Nilsson Associates
11-13-2008, 08:58 AM
Laid Off ? Start Your Own Lawn Care Landscape Business
Business Growth Takes Time, Money And Effort
By Phil Nilsson, Green Industry Consultant
www.nilssonbooks.com
Take control of your future. Become self employed. Prepare now to be your own boss, make more money, achieve success and financial independence in your own business.
One of the greatest advantages of being a business owner is self-promotion. You increase business and profits when you elect to. Sure, there are a few obstacles to overcome, but a boss isn't one of them. The obstacles to business growth are mainly time, effort and money.
It's clear that no matter who you are, or where you find yourself at this moment in time, you will never have enough time to exercise all your options in life. That's an understatement to say the least. We are all subject to prioritizing activities and allocating time to get them done. But when it comes to business growth, unless strategic time allocations are made, growth comes slowly.
Ask any business owner who is actively working and trying to increase business at the same time how he grows his business. He’ll tell you growth comes only when you take the time to work on it - getting out more job bids, making and keeping customer appointments, and developing advertising programs and executing marketing plans. Then when business does increase, you need to have the two other components in place: employees and equipment. It's a three-ring circus, but business growth doesn't happen by accident - or at least it shouldn't.
THE "TIME" PART
Growth needs a plan. And, the first step is to put aside some time each week to work on it. No matter what comes up, you need to stick to the time allocated because if you don't, you may be forever working "in the trenches."
When I was in the business, my "business growth day" was Friday. Sure, I'd go to the shop, get the people out the door and on their way, but the rest of the day was spent on promoting business. I'd refer to my ongoing business growth plan, review it and think about my options.
The plan consisted of two parts. Part one of the plan included customers and sales; part two involved scouting for employees. I ignored part three, which was equipment, because as soon as business increased, equipment was always available at the store. Financing equipment and carrying the payments were the only concerns with part three. Therefore, what the growth plan came down to was increased sales and employees to carry out the work.
On Friday, I'd grab a batch of business cards, stuff them into my pocket for sales calls and get out and meet people who could at some point be transformed into employees. Depending on a company’s current situation, the primary focus will reflect what is needed for the company’s immediate success. If there's plenty of work and it's easy to get, then the emphasis will obviously be on finding workers. If sales are slumping, the focus will be on prospecting new clients or up-selling existing clients. In my case, finding employees was far more difficult than finding work, so the primary emphasis was on people.
Everybody I came in contact with on Friday I considered to be a potential employee, so I'd pass out business cards. If I saw a landscape crew in my travels, I'd stop and ask, "Do you know of anybody who needs a job?" Did I try to steal employees from other landscape companies? Absolutely! They've got experience, and besides, they'll only "jump ship" if they are unhappy with their present employer. Names collected on Friday were posted to an ongoing list. My list contained an average of 100 names of people I met along the way. As soon as I had sales that would support just one more worker, I'd go back to my ongoing potential employee list. If I had not allocated one day a week to "hunting for employees," I doubt I could have grown as fast as I did. Friday was also interview day - 30 minutes; that was it. In the first five minutes, you can usually tell if you've got a winner. So half of every Friday was spent finding the work, and the other half was spent finding people. I looked for long term in both - long-term people and long-term contracts - so I concentrated on landscape maintenance requiring care for large commercial sites. Logistics are easier that way. Maintenance is also easier to manage than other services since training time is residual. Also, offering landscape installations requires having a good foreman to provide direct supervision to a crew, and that type of employee is not easy to find.
THE "MONEY" PART
They say it takes money to make money. They're right about that, but it doesn't have to be your money - it can be the bank's money or those who finance equipment. As long as your credit is sound and you can cash flow the payments, obtaining vehicles and equipment usually isn't the problem - it’s working capital. You must focus on covering payroll and overhead costs, and you never want that to be a problem. As a rough example of how to cover these two expenses, consider the following figures, plugging in the appropriate rates and percentages for your business.
For each "fully supported with work" employee you hire, figure the gross pay for that person for six weeks, then add about 125 percent to the figure, and you will have the approximate cash number you're looking for (NOTE: The 125 percent figure is added to the employee’s wages to estimate the various taxes, benefits, insurance premiums and other overhead expenses associated with employing that individual person.). Your figure here is the total amount needed to carry that person - and the increased sales associated with having one more employee - until you get paid for the work six weeks later. For example, if you hire one person at $10 an hour, you will need about $5,500 in available cash to pay that employee’s wages and associated overhead expenses (6 weeks times 40 hours/week times $10/hour = $2,400 plus 125% = $5,400; rounded to $5,500 for this example). Generally the new employee generates about three times his or her base pay - in this case about $16,500 - in new sales. Remember, these numbers are rough, so work it using specific examples from your company.
From this example, you can see that business growth may come down to just how much working capital you have. You can back into the numbers by dividing your total annual sales by the number of employees to find the annual production rate (sales) per employee. That will help you plan sales increases "matched" against the number of employees needed to reach a specific sales goal, which will help you calculate how much working capital you'll need. Using the figures from the above scenario, if you increase annual sales by $50,000, and hire one more person to have enough labor to meet the work that sales increase generates, you create the need for another $5,500 in cash availability over a six-week period. Now, consider the next step: equipment and vehicles. Look at your total investment in equipment and divide that number by the number of production people on your payroll. The outcome is the approximate equipment investment per employee. Each new hire is supported by X amount of financed equipment. That's easy to figure, but it's an important consideration.
THE "EFFORT" PART
The three-ring circus in running a business is sales, production and control - get the work, do the work and control the outcomes. That's what it comes down to, but it takes effort to make these items fall into place for continued success. In other words, if you have to choose between buying groceries and making your equipment payments, eat if you're hungry, but know that without financing in the absence of cash to invest, you can't grow your business. If you don't maintain your credit in top shape, growth will probably not be possible.
Let's sum it up. The equipment is "waiting for you at the store." The employees you'll need to grow are "out there" wandering around; you simply have to "hunt" for them. It's a matter of taking a risk by hiring them "just in time" or having the stomach to hire them in advance of having the work to pay for them. Also, don’t forget sales and increased business. To juggle all of those and grow your business, you must have a solid allocation of your time, money and effort. Define the sales goal. Set aside the time. Do the math. Find the people. Then go for it.
About Nilsson Associates
Nationally recognized "Best Selling Author", Business Consultant and Seminar Presenter with over 30 years experience in the Green Industry. Nilsson's articles are published by Grounds Maintenance Magazine, Lawn & Landscape, PRO, The Arborist, Landscaper Publications of New York, PGMS, PLCAA. Nilsson owned and operated a successful Landscape Design-Build-Maintain firm for 15 years, and for many years was retained as Business Coach and Management Advisor to the national membership of the Professional Lawn Care Association of America.
Nilsson's books are endorsed by National Trade Associations, The California Landscape Contractors Association, The Professional Grounds Management Society, The Horticultural Departments of Ohio State University, The University of Tennessee, and The University of Georgia. Nilsson's books are in use by over 25,000 Landscape Contractors, Lawn Care Companies, Property Managers, Government Facilities, Park Departments and Municipalities nationwide.
http://nilssonbooks.com/_borders/Phil-Nilsson-Picture.jpg
Phil Nilsson
Nilsson Associates
Green Industry Consultants
374 Hart Street
Southington, CT 06489
Toll Free 866-280-2252
www.nilssonbooks.com (http://nilssonbooks.com/) email nilsson.assoc@snet.net
Business Growth Takes Time, Money And Effort
By Phil Nilsson, Green Industry Consultant
www.nilssonbooks.com
Take control of your future. Become self employed. Prepare now to be your own boss, make more money, achieve success and financial independence in your own business.
One of the greatest advantages of being a business owner is self-promotion. You increase business and profits when you elect to. Sure, there are a few obstacles to overcome, but a boss isn't one of them. The obstacles to business growth are mainly time, effort and money.
It's clear that no matter who you are, or where you find yourself at this moment in time, you will never have enough time to exercise all your options in life. That's an understatement to say the least. We are all subject to prioritizing activities and allocating time to get them done. But when it comes to business growth, unless strategic time allocations are made, growth comes slowly.
Ask any business owner who is actively working and trying to increase business at the same time how he grows his business. He’ll tell you growth comes only when you take the time to work on it - getting out more job bids, making and keeping customer appointments, and developing advertising programs and executing marketing plans. Then when business does increase, you need to have the two other components in place: employees and equipment. It's a three-ring circus, but business growth doesn't happen by accident - or at least it shouldn't.
THE "TIME" PART
Growth needs a plan. And, the first step is to put aside some time each week to work on it. No matter what comes up, you need to stick to the time allocated because if you don't, you may be forever working "in the trenches."
When I was in the business, my "business growth day" was Friday. Sure, I'd go to the shop, get the people out the door and on their way, but the rest of the day was spent on promoting business. I'd refer to my ongoing business growth plan, review it and think about my options.
The plan consisted of two parts. Part one of the plan included customers and sales; part two involved scouting for employees. I ignored part three, which was equipment, because as soon as business increased, equipment was always available at the store. Financing equipment and carrying the payments were the only concerns with part three. Therefore, what the growth plan came down to was increased sales and employees to carry out the work.
On Friday, I'd grab a batch of business cards, stuff them into my pocket for sales calls and get out and meet people who could at some point be transformed into employees. Depending on a company’s current situation, the primary focus will reflect what is needed for the company’s immediate success. If there's plenty of work and it's easy to get, then the emphasis will obviously be on finding workers. If sales are slumping, the focus will be on prospecting new clients or up-selling existing clients. In my case, finding employees was far more difficult than finding work, so the primary emphasis was on people.
Everybody I came in contact with on Friday I considered to be a potential employee, so I'd pass out business cards. If I saw a landscape crew in my travels, I'd stop and ask, "Do you know of anybody who needs a job?" Did I try to steal employees from other landscape companies? Absolutely! They've got experience, and besides, they'll only "jump ship" if they are unhappy with their present employer. Names collected on Friday were posted to an ongoing list. My list contained an average of 100 names of people I met along the way. As soon as I had sales that would support just one more worker, I'd go back to my ongoing potential employee list. If I had not allocated one day a week to "hunting for employees," I doubt I could have grown as fast as I did. Friday was also interview day - 30 minutes; that was it. In the first five minutes, you can usually tell if you've got a winner. So half of every Friday was spent finding the work, and the other half was spent finding people. I looked for long term in both - long-term people and long-term contracts - so I concentrated on landscape maintenance requiring care for large commercial sites. Logistics are easier that way. Maintenance is also easier to manage than other services since training time is residual. Also, offering landscape installations requires having a good foreman to provide direct supervision to a crew, and that type of employee is not easy to find.
THE "MONEY" PART
They say it takes money to make money. They're right about that, but it doesn't have to be your money - it can be the bank's money or those who finance equipment. As long as your credit is sound and you can cash flow the payments, obtaining vehicles and equipment usually isn't the problem - it’s working capital. You must focus on covering payroll and overhead costs, and you never want that to be a problem. As a rough example of how to cover these two expenses, consider the following figures, plugging in the appropriate rates and percentages for your business.
For each "fully supported with work" employee you hire, figure the gross pay for that person for six weeks, then add about 125 percent to the figure, and you will have the approximate cash number you're looking for (NOTE: The 125 percent figure is added to the employee’s wages to estimate the various taxes, benefits, insurance premiums and other overhead expenses associated with employing that individual person.). Your figure here is the total amount needed to carry that person - and the increased sales associated with having one more employee - until you get paid for the work six weeks later. For example, if you hire one person at $10 an hour, you will need about $5,500 in available cash to pay that employee’s wages and associated overhead expenses (6 weeks times 40 hours/week times $10/hour = $2,400 plus 125% = $5,400; rounded to $5,500 for this example). Generally the new employee generates about three times his or her base pay - in this case about $16,500 - in new sales. Remember, these numbers are rough, so work it using specific examples from your company.
From this example, you can see that business growth may come down to just how much working capital you have. You can back into the numbers by dividing your total annual sales by the number of employees to find the annual production rate (sales) per employee. That will help you plan sales increases "matched" against the number of employees needed to reach a specific sales goal, which will help you calculate how much working capital you'll need. Using the figures from the above scenario, if you increase annual sales by $50,000, and hire one more person to have enough labor to meet the work that sales increase generates, you create the need for another $5,500 in cash availability over a six-week period. Now, consider the next step: equipment and vehicles. Look at your total investment in equipment and divide that number by the number of production people on your payroll. The outcome is the approximate equipment investment per employee. Each new hire is supported by X amount of financed equipment. That's easy to figure, but it's an important consideration.
THE "EFFORT" PART
The three-ring circus in running a business is sales, production and control - get the work, do the work and control the outcomes. That's what it comes down to, but it takes effort to make these items fall into place for continued success. In other words, if you have to choose between buying groceries and making your equipment payments, eat if you're hungry, but know that without financing in the absence of cash to invest, you can't grow your business. If you don't maintain your credit in top shape, growth will probably not be possible.
Let's sum it up. The equipment is "waiting for you at the store." The employees you'll need to grow are "out there" wandering around; you simply have to "hunt" for them. It's a matter of taking a risk by hiring them "just in time" or having the stomach to hire them in advance of having the work to pay for them. Also, don’t forget sales and increased business. To juggle all of those and grow your business, you must have a solid allocation of your time, money and effort. Define the sales goal. Set aside the time. Do the math. Find the people. Then go for it.
About Nilsson Associates
Nationally recognized "Best Selling Author", Business Consultant and Seminar Presenter with over 30 years experience in the Green Industry. Nilsson's articles are published by Grounds Maintenance Magazine, Lawn & Landscape, PRO, The Arborist, Landscaper Publications of New York, PGMS, PLCAA. Nilsson owned and operated a successful Landscape Design-Build-Maintain firm for 15 years, and for many years was retained as Business Coach and Management Advisor to the national membership of the Professional Lawn Care Association of America.
Nilsson's books are endorsed by National Trade Associations, The California Landscape Contractors Association, The Professional Grounds Management Society, The Horticultural Departments of Ohio State University, The University of Tennessee, and The University of Georgia. Nilsson's books are in use by over 25,000 Landscape Contractors, Lawn Care Companies, Property Managers, Government Facilities, Park Departments and Municipalities nationwide.
http://nilssonbooks.com/_borders/Phil-Nilsson-Picture.jpg
Phil Nilsson
Nilsson Associates
Green Industry Consultants
374 Hart Street
Southington, CT 06489
Toll Free 866-280-2252
www.nilssonbooks.com (http://nilssonbooks.com/) email nilsson.assoc@snet.net