How to Run a Profitable Business in 2023
A business owner must make a profit in order to maintain a successful business — no business can survive without it. While sales are essential for growth, it’s useless if the business is not making a profit along with those sales. Sales without profit will put a business at financial risk.
Over the years of working with lawn care and landscape business owners, The Green Executive® has learned that what is often missed by business owners is how to read and understand the numbers behind the business. Financials tend to get swept under the rug, usually out of fear and intimidation, but the truth of the matter is, it’s not as difficult as it may seem.
In this article, we’ve put together a list of the top 10 things you can do right now in your business to make a profit in 2023. If you are looking to become a better CEO this year in your business, then check out these tips.
#1 Build a Budget
Invest in LMN (Landscape Management Network) to help you run your day-to-day operations and build out your budget. Budgeting is the plan (aka. roadmap) for sales revenue, expenses, equipment and labor and it should be set annually with quarterly reviews. At Linnemann Lawn Care & Landscaping, we update our budget 2-4 times a year — as the seasons evolve. In this industry, pricing can rise unexpectedly for fuel and materials, so keeping an eye on the budget will keep your profit in check.
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#2 Raise Your Prices
Have you raised your prices in the last few years? If not, you probably don’t know your cost of doing business. Almost ALL costs have went up in the last few years including equipment, labor, fuel, hardscape and softscape materials, overhead, and so forth. By building a budget and estimating what you expect to spend in 2023, you’ll have a better grip on what you are charging.
Tip: If you aren’t charging your clients for your equipment, you should be. This is just another reason why LMN would be of value to your business. It will help you understand what you should be charging per job for a piece of equipment.
#3 Profit Markup vs. Margin
To better understand the thoughts around this, here’s a video called Profit Markup vs Margin – Simple Formula, Common Mistake. You don’t want to miss listening in on that video!
#4 Check your EGO
Stop trying to keep up with the Jones’s! Do you REALLY need that shiny new $90k pickup truck? Before making ANY purchase in your business, ask yourself these 3 questions:
- Is the purchase that I am about to make good for my company?
- Is the purchase that I am about to make good for my client?
- Can the purchase wait?
#5 Think Super Profit!
Sell add-on services to existing clients while already on-site. Can you add that $300-500 boulder to the landscape install you are already installing? How about a landscape lighting kit install for an additional $2500-4000 while replacing the plants and edging on the front of the home? Both of these are examples of Super Profit. Its additional selling of jobs that you can do quickly while you are already at the clients house.
#6 Shop Vendors
Call up your insurance agent and tell them you are trying to keep expenses in check for the 2023 season and would like a second look at your insurance rates. Ask him/her if there are any additional credits available. If they refuse to work with you, ask for your Loss/Claim History and shop your insurance rate around.
We personally know business owners — a few who were evening doing $10,000,000 in revenue — that were being taken advantage of on their insurance rates. When they shopped around, they saved $50,000-$100,000 a year or more!
Additional way to save: There’s a landscape business owner friend of ours here in St. Louis that pays for his hardscape materials by check every week and saves 5-10% on all his hardscape materials from one local vendor. Paying by check means the vendor isn’t paying a processing fee. Find out if cash or check can save you money with your vendors.
#7 Reduce Crew Sizes
We have done the research folks and we can tell you from experience that having crew sizes of 3, 4 or even 5 doesn’t make sense for the majority of landscape/lawn care contractors in our industry. Utilize crews of 2 and have the proper equipment (aka. a dump truck/trailer and Dingo) for each 2 man crew.
#8 Increase Efficiency!
Here’s a list of ways you can increase efficiency right now:
- Put a STOP to multiple gas station stops.
- Reduce your load/unload time with box trailers.
- Have materials delivered to your jobsites vs having your team ride to go pick it up.
- Have staggered start times for foremen and laborers, keep one person back to fuel every evening and get everyone else off the clock.
- Have the crews equipped with the right equipment including plate compactors, Dingo’s, backpack blowers, etc.
#9 Pay Attention To Your Office!
Efficiency doesn’t just need to happen in the field, it also needs to happen in the office. It used to take 4-6 hours a month to invoice out our mowing clients until we started utilizing LMN software. It now takes us 15 minutes. Whatever software you are using, utilize it to the full extent of its capabilities. Thanks to LMN, we can also generate $10,000 landscape estimates in just 20 minutes using the template feature in our software. Again, use your software to its full capability!
Are you doing a lot of printing in house? If so, then purchase a decent office printer. This can really save you a lot of money on ink and drastically increase efficiency.
What about your computer setup? Dual monitors go a long way in increasing efficiency in the office. Fun Fact: A dual monitor computer setup can increase efficiently by as much as 42%!!!
#10 Hire a coach/consultant/accountability partner
All business owners should have a coach. Someone who they can meet with regularly and bounce ideas off of, help hold them accountable to their goals and to in general, help them look beyond the visionary they are meant to be. By investing in a coach, you’re making time to work on yourself and on your business, NOT so much in your business. This will be essential for success moving forward!
The bottom line is, for a business to be successful it MUST be profitable. Invest the time it takes to understand the financial health of your business. As the CEO of your company, you are the ultimate decision-maker. If you do not understand the decisions you are making and how they will affect the profitability of your business, consider that a red flag and seek help.