It’s that time of year. Landscaping industry consultant Jeffrey Scott has long stressed the importance of sprinting to the finish as landscapers close out the year. Scott also champions being open with employees about exactly what day on the calendar will effectively determine whether the company has profited, broken even or taken a loss.
He echoes some of those themes in a recent column. Here’s a few highlights:
- Having a profitable year is ultimately determined by how much in sales you produce and bill out in the 4th quarter.
- Weekly Throughput: The main driver of net profit in the fourth quarter is measured by your company’s Weekly Throughput; that is, the amount of billable production work your company can produce (“put through”) each week. Even though you estimate for net profit with each and every sale, starting with your first sale in January, the fact is that all the profit from those sales goes toward covering your overhead. Once your overhead is covered, you have reached what accountants call your break even date.
- If your operational margin is, for example, 40 percent, then after you hit break even, every dollar that gets produced will put approximately 40 cents towards your bottom line. That is a lot! To this end, the more sales that your team can produce and bill in this final quarter, the more net profit you will ultimately earn. Conversely, if you have too many hiccups this fall, you put your net profit at risk.
- Keep salespeople motivated to continue selling strong up through December. Use situational and year-end incentives to keep up the selling momentum. Having an increased backlog puts positive pressure on the crews, so they have more than enough work to chew through.
- Decrease the non-billable time (morning, travel, deli and gas stops, evening) so more time is spent on billable work.
- Decrease (eliminate) the unnecessary go-backs needed to complete a job by ensuring crews are properly equipped and dispatched, with trucks and tools operating smoothly.
- Ask crews to be flexible in bad weather, so you can hit your Weekly Throughput goals. Use overtime (OT) to get your extra backlogged work done; the incremental cost of OT will be more than offset by additional operating profit that will drop straight to your bottom line. Do the math!
- Sell more fall and winter add-on services. Remember, enhancement sales can be sold at a higher margin than your standard work anyhow, so it is a double win.
Scott says the extra effort in the fourth quarter can increase your net profits significantly.
In addition to consulting, Jeffrey Scott offers peer groups for landscape professionals and other services. You can find his website here.
CASE-sponsored festival raises $10,000 for Team Rubicon
The second “Labor of Love Music Festival” headlined by country singer Chris Young raised $10,000 for Team Rubicon through its outreach efforts and donations.
The festival in Racine, Wisconsin, began as a way of connecting veterans with jobs and training in the skilled trades, and supporting organizations that help achieve that goal.
“We appreciate Team Rubicon’s sense of service, both to the community and to its members, and continue to be inspired by its continued focus on training,” said Athena Campos, senior director of marketing, North America, with CASE Construction Equipment.
“We thank all of our sponsors, our talented performers and stage crew, the Racine Civic Centre and the staff at Racine Festival Park, our vendors, and all of the concert-goers who came out on Labor Day to make this all possible,” Campos said.
For more information on the festival, visit CaseCE.com/LaborofLove. For more on Team Rubicon, visit TeamRubiconUSA.org, where you can make donations directly.