Your client always has a budget, and you should, too. While you can operate without one, the sooner you start creating an annual budget, the better. Brian Mark, partner and president of Chris Mark and Sons, Inc., based in Pocasset, Massachusetts, says they’ve been budgeting for the last 10 years and over the past five years, they’ve gotten much better at it.
“We have been in business for over 50 years, so it took us a while to smarten up!” Mark says.
David Koehn, president of Koehn Outdoor, based in Jacksonville, Florida, says they have been in business for 20 years, but only started budgeting over the last five years at the prompting of their consultants.
Why Budgeting Is Critical
Mark says they started budgeting when they had plateaued with revenue around 2015 and needed to break free. He says they realized they had no good scoreboard or game plan for their team.
“Without a budget, a business owner is reacting to issues and concerns instead of being proactive,” Mark says. “Your measuring stick becomes how are we doing relative to last year? With a budget, you plan for where you want/need to be and act accordingly.”
Koehn adds that what is measured can be improved.
“It’s easy for you to just get off track throughout the year, and then at the end of the year, most owners are sending their stuff to their financial people,” Koehn says. “You’re looking at everything, and you’re wondering, ‘Why am I not as profitable as I thought?’ Because you overspent.”
With a budget, Koehn says they have a monthly amount set aside for expenses like repairs. If they’ve already exhausted that month’s budget, they’ll see if they can push any repairs to the following month to help control expenses. He says in the cases where they have to go over budget in one month, they are intentional about making sure they earn that money back in another month so it all balances out.
Mark says with a budget, they have a much better dashboard for running their business and a solid way to share the results of their season with the team.
Koehn says that every year since they started budgeting, they’ve increased their net profits.
Budgeting to Reach Goals
Another benefit of budgeting is it helps you reach your company’s goals. Mark says that each of their four divisions has a leader who assesses the past season and sets sales goals for the next season based on company intentions. He then marches those goals with the overhead needs.
Koehn says the key is to look back at your historical trends and know when your big sales months are, as well as when your clients set their budgets. This way, you can get your sales team in front of your customers at the right time.
Kohen says you also need to get buy-in from your sales team and make sure your goals are something they feel competent in achieving. They might point out they’re not going to sell $150,000 in January, but they could get $50,000 in January and $75,000 in February.
“It’s hard to really hold your team accountable to try to produce those set goals in months that you know you’re not going to get those sales,” Koehn says. “Try to really get the team involved, try to get feedback, try to look back at your trends and then really build something that your team can all agree on. Then have a big meeting and kickoff to the budget. Go, ‘Alright, guys, we’re ready. We’re fully transparent here. We all agree as a team that we can do this.’ It’s a good time to invigorate your team, too, and get them excited for next year.”
Common Mistakes to Avoid
A budget does your landscape company no good if you don’t stick to it. Koehn says it is still possible to overspend if you don’t have someone controlling the budget. At his company, his director of operations and director of accounting work hand-in-hand to control expenditures and make sure they’re staying on target.
“Having the budget is great, but the key is having somebody in your operation who owns the budget,” Koehn says.
Also, when budgeting, make sure you factor in unexpected costs. Koehn advises being realistic with things like attrition. Don’t assume you aren’t going to lose any customers. Clients leave and properties are sold. Also, incidents will happen where you must pay for damages, like when a rock flies out and breaks a window or a crew member accidentally scratches a client’s car.
“Don’t think that you’re going to have this perfect year,” Koehn says. “Allocate money for those repairs and those things. So when you do scratch Susie’s car, you can get it taken care of. It doesn’t have to be this painful experience of, ‘This just cost me $1,000; we got to paint this lady’s car…Oh, my God.’ It’s unfortunate, but forecast for some unfortunate things so if things pop up, they’re not a surprise.”
This article was published in the November/December issue of the magazine. To read more stories from The Edge magazine, click here to subscribe to the digital edition.
