Many of us have witnessed a shift recently in customer and commercial spending. Customers are more price sensitive, get more quotes, have tighter budgets, have delayed projects and are pitting contractors against each other when quoting projects. When the competition heats up, you’d better be ready to compete. Here are five ways to win competitive jobs without having to sacrifice profit margins.
Get the Right Equipment for the Job
Despite the stereotype that landscape contractors are ‘equipment junkies’, I’ve met far too many that are underequipped. The idea of fixed monthly payments scares off many owners, especially those who are struggling to maintain a healthy bottom line.
The right equipment and work tools allow your crews to do more work in less time. By doing the job in less time, you reduce your production costs, and you can do more jobs in a season.
Consider the following strategies to use equipment more effectively:
· Don’t be cheap on equipment. Focus on the productivity gains you’ll get from your equipment. Savings on labor can easily outweigh a few hundred dollars in equipment payments.
· Standardize your equipment – equip your crews with same models and same brands of your work tools. Equipment standardization makes it easy to stock spare parts, filters, etc., and it’s easier to train employees on the use and care of your equipment and tools.
· Choose equipment dealers who offer excellent support. Parts availability and quick repair turnaround times have a big impact on your crews’ productivity. You may find cheaper sticker prices at “lesser” dealers, but you’ll regret the small savings when you’re waiting a week or more to get your equipment back.
Know Your Company
I can’t overstate how critical it is to know, with confidence, exactly where your prices need to be. You need to understand your costs of production (crew costs per hour, equipment costs per hour, material costs), your overhead costs (company operating expenses) and the profit margin you have in each job.
If you’re using a best guess pricing system, or using numbers that are several years old, then you’re certainly under pricing and over pricing work. An operating budget and an overhead recovery system will ensure you know where you stand on each job and how much room, if any, you have to move on price.
Train and Motivate Employees
The easiest way to reduce your cost and price of your jobs is to reduce the time it takes to do the job. If you want to get more productivity from your crews, they need:
· Systems and training – to enable them to get the work done efficiently
· Incentive and motivation – a system that rewards employees, who drive up productivity and, in turn, make the company more profitable.
Many owners in the landscape industry struggle with both these problems. I can’t count the number of times I’ve been told in workshops, “ my guys will start their own companies after I’ve trained them”. I’m not. I’m far more concerned that I’m losing potential profit because we’re paying for mistakes, downtime, customer service problems, accidents/incidents, repairs, and warranty work. Eliminate these problems by investing in training, and you won’t have to worry about your employees starting up competitive companies… you’ll be 10 years ahead of them.
A Process for Eliminating Waste
We all have problems and we always will… but have you resigned yourself to accepting the same problems over and over again or is your entire company committed to surfacing and solving problems so that we can avoid the same problems happening again?
When you build a company where all employees are actively engaged in identifying, fixing, and committing to systems that eliminate mistakes and waste, everyone benefits. Less waste means more money available for rewards, but it also means there are less day-to-day problems, making for a more enjoyable, less stressful work environment. Fewer problems mean happier employees, happier owners, and happier customers who are paying less for service that exceeds their expectations.
You can disregard technology as a bunch of (expensive) fancy toys or see technology for what it can really do for your business. With tools such as smart phones, GPS, tablets, electronic time keeping, customer relationship management, websites and even social media, we are able to do so much more, with so much less. For example, smart phones make communication in the field instantaneous, and electronic time-keeping applications give us the ability to take time records right from the field and drop them directly into accounting without the need for tedious data entry.
Imagine an era where designs, project goals, material lists, time tracking, route lists, maps, site maps, repair orders, attendance tracking, health and safety information and training videos are all available at the touch of a finger on a 8” – 10” screen in the hands of every foremen. Expensive? Sure, but it’s a fraction of the cost of the overhead salaries these technologies can eliminate the need for. With less overhead and greater productivity, you’ve found one more way to out-price and out-think your competition.
About the guest blogger - From time to time, On the Level will feature experts in a particular field or specialty contracting service. Here, Mark Bradley of The Landscape Management Network – a member-based suite of software, tools, systems and education to help contractors increase productivity and profits – identifies 5 ways they've used to win competitive jobs without having to sacrifice profit margin.
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