I first heard the phrase “No Margin, No Mission” used in a non-profit health care environment.
It’s reminder to non-profit directors that it is important to be fiscally responsible.
This same message could be embraced by our industry as well.
A healthy margin starts with your sales team.
As I have shared before, Chris DiStefano (DiStefano Landscaping, Burlington VT) does a good job of teaching his sales team to understand how margins are impacted by the type of work they sell and produce.
It’s no wonder, with “profitability” being one of his company’s four core values. (Photo of DiStefano values hung in their yard).
Don’t believe social media: Not everyone has a handle on this.
Once in a while, I will dive into some landscape Facebook groups, and see questions asked about margins.
The advice given there makes me cringe because it never fully explains the margins needed to scale a profitable business. In fact, much of the advice will keep your business small and keep you stuck.
Some Words To Teach Your Sales Team:
- Profit is not a dirty word; it is the result of a well-run business and must also be a goal to be attained.
- Profit fuels your growth: Making ample money does not mean you are greedy; it means you are planning for the future.
- Breaking even is breaking bad: Earning 5% profit (the oft-quoted industry average) is a poor goal, it is the new break-even. You can’t finance growth by breaking even.
Closing ratios count. In January during our Financial Master Class™, we measured the net profit, labor markups, and sales closing ratios of over 125 landscape firms. It should be no surprise that healthy profit firms have a good handle on their marketing, sales process and sales closing rates.
We must do a better job understanding what drives our numbers.
It all starts with your sales: 1) Setting sufficient sales goals to cover overhead and profit, 2) Dialing in incentives to underpin your higher profit targets, and 3) Treating your salespeople as part of your overall team.
Your Challenge: You have to Sharpen the Tip of the Spear: Your Sales Team
If sales are vanity and “profits are sanity”, these four commitments will remove the crazy:
- Make sure your sales leaders are numbers-savvy. They need to understand that profit starts with them.
- Become a sales management expert. Make sure your company brings in the right leads and sells them expediently with savvy.
- Focus on efficiency in both sales and production. Your clients will appreciate it and so does your bottom line.
- Give everyone a scorecard that includes margins: Starting with your salespeople, it’s everyone’s job to help the company make money.
You got into this industry because of your passion. You need a healthy margin to keep your mission alive.
Go get em!
P.S. Join me at the Sales Symposium and learn how to sell more high profit work and become one of those owners we all look up to. The early bird ends next week, Feb 14, sign up today.
We will review your closing ratios during this symposium as well.