Companies encounter no shortage of challenges when determining job costing and project profitability. A survey commissioned by QuickBooks captured some of those pain points among seven industries, including landscaping. Let’s take a look.
Two to five bad estimates could put nearly 50% of companies out of business
24% of businesses say two to three bad estimates could cost them their company, and another 23% say four to five could do the same.
But one in five (20%) say just one bad estimate could tank their business entirely. And those respondents who don’t track their project costs at all? They’re even more subject to death by one bad estimate (38%).
46% Track Project Costs by Memory, on Paper or With a Spreadsheet
In today’s world of digital ease and efficiency, relying on memory or scratch paper shouldn’t be an option. But the survey showed that almost half of businesses are still using what some might consider ancient tools to capture project costs.
But for those respondents who use a job costing app or accounting software, 76% say their cost estimates to the final project costs are either very close or accurate. Only 64% of those using memory, paper and spreadsheets to track project costs could say the same.
Businesses that Review Costs Daily are More Likely to Match Final Project Costs
Nearly 41% of respondents say they track their project costs daily. And it’s working out. Almost 25% say their estimates are matching their final projects exactly. Conversely, of those who never review their expenditures or costs during a project, only 8% say their cost estimates match their final project costs—nearly 1 in 5 state profit is usually less than expected.
24% of Landscape Businesses Say One Bad Estimate Could Put Them Out of Business
Even though landscape businesses tend to take on more projects in a year than the other industries surveyed, one bad estimate could still put them at risk.
But nearly half of those landscapers (46%) are trying their best to avoid such a disaster by using either a job costing app or accounting software with job costing capabilities. Many (almost 40%) who are using that technology say they review costs daily, and 60% say their estimates are “very close” to the actual project cost. Meanwhile, 65% of that same group that uses job costing technology report it’s increased profitability.
72% of Landscape Businesses Say Cost Overruns Are Difficult to Correct
For 33% of landscapers surveyed, underestimating labor costs is usually what gets them in the hole. And when costs overrun, 72% say it’s either somewhat difficult or very difficult to get back on track.
As far as external factors that harm a project’s profitability, 56% say the availability of skilled laborers is at the top of that list. The next two in line? Tariffs (33%) and inflation (32%).
Majority of Landscapers Say Job Costing is Important in Overall Profitability
Of the 64% of landscaping businesses that say job costing is very important to overall profitability, 68% say technology has helped increase profits, and 72% of the combined groups are optimistic for greater profits this year. Pricing with an eye on profit can help.