Have you ever completed a project, and instead of feeling the satisfaction of a job well done, you just become overwhelmed by a feeling of uncertainty? Like you weren’t even sure whether that job was truly profitable for your business? We know the feeling. We have a huge appreciation for the hard work everyone in our industry does, and because nobody deserves to feel lost when it comes to their financials, we’re giving you some easy steps you can implement right away to help guide you on the path to profitability.
1. Plan ahead
You’ve heard the expression time is money? This is true in few industries more so than landscaping. One way to save time, and therefore money, is to scope out your job site before beginning the work so you can plan for proper access. What do we mean by that? Measuring your entry points to a backyard, for example, can inform your choice of machinery size. Since a bigger tractor means a faster job, it’s good to know your bandwidth before you arrive at the site having shortchanged yourself. Another example would be knowing that you have to level some ground. Now you can order extra dirt from the get-go instead of having to scramble halfway through.
2. Don’t forget your wasted materials
These are two dirty words in our business: wasted materials. Let’s face it: our jobs are rarely as efficient as we hope them to be. Waste is inevitable, but you have to take it into consideration when you’re preparing. One of the more common mistakes we make is failing to factor in the extra materials you won’t end up using. We’re talking about things like windy driveway borders you have to cut stone to accommodate. This is uncontrollable waste, but it has to be accounted for. We suggest calculating an extra 15-20% in your budget. Other times, it’s controllable waste that can be avoided by simply taking the time to measure your jobs ahead of time.
3. Account for overhead
Your overhead is the ongoing expense required to operate your business — things like your company’s liability insurance and your warehouse’s rent costs. These are costs that are difficult to directly calculate into every job, but still need to be considered. So how do you properly cost overhead into a job so that your budget is accurate? The best way to calculate overhead is on a time basis. Simply add up all your costs per month that are not directly associated to a job, including a receptionist, rent, or office expenses. Now take that monthly expense and divide it by the number of days in the month to determine your overhead cost per day. With that number, you can attribute a value to each project: if a crew spends five days on a job you can multiply your overhead cost per day by five to get the total overhead cost for that job.
4. Check the forecast
Don’t save this one for a rainy day! Weather delays suck — but they happen. When you first laid out your budget for your upcoming project, you probably did so under the assumption that every working day would actually be a full, uninterrupted working day. Did you hear that? That was Mother Nature laughing at you. Even if your crew is the landscape-warrior type that works in any conditions, over the course of a summer there will be times when it’s just not possible. Factor in roughly one or two rain days a week, depending on where you live. And don’t forget to account for a few other factors: the work will be a little slower in muddy conditions, lack of work means lack of revenue, and transport costs are higher when crews are taking rain breaks back at the shop.
5. Budget properly
Do you know that labour accounts for roughly half your business spend? Do you know how much you’re spending just to transport your materials? These are all things that go into a smart budget plan. If you’ve never budgeted your jobs before, not to worry, we’ve got you covered! We believe that no one deserves to feel lost when it comes to their job financials, so we built a free and easy budgeting tool to help you efficiently track your costs and know exactly where you stand.
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