Knowing your numbers is an essential part of doing good business. That's because you need to have a good understanding of how your business is performing in order to make critical decisions. But when it comes to making decisions in real time, you need to have metrics available at your fingertips. Unfortunately, most companies are not looking at metrics until the end of the month when they're running reports. At that point, it's too late to make any changes to jobs already finished.
Being able to look at daily metrics is the differentiator between landscaping companies taking their business to the next level and those that are remaining stagnant.
Job costing in real-time
One of the most important things that you should be doing is looking at job costing in real-time (for your current jobs) so that you are able to make changes to keep the work profitable. There are five main data points to be tracked in order to do this: Labor, materials, equipment, subcontractor expenses, and overhead. If you are tracking these numbers and looking at daily operations, you'll be able to provide your team with some direction as to what's needed in order to achieve your goals.
Ultimately, it comes down to staying on top of how close your estimated costs are to your actual costs so that you can make changes, if needed, to get a job back on track. It doesn't do you much good to find out a job lost you money after it's already finished.
Looking at cash flow
An ongoing cash flow analysis is also important for a profitable operation. You should know exactly how much cash is coming into your business as well as how much is going out. Healthy cash flow is essential to a healthy business. And just like job costing, looking regularly at cash flow will allow you to make quick decisions in real-time which can impact your financial success.
Utilizing a daily cash flow report is a better practice than using a checkbook or an online bank balance. The latter two do not take outstanding checks into consideration.
Staying on top of company spending
While this is part of cash flow, it's important to point out that staying on top of all business expenses, including the "small ones" will make a huge difference in your success. We call this "financial awareness." The more financial awareness you have, the better. If you aren't staying on top of expenses, you can start to negatively impact an otherwise profitable business.
Tracking daily spending allows you to analyze whether money is being spent in the best way possible for your company. You'll also be prepared for tax season, which will help that period go more smoothly.
The value of visual reporting
When it comes to all of these numbers, you want a quick and easy way to look at them. Reading through a ton of data can be time-consuming. That's why many successful companies are moving toward visual reporting. This is a process of extrapolating data and putting it into readable formats, such as charts and graphs. This will allow you to make quick decisions based on the information in front of you.
While many landscaping companies still use spreadsheets and print-outs to look at data, upgrading to a landscape business software solution for your company will allow you to be able to look at daily metrics and also use visual reporting tools to make quick decisions. The goal is to be able to have real-time information in front of you at the push of a button.
A tool like Asset can help you to produce daily reports and look at financial data in real-time. With everything at your fingertips, you can make smarter decisions for your business.