If you own a landscaping business, you’re likely well aware of the many costs. In some cases, it may seem like you’re paying your team members and lenders more frequently than you’re earning income from customers. This guide is for you if you want to learn how to control costs in your landscaping business.
Why Are Costs and Labor Calculations Important?
Costs, or expenses, refer to the money you pay to operate a business. Labor is anything the company pays to employees or contractors. Most landscaping businesses are familiar with both cost types. In fact, these two expenses are two of the most important factors to consider when ensuring your landscaping business is profitable.
Your labor and equipment costs directly affect your bottom line. Spending too much on your business equipment, repairs, or staff can lead to your business losing money. No business owner wants to be in that position because it isn’t sustainable. Eventually, you’ll have to come out of pocket to cover these required expenses.
Understanding your costs is also essential to setting prices. If you don’t know how much you’re paying for equipment, labor, or other costs, you won’t know how much you need to charge your customers. For this reason, evaluating your costs is often one of the first steps to controlling how much you pay as a business.
Tips To Control Costs
Whether just starting out or hoping to expand your business this year, it’s important for companies to control costs. Control your landscaping business costs with the following tips:
Make a List of All Costs
Before finding ways to reduce your landscaping business costs, you’ll want to establish a clear understanding of what you’re paying, to whom, and when. Make a list of all costs for the last year, including one-time and ongoing expenses. Dividing these costs into two separate categories can help you anticipate future costs, too.
Comparing ongoing labor costs with earned revenue is also important. A general rule of business success is to ensure you’re not paying more in labor than you’re earning. If you’re paying your crew more than you’re receiving, you may need to increase your prices or reduce your employee load. However, keep in mind that reducing your crew by too many can limit your company’s ability to accept new jobs, which is key to increasing revenue.
Evaluate Current Staff
Sometimes, controlling labor costs isn’t about cutting staff but more about carefully choosing your crew members. Higher-quality employees with previous landscaping or hardscaping experience may come at a higher price, but the boosted productivity is often worth it to your business’s success. Hiring better employees from the start also reduces turnover rates and limits injury, both of which can be costly expenses.
The right staff members can also help you boost company morale and productivity. Identifying current crew members’ strengths and then assigning them to roles that support and ensure greater business success. Ongoing training ensures all team members can safely and efficiently operate new equipment, allowing you to schedule and complete more jobs.
Know When To Invest in New Equipment
Purchasing new equipment may come at a price, but supplying your crew with outdated, inefficient equipment also limits their productivity. Basic landscaping projects require equipment like lawnmowers or blowers that work well. The trucks that your team members drive also affect their ability to arrive at client jobs on time. Don’t forget about choosing work trucks that can safely tow necessary equipment.
Upgrading equipment can also help you complete harder, better-paying jobs faster. A skid steer brush grapple, for example, allows your team members to clear land, brush, and compost much faster.
Completing this job with traditional landscaping buckets or tools can take days or weeks, whereas upgrading your equipment allows your team to complete this essential task much faster. Newer equipment also helps create a better image of your brand, helping to boost your reputation, which can lead to more sales.
Keep Up With Maintenance
Keeping up with preventative maintenance on all equipment will ultimately help you control costs, too. When equipment isn’t maintained properly, it leads to more necessary repairs. In addition to the added repair cost, your equipment also can’t be used until fixed. This means you’ll have to give up on client jobs that require that equipment.
Maintenance needs are also another reason to consider upgrading your equipment. Many newer pieces of equipment come with a warranty, which often covers basic repairs or maintenance for a limited period. Of course, equipment that’s made with better materials also typically requires less maintenance.
Controlling costs is an essential part of any business. Failing to identify equipment and labor costs can lead to a company that’s not profitable. Ensure you go into the new year with a plan to control these common costs. In return, you’ll enjoy more revenue, a better company reputation, and a positive bottom line.