7 minute read
Three Keys to a Better Bottom Line
A Master Class with Scott McAdam Sr. & Scott McAdam Jr. Three Keys to a Better Bottom Line
by Meta Levin
Three Keys to a Better Bottom Line? According to the McAdams, the three keys are simple, but not always easy to accomplish.
In 1979, Scott McAdam Sr. started McAdam Landscaping with his brother, Rob McAdam, in Forest Park, IL. Since then, they have grown to become a full-service landscape operation, including a garden center. Scott McAdam Jr., McAdam’s son, now is the company’s director of sales and marketing.
Be Involved in Your Industry
One year after starting the company, McAdam Sr. joined ILCA, a move he points to as one of the most valuable of his career. “I met the rock stars of the industry,” he says. “It helped me so much, because I didn’t know where to go to get the information I didn’t know.”
In addition to his own education, as he and his brother began to hire employees, he encouraged them to go to seminars, something he sees as a win-win for all involved. “If employees are better educated, if they have more information, they become more engaged in the industry,” he says. “Now they have the opportunity to further their careers with us, hopefully achieving their personal goals and the company goals.”
Education is not limited to seminars and lectures, McAdam Sr. emphasizes. Once you are active in industry associations, such as ILCA, “education surrounds you.” He points to trade shows, talking with others at social events and other opportunities for networking.
McAdam Jr. recounted his journey from the beginning of his professional career to where he is now. “ILCA truly helped me become professional,” he says. “It helped me develop business skills.” In college he studied horticulture, but took no business classes. Once in the family business, he realized that he needed them.
His father and others had encouraged him to become involved in ILCA. Drawing on his love of golf and experience on his high school golf team, he joined the Golf Outing Committee, eventually becoming its chair. “Being involved in a committee structure, I dealt with a relatively basic budget and I learned accounting and business principles,” he says. “I was able to take those and apply them in my day-today operation.”
It allowed him to understand how the budget impacted the company’s operation and how to make changes to improve the bottom line.
Both men pointed to ILCA’s legislative involvement as benefitting their business. Before the pandemic, McAdam Sr. says, ILCA members had met with state representatives and senators. “We have their ears,” he says. So that when it was needed, ILCA was known, members were known. “During the pandemic, there were people who had the ears of the top people in the state and were assured that our industry would be considered essential. That has helped our bottom line immensely.”
McAdam Jr. ticked off exempting landscape contractors from the service tax
1. Be involved in your industry
3. Be open with your employees about your company finances
(continued from page 10)
and the designation of landscaping as an essential business during the pandemic, neither of which, he believes, would have been possible if ILCA had not done the work to establish legislative relationships before these issues came up. Had it been applied to the landscape industry, the “6.5 percent service tax would have impacted our bottom line,” he says. “And if we had not been an essential business, we would potentially have gone months without being able to produce anything.”
Understand and Know the Importance of your Budget
“A budget is a plan; it’s like a roadmap,” says McAdam Sr. “If you don’t know where you are going, how are you going to get there?”
For 22 years, McAdam Landscaping operated without a formal budget. As McAdam Sr. became involved in ILCA and worked his way up, he realized there was a budget process. He learned how to budget and saw that it worked well for ILCA.
“I had an accountant doing the budget for our business,” he says. McAdam believes his mistake was not being “A budget is a plan; involved in the process. His accountant did not know his needs, nor his plans. “How did he know what I wanted?” it’s like a roadmap. His wake-up call came in 2001 when the company planned to build a new $3 million facility that had, he says, grown
If you don’t know from a $2.25 million budget. “Budgets became important, because I had $2 milwhere you are going, lion in excess debt that I had to figure out how to pay for.” When putting together a budget, you how are you going to need to determine your direct and indirect costs, as well as how much profit you want at the end of the year. From that he get there?” recommends building the sales prices in and ascertaining what you will need to cover costs and generate profit. Determining direct and indirect costs requires some work. For instance, if you want to hire another person and pay that person $60,000 a year, how much extra money do you need to generate? (continued on page 14)
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(continued from page 12) “A $60,000 salary is going to cost a lot more than that — probably you are going to need $150,000 in extra income,” he says.
There’s still one more step: job costing. Break down jobs each day on the job and find out if you will meet your margin; if you will meet your budget. So for instance, if on the first day you build a patio and finish it a couple of hours over your estimated time and the same thing happens the next day, you have time to change your estimated costs for the job.
The budget is a way to track the company progress, says McAdam Jr. It dictates any decisions made at McAdam Landscaping. Without it, it is hard to know how the company is performing on a month-to-month basis. “Are we meeting our targets or falling behind?” says McAdam Jr. “We can make corrections month by month, day by day.”
Be Open with Your Employees About Your Company Finances
Being open about your company finances does not mean showing them everything, says McAdam Sr. Administrative salaries, for instance, are private. “We hold those tight to the vest,” he says. And the idea of even showing some of the financials in any way to employees was not popular at first. “I got some push back from my brother.”
They believe, however, that the practice has earned dividends. “Having a relatively open book policy with company financials with your employees will help improve your bottom line,” says McAdam Jr. it helps your employees, particularly your department heads, think like an owner if they understand the financial well being of the company on a month-by-month basis.
“Someone might show up and think, I’m showing up, I’m doing my job,” he says. “The question is, are you doing it well? Are you managing your costs and your department to make sure that they are hitting their profit targets?”
The McAdams are “forward and open” about how the company is performing on a month-by-month basis, as well as how they stand in the fiscal year. “If we can’t be profitable, we will not be around next year,” says McAdam Sr.
If a department is struggling, the McAdams don’t publicly criticize that person, but the department head know that he or she needs to do better and figure out where they are having a problem so as to improve performance. “It help, us to be more thorough and more successful,” says McAdam Sr.
