BUSINESS
Financial performance
12 steps to improving your landscape business by Jeffrey Scott, MBA
Photo by Sahand Hoseini on Unsplash
UAC MAGAZINE | SUMMER 2020
The difference between running a good landscape business and owning a great landscape business comes down to your financial literacy and how well you manage by the numbers.
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Many lawn and landscape entrepreneurs make money even
management practices. I first want to know what their level of financial management is. Rate yourself; at which level do you operate?
though they don’t track their numbers closely (is that you?).
I then discuss with them the 37 specific financial habits and systems that will have biggest impact on their profitability and financial status.
Others are leaving too much money on the table because they are so busy chasing the day-today (sound familiar?).
For the sake of brevity, I have boiled down the most important to these 12 steps. Rate yourself and see how well you are doing, and where you need to improve.
The difference between running a good landscape business and owning a great landscape business comes down to your financial literacy and how well you manage by the numbers. This is such an important issue, that before I take on a new coaching client or peer group member, I will survey their
Level 5. Review financial reports monthly, and operational reports weekly, and other operational numbers daily––and consistently make decisions by the numbers. Level 4. Studying financial reports monthly, making many decisions monthly. Level 3. Look briefly at reports monthly (or every other month), making a few decisions but not many. Level 2. Look at reports quarterly at best, making some decisions. Level 1. Wait till year end to see how I did.
Set a sales budget based on monthly numbers — by sales person and by division/service line. This allows you to set goals with sales people and marketing, and track monthly how well you are achieving your business plan for the year. You can’t be an effective sales manager without doing this.
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Use accrual-based budgeting. This is much harder to do than budgeting by cash, but it tells you so much more about your operations when you do accrual budgets vs actuals monthly. This allows you to see problems quicker and to steer your budget more proactively. (FYI: Accrual is defined as following the principle of matching revenue and expenses each month.) Build in a real owners salary to your budget. If you had to replace your role, what would you have to pay on the market? That’s the number you should use in your overhead calculation. While I am at it, I would add that you should run “clean” numbers and don’t keep owners fluff in the budget; otherwise its harder to delegate authority to others and scale your business.
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Use an industry-specific chart of accounts. Don’t just use the QB standards, or the one your accountant gave you. There is a real opportunity to better understand
