In the non-profit world of hospital care, the phrase “No Margin, No Mission” is used to remind those in charge that it is ok for a hospital to be fiscally responsible and make decent margins.
I feel the same message needs to be embraced by our industry, the world of lawn and landscape.
Once in a while, I will peruse some landscape Facebook groups, and see questions asked about margins. The advice given makes me cringe because it never fully explains how to make money and scale a profitable business. In fact, much of the advice will keep your business small and keep you stuck.
No Margin, No Mission, is used to remind those in charge that it is ok for a hospital to be fiscally responsible and make decent margins. Click To Tweet
Some Words To Live By:
- Profit is not a dirty word; it is the result of a well-run business with a focus on people, efficiency, and marketing savvy.
- Making ample money (where there is plenty leftover) does not mean you are greedy; it means you are planning for the future.
- Earning 5% profit (the oft-quoted industry average) is not great, it means you are not making enough money to grow your business and reward your people.
In January during my Financial Master Class, I measured the net profit and the balance sheets of over 150 landscape firms and found that on average, balance sheet equity rose up, but profitability did not. Especially when I made attendees remove PPP from their profit and loss statements, but not their balance sheets.
These heavier balance sheets give people a false sense of security.
Profit is not a dirty word; it is the result of a well-run business with a focus on people, efficiency, and marketing savvy. Click To Tweet
Numbers Do Lie
Case in point, I have a new landscape firm (around 7M in bid build) that just joined my high-impact peer groups, and when the gentleman put together his numbers removing his PPP money, his P/L shifted from a profit of 250,000 to a loss of 150,000. His reaction was, “But I made money!”. My response was, “Only because the government gave you money”.
We have to do a better job as an industry, learning how to earn a good (if not great) margin.
It’s not rocket science, but luckily it is a science that everyone can learn.
Commercial Businesses Can Make Money, Too
A friend of mine just sold his business, and the valuation he received was sky high! How did he pull this off?
The timing was right but even more than that:
- His margins were higher than many residential firms.
- His people and systems were extra ordinary.
- He was able to combine growth and profitability, not giving up one for the other.
With his buyout, he earned enough money to buy a small island and retire.
Instead, he rewarded his employees and gave them money, and he is soldering on.
Your Challenge: Become Financially Savvy
- Make sure your team leaders at all levels are numbers-savvy. Everyone needs to know their number. Maybe not the dollars, but definitely the numbers.
- Become a marketing and sales expert so you can sell to the market with savvy.
- Become efficiency experts, because your clients appreciate it and so does your bottom line.
- Give everyone a scorecard, empower them, and make it fun.
You got into this industry because of your personal passion, but that’s not enough. You need a healthy margin to keep your mission alive.
You got this!