Silent profit killers

I’m sitting down to write this column after having just wrapped up an exhausting, inspiring, whirlwind tour around and across the country, speaking to and coaching green-industry pros who are all striving to get better.

We spent a lot of time talking about vision, mission and core values, about finding prospects and closing sales, and about leadership. These factors are all critical to success. Mastering them can be the difference between a mediocre business and an extraordinary company. That’s why I never shut up about them, both in my work with landscape professionals and at my own landscaping company.

But it’s also true that you can get these things right and still not find yourself in the black at the end of the season. Why? Because you might very well be employing what I like to call Highly Effective Net-Worth Reduction Tactics. These silent but deadly killers slowly but surely siphon off your profits without you even knowing it.

Here are four of the worst:

Underperforming employees.

If you have jobs coming in over-time and over-budget, or dissatisfied clients, or broken equipment, underperforming team members are likely the cause. The question is, what’s causing this? Is it them, or is it you? Have you clearly communicated your expectations? Have you trained your team thoroughly? Do you check in with them regularly to monitor their progress and listen to their concerns? If you have and problems persist, then it may be time for you to usher your underperformers out the door.

Poor relationships.

Landscapers rely on a host of vendors and subcontractors to fulfill our clients’ needs. We can’t succeed without them; they are truly our partners – and we need to treat them that way. If you want them to deliver their products and services on time, then pay them on time. If you want them to do top-quality work, then show your appreciation for it. Discuss with them your goals and expectations. The reverse is true, too. As my consulting partner Jim Cali points out, just as your vendors and subcontractors’ business is important to you, your business is important to them. You have leverage in negotiating better terms. Use it.

Inefficient contract, deposit and collection processes.

Running inefficient or ineffective contract, deposit and collection processes can seriously eat away profits. Verbal work orders are trouble, folks. Get everything in writing, with contracts for significant jobs and at least an e-mail confirmation for small ones. This protects you and your clients. At Grunder Landscaping, we don’t begin any work without a signed proposal or e-mail agreement in hand. For jobs of $2,500 or more, we require a deposit of one-third the estimated cost. This helps establish the client’s commitment to the project, and it helps us with cash flow.

As soon as we complete a job, we invoice. If you have an accounts receivable problem, you might very well have a client satisfaction problem.

Not selling work for late summer or fall.

As difficult as it may be to plan for late summer and fall when you can scarcely see your way around the incessant landscape demands of spring, you’ve got to do it.

Sell your clients now on seeding and planting for fall. If there’s work they want done now that you know you can’t get to until later, do not overpromise and underdeliver. Instead, convince them you’re worth the wait. Let them know how much you want to work with them. Offer a discount. If you want to finish your business squarely in the black this year, you’ve got to see your business through the fall.

Do you have other Highly Effective Net-Worth Reduction Tactics landscape pros should avoid? Shoot me an email at mgrunder@giemedia.com. As always, I’d love to hear from you.