design from your centralized cost book and then create a material take off directly into an estimate. Within 5-10 minutes of design completion, you have your proposal ready to be sent to the client. You can manage changes in your design and produce a new proposal easily and quickly whenever the client requests any revisions. This process will eliminate errors and allow for your team to trust every estimate that leaves the office. This will also speed up and streamline the overall process that will create more time for you and your team to focus on client and business needs.

 

QUESTION 5: Why is it important to have built in best practices that allow for systems to be built and followed?

BestPracticesBy implementing a business management and design solution that integrates together, will automate your work in ways that will help you run your company better. Programs like this are structured to help you follow the best practices in the industry, from the way that you estimate to the ways that you manage your sales cycle, recover your overhead and schedule your crews. With those best practices built into the program’s workflows and options, your landscape business can use the same professional estimating, job management, sales and management methodologies that the most successful companies use to ensure consistent profitability. Having a system like this will help you steer your company towards greater efficiency and bigger profits.

 

So what are you waiting for? Jump on the web and start researching how software can enable great work flow, create professional systems and procedures, and how to invest in the right tools that will take your business to the next level.

High performing companies go the extra mile

High performing companies go the extra mile

When I started at DynaSCAPE, I came on to manage all aspects sales and marketing. As we’ve grown, so have I. I began meeting with as many different landscape companies as I possibly could, learning and absorbing everything. Taking all of the best parts and distilling it into our business management software. I’m now meeting with many landscape companies every year, understanding what their challenges and successes are. It’s been some of the most industry enlightening time for me.

What I can tell you is that there are some very high performing landscape companies out there. The commonality in my mind is that each company represented here tonight performs on brilliantly high level.

Let’s deconstruct these high performing companies for a moment. Each of you have something in common:

  1. Strong Values
  2. Healthy company culture
  3. Great people

They have strong values. Including:

  • Leadership
  • Collaboration
  • Integrity
  • Accountability
  • Passion
  • Quality

They have a healthy culture in which all members of the team engage in. Company culture is at the heart of competitive advantage, because it determines how things are done and how people behave; it is the hardest thing for competitors to copy. High performers create an environment with a unique personality and soul, and with a passion for performance so that people make the right decisions and do the right thing wherever they are in the business.

They have great people. Engaged people are much more productive and way more pleasant to be around. They tend to subscribe to a high degree of innovation and pour a significant amount of their energy into to the company. They give you their best and they tend to stay.

ND Landscape Inc

At the Design Build Install Symposium in Boston, MA last month (hosted by the National Association of Landscape Professionals), the group was invited on a tour of ND Landscape Inc. A full service landscape company that is wholly invested in making their business a great place to work. Here’s some pretty interesting stats:

  • 33 years in business
  • Average customer tenure is 17 years
  • 4 employee appreciation events per year
  • 3 annual company wide meetings
  • 80 employees
  • 52 employee training events per year
  • Average employee tenure is 12 years
  • 2 dedicated owners

During the tour, it was immensely clear that every team member was invested in the culture of the business. Every team member wearing a professional uniform with pride. In each truck, and each desk was an image of 27.2. Now the marathon in Boston is world famous and the marathon culture in Boston is contagious. There are 26.2 miles in a marathon and everyone at ND Landscape Inc is dedicated to going the extra mile in everything they do. Using 27.2 as a reminder of that philosophy is very inspiring.

 

About ND Landscape Inc.

For over 30 years, ND Landscape, Inc has been responsible for some of Essex County’s most distinguished and innovative landscape projects. Our reputation for creative design, quality construction, impeccable maintenance and dependability has resulted in client referrals that create the majority of our new business. ND Landscape specializes in residential and commercial design & build, landscape maintenance, and snow and ice management.

 

12 key sales tips to increase your close rates and your profits

12 key sales tips to increase your close rates and your profits

It’s as true in the landscape industry as it is in any other: without sales, you don’t have a business. A key goal for any landscape company that’s serious about planning for profitability is to excel not only in the work that you do, but also in your ability to regularly generate good work all the time. Here are 12 key sales tips that can help your business to improve both your sales closing ratios and your bottom line.

    1. Understand what your customers really need.
      Understanding your customers’ needs and what kind of work they really want from you is very important. If you can connect with them and come to a good mutual, positive understanding of the work to be done, the customer will feel more inclined to purchase from you. If you have ideas and input that you would like to add, start by setting the stage for your suggestions and recommendations by first asking the customer’s thoughts, and then expanding on them using your creativity and unique skills, never telling the customer what they need or what they like. It is their house and they are the boss.The key is to ask the right questions in exploring exactly what the client is looking for. Questions could be grouped in the following categories: how the property will be used; scope of work and budgets; customer likes and dislikes; customer priorities; etc.

Landscaper with couple

    1. Don’t drop the ball by not following up.
      Always follow up! If you show professional responses in a timely matter, getting back to customers promptly, it shows that you want to work for them and that they have your attention.Following up is critical to your sales success. Most of your competition will not follow up. This is an easy way to differentiate your sales process in your marketplace. Your follow-up process should be structured and enforced. This could include follow-up e-mails, thank you cards, phone calls and site visits.
    2. Execute weekly.
      As a salesperson, you need to be able to execute week after week, closing sales regardless of the size. You have to keep new work coming in constantly, even if that means generating your own leads.Hold a weekly sales management meeting. Have each salesperson report on the following: sold projects, bid projects, follow up, new business development, and year to date statistics.
    3. Whenever possible, close sales on the spot, face to face.
      If you have the opportunity to close small jobs on the spot, face to face, make sure you do so. Be prepared with either an automated estimating system or a spreadsheet that you can use to quickly calculate a small quote accurately. That way, you’re more likely to walk away with a cheque in your hand rather than just another small lead to put on your enormous to do list.
    4. Know what you do – and DON’T do – well.
      Establish what you do well, and what you don’t do well, by analyzing your work and HONESTLY assessing the work that you’re producing. For example, if you’re really not that good at building decks, either get some training, or stop offering to build them. Doing bad work gives you a bad reputation and is a headache for everyone involved. Do the work that you’re best at.
    5. Use a good sales pipeline tracking system.
      Managing your sales pipeline is very important for a successful sales team. Having a good system for organizing and prioritizing your leads will ensure that you don’t let any leads fall through the cracks or become less urgent to you. There’s nothing like an automated reminder to help you keep your clients on your radar, and to keep your company’s services on theirs.

Profit

  1. Present winning proposals.
    A carefully-prepared, attractive-looking proposal is your best calling card, a chance to demonstrate not only your great design ideas, but also your professionalism. Think of it from the clients’ point of view. If they’re comparing proposals from two otherwise similar companies, chances are they’ll choose the one that shows impressive hand-drawn quality, clear labels, plant photographs, attractive colours, subtle shadings and opacities, and 3D renderings. “Wow” is definitely the reaction you want to get from your proposals.The customer leave behind should be a bound document containing the following information: an introductory statement, a reduced copy of the plan, proposal, materials list and supporting documentation, testimonials, certifications and insurance certificates, company history and key employee bios, etc.
  2. Say no to lousy jobs!
    Closing sales but not seeing any profits? Saying no to jobs that yield very low profits, or no profits at all, is the first step in correcting that situation. The next is only choosing work that actually does make you money. To know whether a job will be profitable or not, you need a reliable system that lets you accurately calculate your break-even point on each and every proposal, beforeyou accept the work.Explain the process. At this point in the sale you have the opportunity to set the tone of the entire job and really explain how your company does business. This alone can sell a job, when people understand the next steps and understand what to expect it creates a much better relationship with the client and really helps close business. This is also when you would address what will happen if any changes for whatever reason arise in the job and that it may cost the customer extra money, so as to not hurt yourself if there is something out of your hands that causes the job to be more expensive, whether it be unseen terrain or an old septic tank. Develop a sweet spot project criteria list for your company. This would include who you would work for, the size of project, the type of project, schedule requirements, company profitability, etc. The sweet spot would help define what type of projects your company should be competing for. These projects will better suit your company’s strengths and give you a competitive advantage.
  3. Have a system for handling changes on the fly.
    Job changes on the fly can often be a great way to make a job even more profitable, but only if you’re handling these change requests efficiently and accurately. Tracking all the changes, and ensuring that they’re all ending up on your invoices, will make or break this as a profitable source of revenue.It is vital that change orders are effectively communicated before the work was actually completed. Many landscapers are afraid to discuss the actual costs involved. Unfortunately, this leads to customer dissatisfaction or will cost the company profits during a negotiation upon the completion of the project. The change orders should also have a separate payment schedule, that requires payment upon completion of the change order not the project.
  4. Show your company’s value.
    You may be promoting your company’s skills and products quite well, but are you also pointing out how much your work will benefit your customers? Help them to understand the true value and worth of your services. How does your expertise, or longevity in the landscape business, improve what they’ll get by hiring you? Don’t be afraid to point out how great it will be for them to have beautiful landscaping around their house or business, for example, and how easy it will be for them (or you) to maintain it. Sell the long-term value of your products and service, not just the cost.
  5. Gather and use references.
    Ask each satisfied customer for a reference after you’ve done the work, and keep a list of those references handy to show prospective clients. It’s a habit that not only motivates you to make sure all of your clients are thrilled with your work, but also develops a great reputation for your company that will help you to close sales.
  6. Go after repeat business.
    Create a system that prompts you to go after return business, especially (but not only) if you’re a maintenance company. When you’re phoning or emailing clients, remember to set up winterizing or spring openings. Make it easy for the customer to pre-book your services – it’s more convenient for them, and it guarantees you their return business. Set up a basic schedule that your customer can either confirm, or reschedule.Rule of Thumb – Make it easy for people to do business with you.

BONUS tip: When you lose a bid, find out why!
Everyone wishes they could win every piece of business that presents itself, but this is never the reality. Whenever possible, ask clients why they chose someone else. Finding out and cataloguing the reasons that you’ve lost jobs can be almost as valuable to your company as winning a single job. If you can understand losing trends, you can identify ways to improve your bidding process, and put in motion actions to prevent or alter those trends and turn more proposals into sales. You’ll never win every single job, but taking that losing percentage and cutting it in half or even one third can significantly drive up revenue and make your business more profitable.

Plan for Profitability: Using Metrics

The power of regular self-assessment: using metrics to identify problems, implement solutions and plan your company’s profitability in any economy

In our Plan for Profitability series, we need to ask ourselves the tough questions and give ourselves honest answers. This is a question that seems very simple but drives deep into your company’s inner workings: How Can you tell if Your Business is Profitable? The answer lies in having the right information at your fingertips. Merriam-Webster defines a metric as “a standard of measurement”, and that’s exactly what every company needs to be able to answer that all-important question: “how are we actually doing?”

The problem: many landscape businesses don’t have good metrics to gauge and monitor their businesses’ health and profitability.

Unfortunately, the first time that many landscape companies really know whether they’ve made any money at all is when their accountant hands them their tax return at the end of the year. It’s a very risky practice, but one that’s all too common. Instead of comparing their current year’s performance with past years, or better yet, with a budget, many owners will simply manage their business based on their past habits, their emotions or their “gut feel” for how things seem to be going.

To be successful, business owners need to have solid information that’s accurate, current and reliable. Then you can manage your business based on fact. Without good metrics, your only choice is to use a loose system, or no system at all, to decide how to hold people accountable, how to compensate based on performance, and how to improve your day to day business practices. To know if you’re going to be profitable at year-end, you really need to be looking at your financial data on a regular basis, and comparing that financial data to a budget that’s based on solid, reliable information.

The information that you’re using to make your decisions needs to be accurate and current.
Once you agree that you’ll need data to be able to make good decisions, the next step is to put the systems and practices into place that will ensure that the data you’re collecting is complete, timely and accurate. If implemented only half-heartedly, any attempt to gain business insights from your business’ data will be handicapped by information that’s either incomplete, inaccurate or out of date. So it’s very important that everything, every business activity and transaction, be entered into the financial system that you devise, regularly and promptly. Otherwise, if you run financial report like a profit and loss statement, you won’t be able to trust the snapshot that it’s giving you about your business, because important details haven’t yet been entered into the system.

How do you know when you’re in trouble? The first sign is often cash flow problems.
Without metrics, a lot of owners don’t really realize that they have a problem until it’s too late. In some cases, left long enough, the problem could be serious enough to put a company out of business. Often, the first indication that a business isn’t profitable is that it starts to have cash flow problems. It’s the first red flag: you’re struggling to make payroll each week, or struggling to pay bills.

An owner who is in tune with his/her business can look at the metrics and see if this cash flow problem is a profitability issue, an accounts receivable issue, or an overhead issue. As a result of the recession, a lot of businesses’ sales or revenues have declined in the last 3 years, and many haven’t made the necessary adjustments on overhead. Overhead as a percentage of revenue has increased significantly, and that difference is going to come out of profit.

On the other hand, a cash flow problem may be an indication that you have a poor accounts receivable system. In this case, where your business has earned but not collected the money, the solution is quite different than if cash is lacking because of high overhead. To distingish between the two, you need metrics.

Without them, by not looking at all of this data on a regular basis, by the time you realize that there’s a problem, you may not have the financial resources to get out of that situation. For example, a company in this situation could decide it needs a consultant to help correct the problem, but it can’t afford one. Or it can’t make payroll, or pay vendors, or pay its line of credit. It’s a slippery slope that can often be avoided with the right systems and information at hand.

The wrong solution: taking on non-profitable work to try to improve short-term cash flow.
Some companies try to improve the cash flow problem by asking “how can I bring in cash quickly?” and then starting to do work that’s not profitable, or to cut corners, or to do other things that may help in the short term putting a band-aid on the problem, but simply accelerate the decline of the company, because they’re not making good long-term decisions. So their short-term solution may allow them to make payroll this week, but does not fix the real problem. “Why can’t we make payroll?” is the question that will need to be identified and fixed before this company starts to be profitable again. If you take the short cut to get the “Non-Profitable job” you will inevitably run into issues like not being able to pay for materials at the job or pay your labourers to finish the job; it just spirals out of control at that point.

The right solution: understand the metrics.
Solid, reliable metrics will help you identify and correct the real issues that have led to that cash flow problem. They can help you to decide which part of your business is struggling. Is your overhead too high for the revenue you’re currently producing? Or, how profitable are the jobs that you’re bidding on? Or, job tracking may be the answer: if you’re looking at bid vs. actual on a job by job basis, you’ll be able to see very quickly which of your foremen are profitable, and which salespeople are bidding their jobs properly so that they’re produced with a profit, this makes cutting away the fat, the excess money being spent much easier.

Another important metric: what is our non-billable percentage? Every company has man hours that you pay your field people where you’re not actually earning revenue – things like training, company meetings, working on the equipment, working on the facility, warranty and punch list items. Things that are necessary, but the question is, how much time are you spending on those non-billable items? It’s a cost that you have to be looking at. A lot of companies are in the 20-30% range of the field payroll that they pay out that is not billable. So they’re not earning revenue with 20-30% of their field payroll. You want to be able to reduce that number as much as possible. Of course, you have to have meetings, do maintenance, do safety training, work on your equipment and keep your facility looking good. They’re all necessary, but are they being abused? Are you spending too much time on those non-revenue-producing activities?

Accounts receivable is another very common issue. In this case, it’s not that the company is not profitable, it’s that you’ve done the work, you’ve paid your payroll and vendors, but you haven’t collected the revenue for that project. A very common situation, it relates to poor accounts receivable systems, or to projects not being completed 100%, or to things like poor payment schedules where you are essentially bankrolling these projects. You should always be using the client’s money to fund any project that you’re working on, by collecting bigger deposits or front-load the contract a little bit so you’re always slightly ahead of the customers with regards to the direct expenses on that project. The better reputation your company has or better rapport you have with your customer the more you will be able to front load the contracts.

Of course, you don’t want to be discharging one debt by incurring another. You want to be using the deposit and other money that you received from a job strictly for that job. A cash-poor company will often take the money from one job’s deposit and use it for next week’s payroll, so when it comes time to start the work on that job, they don’t have the money to order materials or pay any sub-contractors.

Do you need software to see these metrics?
A smaller company, like the owner-operator who knows what’s going on with every aspect of the business, can probably get most of its metrics from financial statements and spreadsheets. Where it becomes challenging, and when you really need to use software, is when the amount of data becomes too much for one person to handle by themselves. Analysing a company is largely based on job costing, and the sheer volume of data from a larger company – one that’s working on jobs, tracking different job functions, getting good averages, being able to look at standard production rates – requires specialized software for job costing, bidding and estimating, simply because of the large volume of data involved.

Another important requirement, one that only software can meet, is the ability to manipulate all of that data. There are certain ways that you’ll want to group that data to give you the information that you want. For example, you might want to look at job profit by foreman, or by salesman, or by supervisor. Or compare your residential division’s profitability to your commercial division’s profitability. As soon as you get into that kind of analysis and start to manipulate the data, you need specialized software. When you start to look at the details of bid vs actual, and you discover that your costs were too high for a job, with the right software you can look at the details to determine where the problem arose. Reports that allow you to drill-down to the information that you need are essential for looking at multiple levels of data all at once, so you can analyze and assess all of it very easily. These are features that you’re not going to get from financial statements or spreadsheets.

Once you’ve corrected the initial problem, how do you stay on track?
To keep to a corrected course of action, owners and managers have to stay involved, which means that they have to be looking at this data on a regular basis. Also, they have to trust the data. Some business owners will make excuses or rationalize why things are the way they are, if the figures don’t agree with their own gut feelings. Typically, these excuses are external – it’s the economy, the competition, the customer, or the over-charging vendors – and such owners are not willing to look internally at their own systems, performances and people to see who is really Accountable. That’s what all of this data is for: to highlight the problems and solutions clearly, to give a point of reference for what or who is accountable.

However, the information has to be accurate, and you have to be looking at it regularly. For example, one of the key challenges with job costing information is, how do we make sure the field information is accurate? The foreman fills it out, and he gives it to a supervisor who’s been on that job site who can verify that the information is accurate before it is given to the data entry person. When the information comes in, the owner knows that the supervisor has looked at it, it’s consistent with what was actually done in the field, they trust that information and they trust that they’re doing that every day. However the owner should be randomly checking some of this information, going out into the field to have a look at some progress, looking at the work dailies, and looking at the reports generated. The key is to really understand what is happening in your business on a day to day basis. It’s the only way you’ll know there’s a clear connection between what’s happening and what the data is showing you.

If you’re looking at it on a regular basis, the trends of your data are more important than the actual data itself. The data is always the history of what’s just happened, and you can’t do anything to change that. For example, on your non-billable percentage, if you’re at 30%, there’s nothing you can do about the past. The key question for any business owner is, how do I improve that number? What do I have to change? How do I make sure that that trend is improving?

You have to understand the data.
Identifying trends in the information that you get is not always an easy task and owners or General Managers without formal training may have difficulty looking at the information and really knowing what the data is saying. A large part of the challenge is to be able to look at job cost information and group things in a certain way, for example like grouping our Job Types together so we can see how each crew is doing while building retaining walls, are we over-estimating hours under estimating hours, is one crew better then another, does one crew need training? These answers lead to other questions we can ask ourselves about our business like “What types of work should we be doing?“ “Who’s selling good work?” “Who’s producing good, profitable work?” You have to be able to understand how to read the reports, not only so that you can hold people accountable, but also so that you can have a performance-based compensation system. Some kind of profit sharing is an effective way to compensate the people who are making profits for the company, and also to make sure you’re not giving the people who are not making profit compensation that they don’t deserve.

That’s the real power of job costing, why it’s so critical to the day to day production side of the business, which can be very accurately tracked using that job cost information. This becomes more and more important as the business grows, and the owner becomes less and less involved in the production side of the company.

You need to make time for regular information gathering and data analysis.

Some owners will say they’re far too busy to do all of this analysis. The reality of the situation, however, is that owners have two hats to wear: salesman and owner. As owner, you simply must be working on your business as well as in your business. A lot of owners focus only on what’s urgent, not what’s important. The sales part is a day to day job function and responsibility. But owners also need to be looking at this metrics information on a consistent and regular basis, so they have a good handle on what’s happening to their company, particularly to the things that they’ve become less involved in. It’s absolutely critical that the owner dedicates a certain amount of time each day, week, month to look at the information, the fundamentals, and even visiting job sites, talking to customers and talking to your management people. It’s not just data – you’ve got to get some internal and external feedback on what’s happening within your company.

After they look at the numbers, what common things will a company change in order to become more profitable?
The specific strategy that’s best for your company will emerge from the numbers that you see. Among the things that your metrics may reveal as potential areas for improvement are the following:

  • They may show a lack of efficiency out in the field, such as one crew consistently showing higher overtime or underestimating labor. Possible solutions could include better supervision or raining for that crew, setting daily goals for the crew to reach their allotted labor hours without going over, or changing or reducing your crew sizes.
  • The metrics may show an excess of equipment inventory, which could mean it’s time to sell off some of your equipment,
  • High inventory costs could be an indication that you should reduce your material inventories, or find better ways to maintain your perishable inventories, like plant material.

Further strategies for profitability: the power of good reports.
Looking at your company’s overhead, you will want to look at which of your sales people are meeting their sales goals, and which are selling profitable work. You may also analyze the type of work you’re doing and identify which of those are also generating the most profitable work. You can also look at your overhead numbers, and if they’re out of line, look at things like advertising. For example, how much of your advertising is actually generating leads that result in profitable work? In other words, how much of your advertising is ego-based, and how much of it is performing well? Do you have a system in place to tell whether or not your advertising is working?

Another option is to cut overhead salaries, particularly if revenue has declined. You may switch your salespeople from salary to commission, cut back overtime hours, and/or cut back on some benefits. Some expenses, such as office supply expenditures and cell phone usage, can be cut back to a certain extent. Others, such as education and consulting, are important to maintain whenever possible.

The systems that you put in place in lean times will serve you well in prosperous times too.
Businesses need to focus on the long term, particularly when it comes to overhead. All companies go through peaks and valleys, and you need to invest in your company when times are tough, so that when the economy or your marketplace turns, you have the capacity to handle that additional volume, in a way that remains profitable. You don’t want your business to be growing so quickly when the economy turns that although you’ve added all kinds of new business, you’re actually losing more money than when the economy was struggling.

Companies that have poor systems in place may be able to get away with it when the economy is doing well. The problem is that when you have a company that is not continually improving, continually striving to get better, that’s exactly the type of company that can’t respond quickly enough to a downturn in the economy.

On the other hand, the owner that has a culture of continual improvement, in good times and bad, is the company that will likely survive in any economy. And in good times, it can not only be more profitable, but it can also grow while maintaining that profitability. Once you have the right systems, people and measurements in place, you have the foundation to be able to maintain your profitability, quality, and reputation as you increase your revenue numbers.

Summary: a self-assessment checklist
Every landscape company wants to be more profitable, and in this article we’ve outlined some of the ways that metrics can be used to regularly assess – and improve – the financial health and profitability of your business practices. Here’s a summary of the key points to keep in mind when applying these principles to your own business:

  • You need a system that will give you the metrics – that is, the standards of measurement – by which you can assess the financial health and profitability of your company.
  • The information that you’re entering into that system needs to be accurate and current.
  • Cash flow problems are often the first sign that you’re not running your business profitably.
  • Don’t take on more non-profitable work to try to improve short-term cash flow problems.
  • Make sure you understand what your numbers are telling you.
  • Check your non-billable percentage. Is it too high? Are there ways to reduce it?
  • Check your accounts receivable practices. Do your payment schedules ensure good cash flow? Are you using the client’s money or your own to fund the project?
  • Stay on top of your numbers by checking your metrics on a regular basis: daily, weekly, monthly.
  • Make sure the data that your system needs is being entered on a regular and timely basis.
  • Analyse your job costing to determine which crews, jobs, supervisors and salespeople are responsible for your best and most profitable work and base this on metrics.
  • Make the changes in your business practices that will correct the problem areas revealed by your metrics don’t just band-aid the obvious issue.
  • Use your metrics to promote a culture of continual improvement within your company.