Monroe Porter, a contracting industry consultant with more than 25 years of experience, shared tips and techniques for creating a successful landscape business during an education session at the GIE Conference, Nov. 3., Charlotte, N.C.
During the session, entitled “How to Survive and Prosper as a Landscape Contractor,” Porter shared three essential skills for success he has learned from years of working with landscape contractors through his consulting business, PROOF Management, Midlothian, Va.
And in small business, success is essential because, as Porter puts it, “If you own a small business and your business is messed up, then your life is going to be messed up.”
With the goal of aggressive growth, Porter says, contractors too often seek new customers, hire new employees and buy added equipment before establishing the skills and systems that ensure a profitable company.
“Make more money to grow. Never try to grow to make more money,” he says.
Porter adds, “Numerous business skills are required to run a successful contracting company, but these basic skills generally fall into three definite categories – financial, production and sales and marketing.”
Further, he adds, “Most contractors are far better at doing the work (production) than they are at selling and financially managing their business. While the contractor need not be an expert in business management, minimum standards are needed for each area.”
1. FINANCIAL. To succeed, a contractor must create systems in his or her company for monitoring the company’s financial performance, per job, so as to make informed business decisions. ”If you learn the financial part, your life gets better,” Porter says.
“You have to know your numbers to get better, because you work just as hard as you must work on losing jobs as jobs that make more money,” Porter adds.
2. PRODUCTION. As a landscape business grows, the owner must move from being a goods tradesperson to a good manager, Porter says. Doing good work expands to organization skills, job set-up, time management and production systems. In other words, Porter says, the owner must draw back from the field and spend more time on delegating and developing systems.
For example, to handle bookkeeping and scheduling, Porter suggested hiring a qualified administrative person. An average wage for administrative personnel, Porter says, is $16 to $20 an hour. Porter adds that landscape contractors may find more success hiring an administrative person on a part-time basis. Not only will it cost your growing company less in wages paid, but you can also find very qualified people who are not looking for full-time employment and, as a result, may be available.
Finally, Porter says, when it comes to production, owners must find a way to hire competent foremen, who will allow the owner to spend less time in the field overseeing jobs and personnel. “You are not going to earn a $100,000 being a baby sitter,” Porter says.
3. SALES AND MARKETING. The third essential skill for success in the contracting business is having an effective approach to sales and marketing. “When contractors clearly evaluate productivity and financial information, marketing is even more important. By identifying their marketing needs, contractors can control their own destiny and not wait for the phone to ring,” Porter says.
Accordingly, Porter shared four sales and marketing basics with attendees. They were:
Identify and target customers. Once you have set up systems in your company that allow you to monitor your company’s financials, you will know which jobs are most profitable. Porter advised contractors to look for common characteristics of winning jobs. Once identified, understand how to reach those customers and focus your efforts on them.
Win at the point of sale. “Make sure your presentation looks more professional and provides more information than those of your cheaper competitors,” Porter says.
For example, Porter suggests using a professional-looking pocket folder to hold your detailed proposal, a company fact sheet, as well as specific product detail when necessary.
Project a professional image. “If your customers pay a premium for your services, you must ensure that they perceive that they received their money’s worth,” Porter says.
Easy ways to project an image of professionalism, according to Porter, include proper attire and behavior among employees, clean and well maintained equipment and polished introductions and follow-ups with customers.
“Image is a factor in positioning your company, products and services in the marketplace. Companies with poor images have trouble selling up and increasing their prices,” Porter says.
Communicate your point of difference. Porter encouraged attendees to analyze their company’s story, what makes it different, and then develop a three-line message that communicates that story. Use the message to describe your company to potential customers, and make sure your entire organization knows it, Porter suggests. A company’s “story” should be: truthful; specific (such as include the number of years in business) and unique ( such as the passion the business brings). “Differentiation is a key ingredient to business sales success. If all is perceived as equal, the customer will buy on price. List what traits you have in common with most of your competitors and what traits are unique to your organization,” Porter says.
Further, he emphasized that selling is a skill that can be learned and practiced, and Porter encouraged attendees to seek out sales training and make time to practices sales skills, even if it is as simple as rehearsing the three-line company story you’ve created. “Selling is nothing more than communication. It’s not magic,” Porter says.
FIVE STEPS TO FINANCIAL SUCCESS. Traditionally, contractors’ strongest skills don’t fall in the realm of financial management and bookkeeping, Porter says. However, as a landscape company grows and evolves, knowing these financial numbers are essential to ensure a profitable, well-managed firm positioned for long-term health. During his presentation, Porter shared five steps for financial success in contracting business, which follow.
Raise prices. “Unsophisticated competition drives the cheap segment of the contracting market. Simply raising your prices 5 to 10 percent can impact profits and help you focus on more profitable work,” Porter says.
For example, if you have a long backlog for work, say six- months-worth or more, you likely have room to increase prices.
Further, Porter says, increasing price will automatically weed out some losing jobs, which are typically a major drag on small landscape companies. “Most of the time when a contractor goes out of business, it is from too much losing work, not a lack of work,” Porter says.
Tabulate useful financial information. “Too many contractors let their accountants establish charts of accounts that do not give them what they want or need to know. Few accountants think like contractors and know what information you actually need,” Porter adds.
Ensure that you estimate hours and time correctly. As an owner transfers from doing much of his company’s work to handing off that responsibility to others, production tends to slow. However, the owner often estimates as if he is still doing the work. This results in poor estimates of time and creates money-losing jobs. Porter says contractors follow up on and analyze jobs on a day-to-day basis to make sure their estimates are accurate.
Identify winners and losers. It’s crucial that contractors keep score and analyze jobs so that they can avoid repeated mistakes. “Know where you are making and losing money and shift business accordingly,” Porter says.
Manage your time efficiently. Porter suggests owners of growing businesses keep a time card for themselves so that they can analyze where they spend time. “As contractors grow, their own personal inefficiency can be their greatest enemy. If you spend time performing tasks that are of little value, your economic rewards will follow accordingly,” Porter says.
FOCUS AND EARN. In closing, Porter suggests that contractors focus on goals, develop the three essential skills and keep score by reviewing their company’s financial performance.
“Focus on these goals and the money will follow. Once you have mastered the art of knowing your numbers, you will never need to learn it again. All you have to do is keep score of your company’s performance and do the day-to-day tabulations,” Porter says.
The author is editor of GIE Today magazine.
