Landscape labor costs are one of the most critical pieces of the profit puzzle and one of the hardest to control. Technology is enabling landscape contractors to manage their businesses — including landscaping labor — better than ever.
The data-driven insights boost your bottom line. The technology makes it possible to track productivity, analyze costs and expenses, optimize routes and save on landscape labor costs. Best of all, the technology is easy to use.
Move Your Margins
Making money is all about managing money. To do that you have to understand your profit margins.
To start, let’s talk about the money you make in sales. Undoubtedly that total is an important number, but it really doesn’t mean a lot on its own. The next step is to subtract the cost of anything spent on a job, including materials, equipment, landscaping labor and any other relevant expenses. This gets you to your gross profit. Finally, subtract all additional expenses — often overhead items like phones, vehicles, office space and other recurring costs — from your revenue to reach your net income, a true indicator of profitability.
To increase your net income, you have to move your margins, and there are a few ways to do that favorably:
- Increase your rates
- Decrease your costs
- Become more efficient
- Some combination of the three
- Keep your head above water
Don’t make assumptions or look the other way when expenses come in. It may seem overwhelming, but it doesn’t have to be hard to stay on top of it all. Lean into technology to help manage all your expenses. Horizon360 makes it incredibly easy to sync customer, employee and expense data with QuickBooks Online.
Separate your expenses into costs related to materials and services — like landscaping labor costs — and those related to overhead. Make sure you are accounting for all of your income. Take a look, what is your labor cost relative to your revenue with other expenses removed? Can you afford to pay more to attract the landscaping labor talent you need?
Calculate expenses and income all the way down to the type of job or the client and you’ll be able to easily see what jobs are the most profitable for your business. Then you can make smart decisions about what jobs to take and accurately price to ensure you’re meeting your goals.
Accurately tracking income and expenses by job is the best way for landscape contractors to know if they are hitting profit margins and understanding their opportunities for growth. If you bury your head in the sand, you won’t see those opportunities walking by.
Go Beyond the Competition
It makes sense to be careful about your expenses. Analyze which ones are worth it and which are a drain on your business. It’s also important to ensure you’re charging an adequate amount to not only stay afloat, but also to achieve your goals, without pricing yourself out of your market.
Horizon360 can help you better analyze your numbers to make sure you’re hitting your margins, but it is also great at optimizing your landscape labor costs. Here is where you can differentiate yourself from other landscape contractors in terms of profitability.
Think about your business as it exists today. Are there places you can find efficiencies in landscape labor costs using technology?
- Are your crew members running the most efficient routes? Know definitively that you are scheduling efficient routes, saving both time and fuel.
- Where are your crew members? Did they follow the assigned routes? Are you worried about burnout because they never take a break, or are you worried that those breaks stretched on too long or perhaps took them on an unapproved detour? Track employee and equipment productivity.
- Are some crews more efficient than others? Is it worth upgrading or adding equipment to help them become more efficient? Optimize efficiency across crews, equipment and customers.
- Are crew members bringing in additional business by upselling or spreading the word? Can they create a work order right when the customer requests the work?
- If the weather changes or there’s a change to a schedule, is it easy to alert your crew? Easily flex schedules to add or edit on-demand jobs and push updates to crews in real time.
- Is it easy for your team to check in and out? Enable employees to clock in/out from a mobile device or a tablet in a shop. Track, edit and approve work hours and sync the information with payroll.
- Does all of the work make it through to invoicing and payment? Avoid lost or forgotten jobs and missed invoices.
The real superpower of Horizon360 is the ability to turn your business into a machine that makes everyone’s lives easier. It makes work easier for your crew, it shows more value to your clients, and it frees you up to focus on profitability and growth.
Charge and Pay Appropriately
Once you know your total revenue and costs as well as profits per job, you can safely adjust your pricing and wages. Determine if you could and should charge more on specific jobs. At the same time, analyze if you could pick up more business if you are willing and able to drop any prices.
It’s not only the money coming in that can be adjusted. With the right data, you’ll be able to take a look at your landscape labor costs and determine if they need to be adjusted up or down. If you can’t stay afloat with current wages and there is nowhere else to cut costs, you’ll need to lower wages, or pay new employees a lower rate. On the flip side, if you have healthy margins, you can raise wages or offer bonus incentives to employees, which can also help attract and keep the best talent.
Don’t Stop Now
From those first confident decisions technology enables you to make, you’ll be bettering your business. It’s important to note, there is no set-it-and-forget-it solution. It is leaps and bounds easier to make good landscape business decisions with Horizon360. But to achieve ongoing optimal results from your landscaping labor cost investments, you need to stay tuned in to what the data and your crews are telling you.
Look at each job and ask the team to see if there are opportunities to increase efficiency and better distribute work within each crew and across crews, keeping their wellbeing in mind. Gain buy-in and great ideas for the future. How you use technology and how you interact with your staff play a huge role in your future success.
Frequently Asked Questions
Q: How do I calculate lawn care and landscape profits?
A: To calculate lawn care and landscape profits, subtract all costs from revenue to determine net profits. If possible, do this on a per-job basis so you can determine which jobs are the most profitable. Lawn care and landscaping business software can help make this an easy process.
Profit = Revenue – Cost of goods and services
Q: Why should I calculate lawn care and landscape profits?
A: Calculating lawn care and landscape profits allows you to make informed decisions on how to run your business, which jobs to pursue and what to charge for those jobs.
Q: How much should I charge for a lawn care or landscape job?
A: How much you charge for a lawn care or landscape job depends on the expected income, expected costs, the desired profit margin and what your research says your client will pay.
Q: How do I make my lawn care and landscaping business profitable?
A: By tracking and analyzing revenue and costs, you will be able to see what jobs bring in money, what expenses are worth the investment, and how you can optimize your operations to have profitable margins in line with your goals.
