The Landscape of Landscaping is Changing
With a revival in spending on home improvements, landscaping services have increased as more homeowners are taking on lawn and garden projects. According to IBIS World’s 2018 Landscaping Service Industry Report, annual revenue has grown to $93 billion, the industry employs over a million people and represents over 513,000 businesses.
Confidence in the industry continues to grow as more and more businesses start to enter the landscaping field. According to Lawn and Landscape Magazine’s 2018 State of the Industry report, the median revenue landscaping services company produced was $287,000 in 2017, while the average landscaping company produced $1.1 million in revenue that same year.
So, the question for growing landscape design businesses becomes, how do you scale up your landscaping business? Growth is achieved through many ways, but often landscape businesses struggle to push themselves over that next ceiling line due to many different factors including:
- Lack of budgeting
- A weak sales funnel
- Outdated data
- Poor time management
In this article, we’ll explore each of these challenges in the landscaping industry and discuss ways to overcome them using landscaping business management software and landscape design software. With new, automated tools, faster designing techniques, and better insight into your landscaping business, you’ll be able to push through that ceiling, win more bids and take on more clients and projects.
Knowing Your Expenses, Costs, and Overhead
Every business comes with some form of overhead. Whether it is rent, salaries, office expenses, utilities, insurance, or supplies, you need to keep these costs in mind when preparing bids and estimates, because you must recoup that money from somewhere. In landscaping, there are plenty of people who are not part of the actual construction of a project, but yet are vital to the success of the business. Think about your salespeople, estimators, your designers, and the office staff you have answering phone calls and preparing invoices. Very few companies think about the overhead costs, and this oversight can drastically affect your business.
To scale up your landscaping services, you need to be thinking of these costs. Nearly 20% of landscaping sales is eaten up by overhead costs. Smaller companies with one crew and a few workers, which may include the owner working in the field, may not be thinking of overhead expenses. But when you start adding more crews, an office and pull yourself out of the field, you have to be asking the question, how is your salary going to be paid? Knowing your fixed and variable overhead costs can have a massive impact on a business. Is it more expensive to make trips to the dump for every project or just have a dumpster on-site? Should you lease a new truck for construction or buy a used one? You need to understand all of these costs and how much they add up each day, week, month, and year.
Then you will be able to calculate those expenses and add them as part of your estimate into each project you complete each year. Your hourly rate will not just include labor hours worked, but also the overhead you need to recoup to ensure you run a successful business. By completing a budget, you can stop hemorrhaging money that you may not even know you are losing. And you can ensure that each of your projects is taking care of the percentage of the overhead needed to run your business.
How DynaScape Helps
Knowing where your overhead is coming from is vital to any future success. Managing that overhead and putting the cost of it back into the projects and maintenance you complete is something successful landscaping businesses do to ensure they aren’t short-changing themselves on every job.
With DynaScape’s landscape business management software, you can incorporate budgeting into every job, have it completed automatically, and applied to each estimate. Use any overhead recovery model that works for your business and figure out what your break-even point really is on each project. It’s not just the materials and labor hours, but a percentage of the overhead expenses your business has to pay.
By knowing what break-even point and net profit on each job, you can begin to negotiate lower rates for jobs if needed, but still remain in a positive revenue-generating position.
Funnel Your Sales Opportunities
To take your landscaping business to the next level, you need to do more work. That’s a pretty obvious statement, as revenue can only increase if you take on more projects, win more bids and satisfy more customers. In order to do this, however, you need a better sales funnel that offers you greater visibility into your sales potential. As more customers come in and more bids and estimates go out, you have to manage each one through every phase of the sales cycle. Some of the challenges landscape businesses face are pushing sales through when they go stagnant when they bottleneck with other sales opportunities, or you find yourself spending more time on a bid that is a toss-up when another one is in the bank and ready to move forward.
Growth in landscaping services requires more sales opportunities and in sales, you win some and you lose some. The key is to learn why you lost and at what stage of the process so you can track your outcomes. Did your customers not like your designs? Were your estimates too high? Did you not respond fast enough? There are many different reasons at different phases where a sale can go wrong. Plus, coupled with your overhead expenses, you need to project how many sales opportunities you need in order to be successful. How many construction projects do you need to take on in a year to go to the next level of your business? And how many prospective sales calls do you need to make, or how many designs do you need to do in order to get that number of people. In essence, it’s budgeting your revenue and tracking how to get to that revenue line you have set for yourself.
Where DynaScape Helps
Managing a sales pipeline in a growing business can be challenging, but it’s important to be able to identify your best sales opportunities and track their progression through each phase of the cycle. With DynaScape’s Manage360 business software, have a firm handle on your sales opportunities and funnel them into successful bids. Set start and due dates for each phase and identify leads that may be stagnant that you need to reach out to again.
Go from start to finish with customers from initial contact, all the way through to the final invoice. Start to track your wins and losses to identify where customers are dropping out, but also where you are getting the most success. With Manage360, supercharge your sales opportunities and never lose sight of where you are with potential customers.
Want to find out how DynaScape can help to boost your landscape business?
Go with Data, Not Your Gut
Decisions in landscaping should come from the real facts and figures; they shouldn’t be coming from a gut feeling. The most successful landscaping businesses are turning to data analytics to help them make decisions about their business. You may have years of experience in the field and have an idea of how things are going, but without the supporting data, you’re still grasping at straws.
You need to be able to know the data for every crew, every employee in that crew, every truck you have on the road and for every job they do; you need to know it for every year, month, week, and day as well. All decisions, whether they are small or large, should come from data analytics because that is the actual happenings of your business.
Analytics will be able to look at what jobs are most profitable and which crew is bringing in the most revenue. You will be able to track the revenue you have coming in each day, and how much revenue you will have coming in in the future. If you want to push beyond the new ceiling of your business, knowing the revenue you earned last year, or how much you earned from the job you performed today isn’t enough to continue your growth. You need to be aware of where your revenue is coming from tomorrow and beyond, so you can continue to make decisions that drive profits towards that ceiling. It also comes down to the types of supplies you have, whether you rent or buy equipment in order to lower overhead costs, and deciding which crew to put on which job, based on past performance. Without those types of analytics, you are moving blindly forward on intuition and not facts and figures.
Where DynaScape Helps
Landscapers who use data say they will never go back to gut feelings. It’s hard to argue with raw facts, especially when it comes to business decisions such as overhead spending, the cost of crews, and the price of materials. With landscape business management software, back up your intuition with real analytics that comes from the field. Know the exact costs to your business and make decisions of buying used or new and renting vs owning with actual cost analysis. Dive into your crews’ performance and see which crew is your top earner, down to the last crew member. Winning more jobs and contracts can be based on the type of people you have. Adjust your crews based on performance analytics that you get from DynaScape’s landscape software and know how you are doing every day, week, month, and over the year of your business, down to the project.
Better Time Management
Many business owners believe that in order to grow your business, you need an influx of new business and you need to work harder and longer hours. Part of that is true, in that you do need new customers coming in to continue growth. However, working longer hours isn’t the answer to breaking through the ceiling your business is currently at. Better time management practices and efficiency will get you there a lot faster. When you think of your budget and overhead costs, some of the most inefficient practices are costing your business a small fortune.
Landscape designing is a large undertaking, providing your customers with drawings of their planned landscape with a fully costed out estimate for the number of hours it will take to complete, as well as the cost of materials. Unfortunately, manual practices of designing are slow and very labor-intensive. Drawing by hand takes time. Coloring and shading take more time. And all of those hours by your designer is overhead you have to cover later out of the project’s revenue. It’s a necessary part of any landscape project, but the complexity of the job can add additional variable costs into your plan that you weren’t expecting.
Further, turning that design into an actual bid for the customer can be time-consuming. Every plant, flower, strip of sod, and piece of furniture has to be costed out from your cost book. Many landscapers are still using spreadsheets for their cost book and will create a new spreadsheet for each new bid that comes up. And then they manually add in each item to calculate a cost. Perhaps you have some Excel genius skills to speed up production, but it is still time being spent estimating from a design that could be better spent elsewhere. Many business owners find themselves completing estimates after working in the field all day. But with better time management practices, it’s a part of the business where you can see a reduction in the number of hours spent completing it, while adding growth to your business.
Where DynaScape Helps
With landscape design software, some of your most important tasks can be done in a fraction of the time. The key with DynaScape’s software is that both the design and management of jobs can be completed in one system. And in doing it in one system, it saves plenty of time, which in turn saves you money. Designers can use our Design landscape design software to quickly draw quality presentations of landscape projects, measured out exactly using scanned surveyed plans as a starting point. From there, add from the library pre-drawn figures and plants to get an accurate representation of what the space is going to look like. Export your design over to DS|Color and add color, texture and shadows in a fraction of the time it takes to do it with pencil crayons. Finally, finish it up with Sketch3D to complete a 3D rendering of the design to wow your potential customers, as more deals close with 3D renderings than 2D drawings. When it comes to taking that design and making an estimate, every aspect of the design needs to be accounted for. Rather than spending hours costing out each plant and flower from your Excel cost book, import the design into Manage360 and let the cost book you’ve already set up generate an accurate estimate for you to present. If you’re looking for a place to save on overhead, using landscape design software to produce estimates in minutes is a great place to start. Make stunning presentation packages quickly, while spending less on overhead for designers and estimators.
Break Through the Ceiling with DynaScape Software
In order to reach that next landscape ceiling, you need to change the practices and processes of your business to better align with being that successful of a business. Manual work that can be solved by automation saves dollars. Longer hours don’t always equal success in added revenue. In order to compete with the growing and competitive field of landscape design, you need to build your business on a foundation of efficiency and information. That can be achieved by using landscape design and business management software from DynaScape, which can help you to not only reach that ceiling, but break through it.