This is part two in a two-part series. Click here to read part one.
Whether your landscaping company has already completed its 2019 financial plan or is still in the process of creating it, take a look at a few important aspects green industry financial professionals recommend keeping in mind when going into your budget preparation.
It’s no secret that the world of professional landscaping can sometimes prove to be an unpredictable line of work, as weather changes, labor shortages and more can alter your ability to complete projects.
For Andrew Dickson, product and account manager with LandOpt, weather proved to be one of the biggest roadblocks for his New England companies in 2018.
“You schedule out a budget and when you’re getting off and on snow all the way through April, it can really derail companies, especially larger companies,” he says. “They have to pay people and they have an infrastructure they have to support, so not only do they want to make money, they need to make sure their business is operating well.”
Tome Nrecaj, business systems manager for Bellantoni Landscape in White Plains, New York, says he doesn’t necessarily consider these things to be problems so much as things the company can work through and improve on.
While occurrences like unexpected weather can cause issues for landscaping companies, Nrecaj says one of the biggest improvements to watch out for is discovering inefficiencies in the company and working to solve them.
“Weather plays a huge role, but if your company is not running efficiently, that’s even more of a problem than your weather,” he says. “You have to find and discover inefficiencies, whether on a minor or larger scale. We always try to come up with better processes to avoid these unnecessary expenses by involving staff and having regular meetings. We try to educate them where inefficiencies happen.”
When dealing with the nationwide labor shortage, the green industry certainly suffers tremendously, as it continues to prove increasingly difficult to find qualified and dependable landscaping employees.
Dickson says that in light of the labor shortage, LandOpt has actively changed its company focus from a sales culture to a recruiting one.
“Now, it’s more of a team effort than it has ever been,” he says. “Instead of one person doing the recruiting, it becomes everyone has to know that if (the company) needs someone or something happens, I should be talking to that person about working for the company. It’s about making sure you’re always out there speaking with somebody or looking for somebody.”
Regardless of what your landscaping company faces when planning, preparing and amending your budget, Dickson and Nrecaj agree that it all boils down to being flexible and willing to make necessary changes.
“Companies can go completely off goal or completely over goal, underperform or overperform,” Dickson says. “We have the type of business where that can happen, but then they readjust, rethink and reevaluate.”
Whether it’s due to positive or negative findings, changes will always need to be made in a company’s budget.
For Bellantoni Landscape, Nrecaj says the biggest change in the budget dealt with employment and setting the salary budget. To make up for the rise in labor costs, Nrecaj says the company’s 2019 hiring budget is more conservative than it was in 2018.
Dickson says the biggest change he saw across the board with the companies he helps through LandOpt was focusing more on the individual roles and responsibilities each person has within their company.
Dickson says the tendency, especially for smaller companies or ones just starting out, is to have multiple people wearing multiple hats, but this ultimately proves to be too confusing.
“Planning this way helps people define their roles and define their goals,” he says. “You want to have the right cogs in the right location.”
Keeping it realistic to avoid mistakes
When budgeting first begins, Dickson says the biggest complaint he receives from companies regards the amount of work and detail that goes into the structure LandOpt requires for financial planning.
The reasoning behind this detailed process, he says, is because the more detailed a financial plan is, the easier it is for companies to see the strategic view of what they are doing for the new year. This leaves a smaller margin for error and makes companies view their budget line by line instead of just as a big picture plan.
“We want you to take time out and work on the business not in the business,” he says.
When it comes to planning a company budget, Nrecaj says the biggest mistake he’s seen companies make is to set their budget too high and make it too unrealistic.
“It’s good to have a goal, but you have to be able to achieve it or come close to achieving it,” he says. “If the revenue is high, it serves as a discouragement rather than an encouragement because it brings down morale. When you have a realistic plan, it serves as encouragement because it boosts confidence, and we’re hoping that confidence rolls over into the coming year.”
Advice to other landscapers
Regardless of where you currently stand in your 2019 financial planning, Dickson and Nrecaj agree that paying close attention to budgetary details, finding out what’s working and what’s not, correcting inefficiencies and staying consistent with numbers and filing systems can help your company stay on track financially.
“Even if they don’t see numbers every day, you want to make sure your staff is aware of what the inefficiencies are,” Nrecaj says. “By bringing it up and trying to educate your staff about them, it’s really beneficial. This could really make or break your year. Take your time because you only do this once a year.”
By keeping accounts and filing systems uniform across all platforms, Dickson says companies will easily be able to access information from past years, as well as keep things simpler to follow for future budgetary needs.
“Make sure your data is good and be consistent,” he says. “If you’re a landscape contractor, make sure your books are clean, and make sure you’re staying consistent when logging information into your books, so that when you do start to monitor and create these budgets year over year, you’re comparing yourself apples to apples.”