Labor is the largest expense for almost all landscape operations. Your organizational skills and processes are important factors in your company’s efficiency in regard to your labor expense. I will outline five areas to increase operational efficiency in your landscape business. You can focus on these this year and I’ll explain why they are important to pay attention to.
First, let’s look at why “time is money” in the landscape profession. A simplified example shows:
If your company’s average year-end profit is:
- 3% then 14.4 minutes of each 8 hour day is profit
- 6% then 28.8 minutes of each 8 hour day is profit
- 9% then 43.2 minutes of each 8 hour day is profit
This tally highlights the importance of minimizing or eliminating non-billable time and being as efficient as possible. Non- billable time is any time your crews are not working for and directly billing a customer. If you waste this precious profit time in a day, the entire day becomes unprofitable.
Cutting Out Non-billable Time
There are five areas or processes that you can focus on to minimize non-billable time and increase profitability in your operation.
- Track It
- Start tracking any non-billable time through your accounting/payroll system. This can easily be implemented by creating a new expense account for non-billable time that can be tracked through most accounting packages such as QuickBooks™. Your crews will need to denote their non-billable time on their daily timesheets for this to work. Once you measure how much time is being recorded as non-billable, you can work to minimize it.
- Prescribe Times and Processes for AM and PM Shop Load/Unload
- The foreperson is the only person punched in for morning loading and evening unloading to reduce overtime with crew people, unless an excessive amount of loading or unloading is required.
- The end of the day is the most important time for tomorrow’s preparation. Allow no more than 30 minutes.
- The truck and equipment should be fueled on the return to the shop at the end of the day.
- The foreperson should review the day’s work and the next day’s assignments with you or your Manager.
- The truck should be unloaded and then pre-loaded with everything for tomorrow’s job assignment and parked in its assigned spot.
- Why is the end of day so important in reducing non-billable time?
- It is critical that the crews arrive and are ready to roll by an assigned time in the morning. It establishes a momentum that will carry them throughout their day.
- Crews hustle more in the afternoon to get these tasks done because it is the end of the day and they want to go home.
- Crews return on a staggered basis in the afternoon, so there is less traffic in your yard and office.
- The start of the day
- The foreperson arrives at 6:45 AM, 15 minutes before the crews, for final prep, DOT pre-inspection, and final instructions.
- All crew people arrive, are clocked in, and trucks roll out at 7:00 AM sharp.
- This is a fast paced event. Everyone starts out the day with a sense of urgency. No hanging around sipping coffee. Start the day by setting a good example of how you want their day to go.
- Use this link to access the foreperson typical day outline that my operation used.
- Empower your staff by showing them the “Big Picture” with detailed and visible schedule boards.
- The boards should include the jobs that the crews should complete that day, efficient geographic routing (start with the furthest site and work back towards your shop), budgeted man hours for each job, equipment and materials needed, etc.
- Your entire staff (including the office) can easily see where everyone is going each day/week, who has what equipment, etc. This allows your forepersons to see their upcoming schedule, think ahead, and increase their efficiency
- PROPER SCHEDULING + PROPER STAFFING = REDUCED OVERTIME + CLIENTS SERVICED WHEN PROMISED.
- Use enclosed trailers. Many of you have these, but for those who don’t here are some powerful reasons you should be considering them.
- Reduce non-billable time because of less load/unload time each day because assigned equipment and tools are stored in their trailer and ready to go.
- Reduce tool loss and equipment abuse since crews can be assigned tools and equipment for the year that they can secure and keep them out of the weather. Also great for winter storage.
- Act as a large, mobile billboard advertisements for your company
- Job costing
- This is the most important reporting you can use to ensure each job is profitable and your production rates in your estimating process are accurate. You should look at it weekly, but most definitely monthly.
- Show your staff these reports on a regular and timely basis, and hold them accountable. Post the scores to create competition between crews. Be watchful of maintaining quality while you emphasize efficiency.
- It is essential to keep it simple. I like to compare budget vs. actual man hours in maintenance, and I add budget vs. actual materials at cost in construction.
Everyone likes to work as efficiently as possible, whether you’re the owner or an employee. By focusing on the areas I’ve outlined, your staff will see that you have a solid, well thought out plan and schedule in place. You have implemented and communicated efficient processes on how you want things done. This will reduce everyone’s stress level, especially yours, and increase your profits from reduced non-billable time. Your stature with your staff will be elevated as you now run a well-oiled machine. Working smarter not harder is sometimes the name of the game. Make this Spring count!
About the Author
Laurence Coronis is a business consultant and leadership coach focusing on profitability and bringing sustainability and organic practices into the Green Industry. With a B.S. in Plant Science from U.N.H., he founded Coronis Landscaping Inc., and in the 30 years of operation won numerous state and national awards, including a “Grand Prize for Landscape Excellence” from A.L.C.A. (now PLANET). Coronis Landscaping was named one of the top 100 landscape companies in the U.S. in 1999 by Landscape Management Magazine. After selling Coronis Landscaping to a national landscape company, Laurence stayed on as the Branch Manager. During the years of his leadership, his branch was consistently a top performer in customer retention and profitability. He has served on the Board of Directors and as President of N.H. Landscape Association and presently is on the Advisory Board for NOFA-OLC. He can be contacted at firstname.lastname@example.org or visit his website at www.coronisconsulting.com.