Business Type: Garden Maintenance and Landscape Construction
Location: Wollongong, NSW
Size: 14 Staff
Time a Client: 8 months (and on-going)
Background
Paul, the owner of the garden maintenance and landscaping business, was referred to me by another consultant that I knew from Sydney, who has retired to Wollongong.
Paul has had other business coaches in the past but not with a financial background, and he was skeptical as to the value that I could add to his business. However, he was willing to work together on the recommendation of the retired consultant.
Initial Engagement
We started off slowly with an initial one-off business review and planning workshop. This uncovered specific areas for Paul and his business partner to work on and helped them to get onto the same page regarding the steps that were needed to improve the business.
After this initial workshop, Paul decided to engage me on an ongoing coaching program to help him to implement the plan that I had provided, help to keep him on track, and to provide monthly insights into the business’s financial performance. He recognised the importance of staying on top of the numbers, and also for him to develop his financial understanding and skills.
Results and Key Strategies
We have only been working together for 5 months on an ongoing basis. In that time his average monthly profits have skyrocketed from around $5,000/mth to now regularly achieving $50,000/mth. This rapid growth is not typical, but it is still a good example of what is possible. Here are the key strategies and changes that have helped Paul to achieve this result.
All of these are a result of getting closer to the business numbers and making decisions based on this.
1. Reduced Garden Maintenance Crews from 4 to 3
Paul was running 4 garden maintenance crews. An analysis of the revenue and profitability of each crew showed that one crew was not fully utilised and that it would make sense to move staff to the landscape construction team and spread all of the garden maintenance work across 3 crews.
This obviously meant the same garden maintenance revenue with only 3/4 of the costs, resulting in a far more profitable division.
2. Grew In-House Landscape Construction Work
Paul was using sub-contractors extensively for his landscape construction projects. Once again, running the numbers for this and comparing it to what the profitability of these projects would be if he grew his employed landscaping team showed that this would be the preferred structure.
In addition to the staff that were moved from the garden maintenance division, he employed an experienced landscaper to run these projects instead of relying on subcontractors. We also set revenue targets for this team and Paul has been focused on winning the right amount of work to keep this expanded in-house team busy.
So there has been a double benefit of more revenue at better margins that has contributed to more profits for the business overall.
3. Increased Prices
This was an easy one, but one that is easily put to one side. We reviewed when customers last had a price increase and he updated his prices accordingly. He now has a regular process to review and increase prices.
As you probably know, any increase in price flows straight to the bottom line since there are no corresponding cost increase when you increase prices, unlike growing the volume of your work.
4. Increased Mark-Up on Subcontracted Work
He still uses subcontractors for both landscaping projects and also general property maintenance work that his own team isn’t set up to provide.
He has increased his mark up from 10% to 15-20% depending on the size of the job. Once again, all of this flows straight to the bottom line.
Not Just One Thing
So, you can see that it wasn’t just one thing. All of these things have added up to result in a massive improvement to his profitability.
His new level of profitability is not uncommon for other landscaping clients that I have worked with. The reason for the dramatic increase is more so because his profitability previously was way too low. But this is the situation for many small businesses.
You Can Achieve This Too
Paul is not super special. Sure he is keen to learn and he does have a great way with people. But he is just like you – a hands-on tradie. If he can achieve these results then you can too.
Let me know if you would like to chat… You can click here to book in a time for a quick 15 minute phone call.
