How it works in the field.
A landscape contractor from the Midwest called me a number of times to discuss having me consult with him and his company. He just couldn’t make up his mind. During our final call, he informed me that, in order to save money, he was going to have his brother-in-law, who (like me) has an MBA in finance, consult with him. Forget about my 30-plus years of experience successfully working with landscape contractors. Because his wife’s brother had a similar degree as me, certainly he could do what I could do.
Here’s your sign!
A residential landscape installation client in Utah decided to hire an unemployed friend to be his general manager. The friend had neither construction nor estimating experience, but he argued with me insistently about how my estimating methods were wrong. He insisted that all truck and equipment expenses should be put in general and administrative overhead costs and allocated to jobs as a single percent markup applied to the total of direct costs (like materials, field labor, labor burden, subcontractors). I tried to explain to him that you should be job-specific with equipment costs. For instance, if a job needs a mini-excavator for three weeks, its cost should be included in the bid for that job. On the other hand, if the job doesn’t need a mini-excavator, the cost for such a machine should not be included in the bid for that job. I tried to explain to the new G.M. that his method would cause him to overstate the equipment costs on labor-intense jobs and understate it on equipment-intense jobs. He’d win the jobs that he underpriced and lose the jobs that he overpriced. He would have none of it.
Here’s your sign!
Two partners in southern Colorado were producing about $1.2 million in landscape installation work per year but barely breaking even. A friend of the two partners suggested they call me to get help with their pricing. They did! I prepared a budget with them, showed them how to estimate all of the costs for their jobs and computerized their estimating system. The next year, they produced about the same amount of work but charged just over $1.4 million for it with a 15 percent net profit margin. Their company has been growing profitably ever since.
A landscape maintenance contractor in Texas was producing just under $1 million in annual sales but losing money. A number of his friends in the industry suggested that he contact me to get some help. We got together and I analyzed his company, his operation
What’s the antidote that turns stubbornness into perseverance? Creativity! What separates self-imposed ignorance from true inspiration? Knowledge! You obtain knowledge by being creative, asking the right questions and keeping an open mind.
Our contractor friend in the Midwest was wise enough to reach out for help. However, hiring his brother-in-law just because he had a degree may not have been so smart. The G.M. in Utah, as predicted, cost his employer lots of money … and jobs. I still don’t think he learned his lesson. The two partners in southern Colorado and the landscape maintenance contractor in Texas are growing their businesses while maintaining excellent profit margins. They were willing to be creative, face their problems, ask the right questions and ask for help from knowledgeable sources. They were also wise enough to implement good suggestions.
Constant improvement and progress really are about the questions that you ask yourself. Are you asking the right questions?