For competitive runners and race car drivers, measuring performance is as much a way of life as lacing up their shoes or donning their driving gloves. After all, how else could they tell if their training regimen is on target or their engine is clicking on all cylinders?
The same logic applies to landscape contractors. Measuring performance is the only way to determine if crews are working optimally, estimates are on target, and a business is growing profitably. Simply put, you cannot improve something if you fail to measure it. By quantifying processes and setting standards, you may even identify a weak link in your operation.
Mike Rorie, president of GroundMasters, Inc., in Loveland, Ohio, has been applying a yardstick to his operation for years. Says Rorie, “Measuring gives a company an opportunity to quantify, develop standards, and make improvements. Suppose a job turns out to be less profitable than expected. How do you improve profitability if you do not keep track of your labor costs and how well crews are performing? Sure, you can raise your price, but that may put your company at a competitive disadvantage, and the move may be the wrong one. Maybe you truly do not have a handle on job costs or possibly the crew at the site is underperforming. These are the things you need to find out to make the right business decision.”
Without taking measurements, there is no scientific way to perform an accurate analysis of any particular aspect of your operation, he adds. In the scenario above, for example, how does one determine if a crew is under-performing? It may be as easy as putting a stopwatch on your best maintenance crew and then developing standards for different categories of properties. Armed with performance standards and job cost figures, salespeople can more accurately predict job costs and project profit margins. If competitive pressures force a salesperson to lower a price by 10 percent, then that individual has the choice to either accept 10 percent less margin or ask production to find a way to either enhance performance or take costs out of the job.
This can only be done, Rorie reemphasizes, if a company has the information and systems in place to help individuals make decisions. Measuring is not limited to getting a better handle on profit and loss but applies to virtually every aspect of a company’s operation. If employee retention is a challenge, document the age, experience, background, personality, and other characteristics that help define your loyal employees and hire within similar demographics. The same applies to customer loyalty. Determine what common denominators loyal customers share and target those types of customers. He emphasizes that the bigger a company is, the more it needs to have different measuring systems in place.
Start at the beginning
Rorie stresses that the place to begin measuring is at the beginning. As he points out, industry data is helpful, but every company in every market is different.
“Measuring is your opportunity to quantify any aspect of your operation, establish standards, and then improve,” says Rorie. “Many of us started out the same way. We were willing to work hard and didn’t want to overcharge customers. As we grew, though, we realized that we were working hard and not making any money. It took some of us several years to figure it out, with the help of Frank Ross and other industry consultants. We had to improve on several areas of our business if we were to succeed. And the only way to improve is to know where you currently stand.”
As Rorie notes, franchises are among the best examples of companies that measure and establish standards. Having information at their disposal gives franchisees the opportunity to dramatically shorten their learning curve and turn an early profit. Individual owners usually don’t have this kind of information at their fingertips. They can get it, however, by measuring and setting benchmarks for just about everything, from how long it takes crews to get on the road to how much downtime is logged by each piece of equipment.
Where does one start measuring? “Start with your trouble spots first,” says Rorie. “Establish a benchmark. Then, you can tell if changes are having a positive impact.” Not every landscape contractor can lay claim to being No. 1 in his or her market. But if companies measure their performance and show improvement every year, they are winners all the same.
08/05
By Rod Dickens, PLANET Contributing Writer
