This is the first in an updated multi-part series about the importance of business calculations and reporting in the landscape and snow industries.
“Do the math!”
This was my mantra for 23 years of consulting for landscape and snow business owners. What I meant was that business plans and pricing should be based on information that is mathematically sound.
Business plans should also identify the key activities required to achieve success—be it success in sales, margins, hours, or profits. And whether you’re mowing, planting shrubs, or pushing snow, doing the math behind the work is how your landscaping company stays in business. For example, in creating a sales plan for a salesperson, doing the math means taking the following steps:
Start with the goal
Let's say your goal is to sell $1,000,000 in new contracts. Consider the likely close rate—maybe 20%. That will require that you bid $5,000,000 in prospect volume.
Ask questions and make assumptions about how to reach that goal
With your bid target in mind, it's time to ask some questions about that target. For example, “How big is the target prospect job size?” “Whom should the salesperson pursue?”
Let’s say the target size is a $25,000 annual contract (which, in my experience, seems to be the national average for many green industry contractors). Now we know that we need to bid 200 landscaping/snow management job sites. But how many potential customers must be contacted to get the 200 opportunities to bid?
Let’s say that 50% of the time, a salesperson calls a prospect who is open to a bid. Now we have a number we can use: The salesperson needs to have a list of at least 400 prospect job sites that average $25,000 annually in landscape/snow contract value.
Determine what matters in the sales process
Does the salesperson have this list of 400 prospects? If not, how in heaven’s name can he/she sell $1,000,000 in new business? The simple answer is, it’s probably not going to happen. This is not a bad plan, it’s worse—it’s no plan. In doing the math, we realize that the key to success is not setting the goal. The key is determining what matters in the sales process and where to start. That is why we do the math!
Let’s add one more calculation: Let’s assume it takes eight calls to get a chance to bid. Now we know another important number: that 3,200 touches will be required to meet the goal. Divide that by 250 working days and we get 12 touches every day. Now we have marching orders: The salesperson will have to reach out an average of 12 times to potential new clients every single day.
Is this too detailed? Not really, but it is essential. Can the salesperson hit that goal? Absolutely! It's hard work, but I’ve done it!
Don't forget that there's a key part of this sales process and critical for business growth: Once you have a target goal, you can develop a marketing strategy. This strategy will include creating a social media plan to build your online presence, and tactics to leverage referrals and word-of-mouth to attract new customers.
Be sure to ask your best customers for online reviews or testimonials for your business page. Having a sound marketing plan will help support your sales team by putting your best landscaping jobs and clients front and center.
Build accountability with reporting
Now that we have a plan of action, we need a reporting structure to monitor and hold the salesperson accountable. The reports we need to track will likely include the following.
- Sales dollars closed
- Bid dollars proposed
- Bid number proposed
- Average job size proposed
- Number of prospects contacted
- Number of touches (email, call, task, appointment)
You'll notice these reports run from big picture to small, with an emphasis on managing the small picture.
These reports could be reviewed every day, week, or month. Why would anybody want to do that? Of course, for accountability, but mostly to reassess activity and coach for the right tactics. This is something every sales manager must do, no matter the industry. Reporting provides the information essential to achieving success.
Do the math for your lawn and landscape business
What's the math essential for your company’s success? At the big-picture level, it will be measured in terms of growth and profit margins. How many properties are you caring for in your service area? How much are they paying you to do it? Just like the math you did to determine your sales targets, you need to do the math and create a reporting structure from big picture to small. The big picture provides the vision. The small picture provides the traction—the forward momentum for your lawn and landscape business.
Here’s the reporting structure for running a lawn care, lawn maintenance, or snow removal business—from the big to small picture. We'll cover these reports in upcoming posts.
- Rolling Budget
- Business KPIs (Key Productivity Indicators)
- Functional Reports (Sales, Client, Production, Finances)
- Work Process Management Dashboards (a landscape business management software features some of these dashboards)
In future blog posts, I will do the math starting with the Rolling Budget and drill all the way down to Work Process Management Dashboards. I call this process of creating a reporting structure “cascading.” We start high atop the waterfall and cascade it down to the river below where the actual flow of work happens.
Just knowing this structure can help lawn and landscape business owners streamline the work of reporting. It can also help them decide how to focus their efforts on attracting homeowners or commercial clients and take their company to the next level.
Learn more about how a Rolling Budget helps maximize visibility into your numbers and creates accountability for your business in the next post of the series: "Do the Math, Part 2: Budgeting for Profitability."