Chiera is well aware of what his company’s overhead burden is, and strives to maintain a minimum gross margin on all jobs—in both maintenance and installation—to make sure it’s recovered. Of course, some projects and accounts are more profitable than others. “When you have a really profitable account, you have to baby it to death so the customer never decides to start shopping again,” Chiera says.
Delivering a minimum gross margin on all jobs leaves the owners with an acceptable net profit margin to justify all the blood, sweat and tears, and to allow for future expansion of the business. Chiera is a huge proponent of planning for the future, whether it means investing in a business expansion or simply building up some reserves for an unexpected business downturn. “We’re actually looking at opening satellite offices in the future, and potentially launching a nursery,” he points out.
Although the partners each wear many hats, Posten is more of the operations guy while Chiera works the numbers. “I used to just watch the checkbook and make sure we could make payroll and fuel our fleet,” Chiera relates. “Now I’m constantly looking at P&L’s, job summary reports and quotes. I rarely let loans go full-term in order to save on interest, and I’m always watching truck and equipment repair costs. I don’t like getting nickel-and-dimed to death. When repair bills exceed what a year’s worth of payments would be on a new truck or mower, we get a new truck or mower.”
Monitoring these crucial items—in addition to a sizeable staff and growing customer list—is a bit overwhelming, Chiera concedes. A full-time office manager and new filing system have proved invaluable. “Thanks to him,” Chiera says, “our P&L is now four pages long as opposed to a half page. It’s a lot more detailed so we really know what’s going on and what’s being spent on what.”
The new filing system consists of a series of mailbox bins in the front office. “It’s for all those things we need on a daily basis and spend a lot of time digging out of filing cabinets,” Chiera says. There are mailboxes for each supervisor, and separate bins for quote request forms, employment application forms, job summary reports, purchase orders, and more.
Chiera and Posten have a couple other bits of advice for a growing contractor. For one, get a good CPA. “I can’t tell you how much money ours has saved us over the years,” Posten says.
Secondly, don’t be afraid to use trustworthy outside vendors such as servicing dealers—because they may save you money in the end. Chiera relates, “We hired a full-time mechanic a couple years ago to handle all vehicle and equipment maintenance and repairs. It didn’t work. That’s another person you have to manage. Nonetheless, we now outsource all vehicle repairs and maintenance to a local shop we’ve established a great relationship with. All equipment service is also sent to local dealers, except for basic things like oil and blade changes.”
BRINGING THE VISION INTO FOCUS
Speaking of saving money, gas is now on lockdown at Impact Landscaping & Irrigation, just as a precautionary measure to help deter theft and waste. While fuel costs have naturally made an impact on net profitability, Chiera doesn’t get overly worked up about it. “Fuel is still only 5% of our gross sales,” he points out. “I’m more concerned with labor, which is by far our largest expense. Another thing Rod Bailey taught me was to never overpay for labor.”
Other contractors and sources like the OLA and PLANET have helped Chiera get a handle on what a fair wage is in this business. From there, it’s all about managing the human element of a landscape company. “Over the years, we’ve figured out how employees need to be treated in this industry in order to hang onto them,” Chiera says. “You need to create a vision for your company and present a career path for people so they understand there’s something to work for.”
For example, one of Impact Landscaping’s H-2B employees had proven himself very reliable and valuable last season. This season, Chiera made him a foreman. “We want our guys to know they can make more money and move up as the company grows and gets better,” Chiera adds.