Breaking Even

A recent thread on the Lawn & Landscape Online Message Board examined various pitfalls that can damage a fledgling company’s attempts to post solid profits. And while the discussion hit on a few specifics, forum participants have more advice to share.

"Does anybody else feel like they are always just paying their bills – no matter how hard or how little you work?" writes Joel Swisher, owner, All in One Lawn and Landscape, Plymouth, Mich.

Swisher and his partner started in the lawn business about eight years ago and have grown significantly – but, as he puts it, they are always just "getting by."

"We have great equipment and do have the money to play around a little, but can never get any in the bank," Swisher notes. "No matter how hard we work, or even when we charge high amounts and run into great accounts, it is like we are always in the same boat."

Swisher’s request for help on the Message Board prompted a wealth of detailed advice from other green industry professionals familiar with the struggles of making a living in the lawn care business.

MANAGE MOOLAH. One cash-consuming business concern is the improper handling of money, notes Ken Reis, owner, Turf & Shrub Management, Dartmouth, Mass. "It could be that you are good at doing your work but poor at managing money," he points out.

Often, those who do exceptional landscape work do not necessarily have the skills needed to keep monetary matters in order, he comments. Thus, hiring an operations manager could be the ticket to turning things around.

Contractors should appoint finance managers who are frugal with revenue and can allocate expenses wisely, Reis continues. "Putting the responsibility on a non-owner to manage your company’s money makes very good sense if you lack the skill to manage it yourself," he comments. "A non-owner will look at the spending habits of a company without the emotion that an owner may have. An owner may feel the need to spend money on the latest equipment fad, while the non-owner operations manager may see how the existing equipment gets the job done at a higher profit margin. A non-owner may actually be more frugal with the company’s money than an owner would be and might see more clearly the inefficiencies in the operation of the company."

Bringing someone aboard who has extensive accounting expertise also may be a smart approach, advises Bob Borden, B&W Landscaping, New Hamburg, N.Y. "Look closely at your numbers and don’t be afraid to ask for help," he asserts. "If you don’t have a good accountant, get one. We are getting our accountant more involved in our operation and feel it is well worth the money."

When hiring an accountant, Reis recommends getting referrals from other industry professionals. He also encourages contractors to employ accountants with lawn care-related experience – to accelerate the learning curve and perpetuate a mutual understanding from the get-go.

Once a contractor has a few potentially solid candidates to choose from, calling references is crucial, Reis says.

"When you call, ask probing questions," he urges, outlining a few examples. "‘Have you had any bad experiences with this person or firm? Do they make themselves available to you? Do they return your calls promptly? What do you like most about this accounting professional or firm?’"

Beyond financial expertise and numeric know-how, a good accountant is one who listens well, Reis says. "I want to be able to discuss my business with my accountant for as long as I feel necessary," he explains. "If I’m being interrupted, that makes me feel they don’t want to listen to me. They need to make me feel that they truly do care about my business, and part of that understanding is that they are aware that they work for me."

ON TRACK WITH TECHNOLOGY. With just four years of experience as an owner, Guy Dougherty, Dougherty Fine Quality Landscaping, Chino, Calif., can relate to the concerns Swisher expresses about business finances. "It has been a huge challenge to stay on top of the accounting, tracking, job costing and crews," Dougherty explains, adding that without a handle on these basic business figures, profits are difficult to quantify and control.

To resolve the problem, Dougherty set up systems for gauging profit. "It is a must to have a system to track the money and see where it is and where it is going," he acknowledges.

Dougherty’s money-management method looks at man-hours of income vs. investments. While this may seem elementary, the West Coast company has seen success with the cost-tracking strategy. The system helps Dougherty see which employees are slowing profitability and which purchases are not earning their keep. From these fundamental figures, he makes adjustments necessary to boost revenue.

To implement and operate a cash-sensitive system, Dougherty suggests looking into software programs. His company invested in basic business management software upon entering the green business and has never regretted the purchase.

"I talked to a lot of people about software and did a lot of investigating on my own because I wanted to get the best system for my money," he recalls. "Some people I talked with admitted that they only utilize about 15 percent of their software investment. I didn’t want to waste my money like that."

So Dougherty found a $1,300 program that he says handles about 85 percent of his company’s paperwork and number crunching. Based on his experience, he says companies who are struggling to pull their bottom lines out of the red not only should consider buying a software package, they also should consider the return they’re getting on their investments. "Get in and learn the capabilities of the programs you have," Dougherty urges. "Don’t waste the money you’ve put into business management tools. Save some of your profits by letting the computer do its job. Let that investment work for you, not against you."

When buying business software, contractors should look for packages that suit their unique business needs, Dougherty says. Rather than paying for the extravagant bells and whistles, invest in only what will be useful. "Don’t pay for all the extras that you’ll never use or the regional plant lists and obscure offerings that don’t apply to your company."

Since Dougherty generally handles his company’s finances, he tries to maximize his investment by using the software program for everything it offers – including proposals, payroll, taxes, purchase orders and invoices. By exploiting the software’s full potential, he saves time and money. This way, Dougherty and other contractors can see smart returns on their business software investments.

BE THE BOSS. Another weakness Swisher says negatively affects his profitability is the personal connection he feels to employees. "We have become friends with our workers," he says. "They walk all over us, want more hours when we are slow and cry about working when we are busy. However, I have to keep them because I have invested too much training in them."

To remedy this employee-owner relationship struggle, Matthew Morgan, owner, Emerald Landscape Management, Danville, Ill., advises creating an employee handbook. Having a company handbook with strict policies and procedures could help Swisher and others demand more from manipulative employees and impose effective guidelines.

"A handbook is a must," Reis agrees, noting that printing costs for a basic company manual may total only a few dollars per employee. "Ours outlines the company rules and regulations and explains company-paid benefits. We review its contents annually and make changes where needed."

When Turf & Shrub Management reviews its manual, all employees are invited to join the discussion. This allows for company-wide feedback about the policies governing their daily work. The gathering also includes discussion about the disciplinary consequences of disobedience to company policy.

"Having all employees have a say in composing a handbook makes enforcement simple," Reis shares. "Not every rule is open for discussion, and there is no discussion on issues like company-paid benefits. In essence, the handbook is the company law."

However, owners must be willing to do more than distribute a handbook and hope employees fall into line with the prescribed regulations. Enforcement, even if that means firing a rebellious crewmember, is necessary for results. "You are the boss and you must be the boss on the job," Morgan says. "If they don’t play by your rules, they should be disciplined."

To ensure employees understand the consequences of misbehavior, each should be asked to read and sign the company manual before beginning day No. 1 on the job, Reis asserts. Also, any revisions to the handbook should be acknowledged and initialed by every employee as well.

A company’s management also should ensure that business goals and standards are communicated clearly on a regular basis. This can be accomplished through staff meetings and candid, one-on-one discussions with employees.

Erich Heinrich, Avalawn Landscaping, Cincinnati, Ohio, acknowledges that contractors should strike a balance between befriending their employees and maintaining authority. "I’m not best friends with every employee, but good friends with a couple of them," he mentions. "But if they can’t differentiate between work time and play time, you need to lay down the law."

Read part two of this Best of the Web feature, covering niche development and equipment purchasing and money saving tips, in the May 2004 issue of Lawn & Landscape magazine.

The author is assistant editor-Internet of Lawn & Landscape magazine and can be reached at aanderson@lawnandlandscape.com. Join the ongoing Message Board dialogue by logging onto www.lawnandlandscape.com/ messageboard/.