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The Grow Show is brought to you by The Harvest Group and is a regular podcast series focusing on the difficult issues and challenges contractors face day-to-day in their businesses. The Harvest Group includes Bill Arman, Ed Laflamme, Steve Cesare and Cindy Code.
This podcast series is designed to provide the lawn and landscape professional with targeted ideas that you can immediately implement into your business. The goal of The Harvest Group is to help you become more efficient in your business and, most importantly, more profitable.
For the foreseeable future, The Grow Show will continue to provide specific tips for business efficiency and increasing gross margin. Remember, if you missed any of these podcasts, you can listen to them at www.lawnandlandscape.com or at www.harvestlandscapeconsulting.com.
Review: Most common ways your business’ gross margin is too low or goes down
- Personnel turnover
- Having the wrong customer
- Inaccurate estimating
- Increase in costs without a price adjustment
- Scope of work change without price adjustment
- Extra work performed without billing
- Inaccurate job costing
- Basic administration, or lack there of
- Lack of mindset
- No system or processes in place
- Operational execution
Your choices are:
- Do nothing
- Decrease costs
- Increase revenue
- Do both
Gross margin really is the “financial furnace” for the organization and provides the best opportunity to make more money for an organization.
Gross Margin: in the maintenance world it looks like this:
Gross Margin = Revenue less Direct Costs
Direct Costs = Labor plus burden (foremen and below) + materials
Focus on this: GROSS MARGIN: Revenue minus Direct Costs
Next steps in getting better Gross Margins through some Operational Execution
1. Ag Hort Program
- Chemical applications that are accurate, timely and help with plant health and with productivity/ labor savings
- All jobs should be measured and the sq. footage should be known for turf, ground cover/beds, seasonal flowers
- Linear footage for hedges and in some ground cover edges for plant growth regulators
Key things to consider:
- Weed control: with effective applications of pre-emergents or with mulching
- Weed control for turf – pre- and post
- Plant Growth Regulators (PGR): Atrimec, Embark, Primo
- Fertilizers – establish plants to minimize weed populations and fight off diseases
- Fertilizers: slow-release to minimize clipping pick up on turf areas
The AG Hort Program should also include:
- What to apply? List types of products to be applied
- How much to apply? List application rates/amount to be applied
- When to apply? List what months are best for what applications
The AG Hort Program will save time with labor and material costs resulting in gains to the gross margin.
2. Right Equipment
Look for most frequent tasks and figure ways to have the best-matched equipment to save the most labor:
- Mowers – right size for the turf areas that are the most productive
- Edgers – use stick-edgers rather than weed-eaters for turf edging
- Augers – use augers vs. digging by hand
- Trenchers – use trenchers rather than hand trenching
- Trailers – use the right trailers that you can store equipment on to avoid costly loading and unloading process
- Remote controls/controller plug in units for irrigation checks: rather than set the clock for 2 minutes and look at the irrigation systems these devices enables you to do irrigation checks quicker and more efficiently
Remember the cost of equipment is a lot less than the cost of your workforce. Be on the lookout for equipment that can save time with your workforce.
3. Route Sheets
- Have weekly route sheets made up for the jobs by crew
- Each job should have crew hours scheduled for that day with specific arrival times and departure times
- These sheets should also include what equipment is required for the job, and if there are any special assignments that need to be completed during that visit i.e., fertilizer applications, remove seasonal flowers, bed prep or any other key non-routine items
- This way each crew leader knows what the time allocation is for each job. A loose schedule can cause some issues like not completing the route or leaving some non-routine items uncompleted.
- Route sheets make it very clear what time there is allocated for the job
- These route sheets also need to be adjusted for seasonality as well as the time needed to service jobs can change based on growing season vs. slower growing times of the year
- Also be careful to not get stuck on the hours needed as we should be getting more efficient on jobs the longer we are on them.
During our next podcast, The Harvesters will walk you through some more fundamental operational areas to increase your gross margin.
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