Tip: The cost of estimating and selling in the green industry is often underestimated.  If you do not already know what your selling costs are, Monroe Porter suggests that there is no better time to begin to understand them than now. 

The cost of estimating and selling in the green industry is often underestimated. If you do not already know what your selling costs are, there is no better time to begin to understand them than now. It will also be imperative to set up a system to track these costs.

To start understanding these costs, take a close look at how you sell jobs, how many phone estimates you give out, and what your close ratios are. Then consider your actual “selling” costs (i.e., what you pay your salespeople, what you don’t charge for designs, etc.). The bottom line here is you want to sell jobs and not give them away.

Track Your Closing Ratios … Know where you win and lose jobs. Track closing ratios from repeat customers, from referrals, and from advertisements in the Yellow Pages. Closing ratios can be deceptive. For example, if you are only getting 40 percent of the jobs quoted but you win 90 percent of the referrals and repeat customers quoted, your actual sales ability might be distorted. You also need to look at dollars quoted versus jobs won. If you lose all the big jobs, you may be overdesigning what the customer can actually afford and failing to establish a budget.

Know Your Cost of Estimating … Add up all your sales support salaries, including those for design. Make sure you include payroll taxes, vehicle expenses, payroll benefits, and other costs. Also factor in your salary or costs if, as the owner, you sell. Now divide this cost by the number of estimates given. For example, if your sales cost and designer costs add up to $150,000, and the company made 300 estimates and designs, your cost per estimate and design is $500. Or, if you sold $1,000,000 in sales for this $150,000 cost, your cost of selling is 15 percent of sales.

Lifestyle, Design, and Sales Costs … For landscape contractors who sell directly to homeowners, the cost of estimating and design are not only out-of-pocket costs, but they can also be a drain on your lifestyle and personal time. Unfortunately, the love of plants, the joy of talking to customers, as well as the failure to adequately qualify people over the phone can all zap the life out of you, your family, and your business.

By Monroe Porter

Proof Management-PRSOULT Networking Groups

Midlothian, Virginia

www.proofman.com