Jack Jostes [00:00:00]:
What's the difference between growth in your landscape company and scaling it deliberately? What are some of the most common profit killers in landscape companies that you need to nip in the bud to end the year strong? In today's podcast, Landscape Industry Financial Expert Christeen Era shares the answers to those questions and also a proven recruiting tactic that helps you weed out bad fit employees quickly, while retaining the good ones long term.
Christeen Era [00:00:32]:
One of the questions that a lot of businesses have is, what should I spend? What should I spend on what? They said, man, if you could tell me that, like, that is gold. What we find is that their crew size is too big. They're sending these people out on these jobs or on these routes, and they have too many people doing the job. As a company scales and grows, we have to stop and look at should we still be doing that or is there a better way? You can do a strategic scaling of your business, or you can do growth. If you strategically scale your business and you know where your break even point is and you know what you can afford, it kind of keeps you in your lane.
01:19 - Intro to Christeen Era
Jack Jostes [00:01:19]:
Hey everyone. Welcome back to The Landscaper’s Guide. Today I'm excited to have Christeen Era from Green Profit Academy back on the show. Christeen was a guest back in March 2023. I'm going to put a link to that interview in the show notes. Christeen and I also have I'm going to be a guest on her podcast and she's going to speak at a Landscaper’s Guide Webinar. I'm going to do one with her, so make sure you check out landscapersguide.com/events for more details on that. And Christeen is the author and the way that we connected. She wrote Profit First for Lawn Care and Landscape Businesses. “Grow your lawn care and landscape company from a cash eating monster to a money making dream.” This is a great book. It's also available on Audible. So it's a good audiobook and I've listened to it and read it. Christeen, thanks so much for coming back on the show.
Christeen Era [00:02:12]:
Yeah, thank you for having me. I've loved our past conversations, you know, great minds, great topics. So, yeah, thanks again for inviting me back.
02:22 - Creating a Roadmap for Scaling: What Should You Spend On?
Jack Jostes [00:02:22]:
What does it mean to have a roadmap to scale your landscape company and what are some of the milestones that landscape companies should strive towards?
Christeen Era [00:02:34]:
Yeah. So one of the questions that a lot of businesses have is what should I spend? What should I spend on what am I spending too much? What's a good amount of spend for, let's say, field payroll, operations, payroll areas of the business they're trying to get a good understanding of what's acceptable, which is how this dashboard was born, right. Because it's like they keep asking these questions, and it really varies from one revenue tier to another, right? So it's like, as a business grows, you need to invest or infuse cash into different areas of the business dependent on its needs and its stage of growth. So if we could provide a roadmap. This is in conversations I've had with business owners over the years. They said, man, if you could tell me that that is gold, that's the magic ticket. And they're like, what is it? It's like looking into a crystal ball. So this is where the development of the scalable growth business model came from.
Christeen Era [00:03:43]:
And I put it into this format that people we're already familiar with, like, you know, Mike Michalowicz’s work, Profit First. So many business owners out there know this, and it's a very easy system to understand. So I put it in that format so it's relatable. And we want this roadmap in place. We want to know, you know, what should our gross profit margin be, right? What's a really good one? What's the lowest we could bring it down to? You know, as we're investing in growing the company, infusing cash in other areas, because it takes money to scale your company, and, you know, what should we be spending as we kind of move through these valleys and plateaus that a business grows through as they are scaling their company?
04:35 - Setting Financial Targets: How to Determine the Right Numbers
Jack Jostes [00:04:35]:
And so how did you arrive at these numbers and these targets? Was this based on, like, how did you. You know, eventually you've created a dashboard, and in the book, you know, you have charts and. And, you know, as an example, equipment can be, you know, three to 5% overall in companies that provide snow. You know, so there's. There's a lot in here. How did you arrive at what you're recommending in the book and in the dashboards?
Christeen Era [00:05:06]:
Sure. Yeah. That is a great question. I've been asked that several times. I've been doing this for 25 plus years now. It's kind of hard to believe that it's been that long. I've always focused in the contracting based service industry, from custom home builders to lawn care and landscape companies to even individual trades. And in working with them, I've gotten a lot of insight over the years of what's healthy.
Christeen Era [00:05:37]:
Right. It's like, it's always been a purpose of mine to ensure the clients that we work with are profitable. So as we have brought them through that journey. We've been able to mine a lot of data from them on what is the spend in these different categories. And this is another reason why it was so applicable to not just lawn and landscapes, but trade industries in the contracting field, because the business model, the structure is very similar. They have field workers and production people that they have to keep on schedule. So there's project management involved, and then they have support people in the office that support the customer service, most likely the routing and scheduling, some of the project management, they all have sales. You know, they have marketing.
Christeen Era [00:06:31]:
Right, like all the usual things of the business. But then in this industry, they have equipment. So in working with these companies over the years and ensuring that their profitability, you know, is on point and then helping them scale and grow, it's like, how much should we spend? Well, what do we have? What's going to be the return on investment? I was able to construct this through testing, through information that we are gathering from these customers that we are working with on their financials, because my background is accounting and operations, looking to make sure the operations is streamlined. And so for me, it was really easy for me to pull this information together and test it to ensure, yeah, this is where we should be as we move from one revenue tier to another. And then in the book, like you said, I give more explanation on why and if there's variables involved.
07:34 - Budgeting and Percentage Allocation for Small Businesses
Jack Jostes [00:07:34]:
So, Christeen, one of the things that I like about your book that is interesting is that you break it down during these different tiers. So for businesses, the first one is zero to 250,000 in revenue, and then 250 to 500, 500 to 1 million, 1 million to two and a half million, two and a half to five, five to 10,10 to 50. And the percentages change. You know, for those businesses, some of them are different. Many of them are the same. For the folks listening, who are under a million and they're trying to get there, what are some of the biggest mistakes or most common things that you see when it comes to budgeting and percentage allocations that businesses like that are making?
Christeen Era [00:08:22]:
Yeah. So what we find is that their crew size is too big, right? So they're sending these people out on these jobs or on these routes, and they have too many people doing the job. So their field labor expenses are spiking and they're overextending themselves because they're pricing for a smaller group of, you know, smaller crew, and they're also pricing for a, you know, more efficient route. So you've got too many people trying to do the job without, and it's eating up the profit.
Jack Jostes [00:09:02]:
So is it inevitable? And what I mean by that is I have employees and I've gone through phases where we're really profitable, but we're pretty overworked and people are at or above their capacity, maybe approaching burnout. And then I hire people and then the profit goes down. But people are feeling good. And I don't know, I found it really hard to have the right amount of staff. And I'm just curious, your perspective on that as landscape companies are growing, is it inevitable? And if not, you know, how do you, how do you get through that period where you, you need more people but you don't quite have the route density or the, the full pipeline?
Christeen Era [00:09:46]:
Right? Yeah. And that is a common challenge. Right. In any business. And, you know, our business goes through that as well as like, to where we're like, okay, we're doing all these things and we need more people to help us because we're kind of, you know, at capacity. You know, when do we add people? And so I always look at it from the perspective of, you know, what can you let go to where you can spend more time focusing on what matters through this growth phase. Right. So we don't always want to be doing everything all the time.
Christeen Era [00:10:20]:
In a business, there are some things that are, you absolutely have to do and then there's some things where, and it's really hard, I think, as an entrepreneur and a business owner to put things on the back burner, but there really are things in a company to where we have to hit the pause button. And this is typically that extra work where somebody's working on a project or they're doing something because they've always done it that way. And as a company scales and grows, we have to stop and look at should we still be doing that or is there a better way for us to get there or to get this job done? A lot of it. And especially in this industry, I think they've done a phenomenal job at developing the technology. They're actually far more advanced than in so many other industries and having software that supports the entire operations of the company and making a lot of things automated.
Jack Jostes [00:11:17]:
I agree. And I think this industry, I've been working in the landscape industry specifically around eight or nine years. In the last two to three years, I've seen so much innovation in software and different things like that that it's just an absolutely incredible evolution from where things were nine years ago with people. So, yeah, putting ideas on the back burner is like the opposite of, I don't know, the feeling of being an entrepreneur. It's like, oh, I have this idea, I want to go build this thing right now. And I think sometimes though, you have to power through it and do it and it is risky and that is what leads you to the breakthrough. So I don't know that there's any answer to it, but it's just something that I think small businesses in general struggle with is that balancing act between growing and being profitable and getting to that next level.
Christeen Era [00:12:19]:
Yeah. And I think you really have to be strategic about it, right. Because you can do a strategic scaling of your business or you can do growth. Growth is probably going to break the bank, right. But if you strategically scale your business and you know where your break even point is and you know what you can afford, it kind of keeps you in your lane. The other thing that you have to consider, and this is another challenge for entrepreneurs, besides hitting the pause button, is knowing that your pricing strategy is correct. Because as you scale and grow in your business, so should your pricing. So you want to make sure that as you're adding those team members, that you're in the right percentage of overhead of what you should be spending.
Christeen Era [00:13:11]:
As you add those people in the field, you're in the right percentage and then making sure that your pricing ties back to that. So making sure you're not missing anything that you should be charging for huge areas, equipment. They always forget to charge for equipment or include that in their pricing model. And they consider it just a cost versus a profit center in their business.
13:38 - Growth vs. Scaling: Understanding the Difference
Jack Jostes [00:13:38]:
Tell me more about what you are saying is the difference between growth and scaling.
Christeen Era [00:13:44]:
So growth is, it just happens. There's no rhyme or reason. You don't have your finger on the pulse. All of a sudden you're just like, oh, we need to hire more people. We've got more marketing to do. We need another office person. Here's a new route. So it's all just kind of reactive versus responsive and that being strategic about it, right.
Christeen Era [00:14:12]:
You're slowing down, you are responding to your company's growth, you're tying it back to the facts, the numbers versus it just happening. So you continue to drive your business forward, but you're doing it intentionally and with a plan and you're also making the decisions. As a business owner and as a leader. We're going to say yes to this because it's profitable, though this is growth, it may not be the best decision for our business. And like a big project comes in, maybe it's not the right project to say yes to. And you need to say no to it because it's going to break the bank. And it, you know, though it looks like a great opportunity. Is it something that you can do that's going to help your business grow strategically and be better? Or is it going to hinder your company and cause problems and burn people out?
Jack Jostes [00:15:10]:
So the big picture is that it's deliberate, it's based on facts and numbers, and we know it's going to be profitable. What are maybe some, are there some frameworks or questions or maybe things in your book that when you inevitably get the email from your client, hey, can I afford to hire this or should I do this? What do you respond back to them with to help them figure it out? What's something maybe we could share with the audience to help them maybe step into that scale framework with a big decision they're about to make.
Christeen Era [00:15:42]:
Yeah. And this is in chapter eight as well, right after I introduced the scalable growth business model and bring them through. That is I talk about how to scale and grow. Right. How you make these decisions. So there are some really great charts in there and step by step processes that someone can go through to where they can calculate. Okay, I'm going to add another route, so, and another crew, which means I need a truck and I need this equipment and it's going to cost this much in gas and this much in labor, and then I'm going to charge this much for it so they could actually run the scenario. So it's kind of like running the play right, at practice before you even invest in it.
Christeen Era [00:16:27]:
So you can decide, is this a good investment or a bad investment? Are we ready for it yet? And then when you run through that process, you'll have your answer of, okay, we're almost there, so we can start planning or, dang, we should have done this like two months ago.
16:46 - Navigating Current Market Trends in Landscaping
Jack Jostes [00:16:46]:
Yeah. And what I, what I like about this is it's really thorough. And you have examples in here for lawn care, you have things for maintenance, you have things for construction. There's a lot of different, different things in here. I'm just curious, what's your, like, sense of the market for landscaping right now? This year, spring 2024. What are you seeing based on your experience with looking at the finances of all these landscape companies?
Christeen Era [00:17:15]:
We have some people, business owners, where they have it really dialed in. And yes, it's 100 days of hell, but all they're doing is they're rolling their team out. They're like, okay, guys, you know what you need to do? Get out in the field. So what used to be hard isn't hard anymore. And then we have the other group where they're still, you know, going through all those, those pain points and it is the hundred days of hell and, you know, there are unsolved problems and things aren't running as smoothly. So it really, I feel like it depends on who you talk to right now and what, where they're at in their business, on how they're really doing.
Jack Jostes [00:17:56]:
I agree. And I don't think it's just revenue based. And what I mean by that is I know many multimillion dollar companies that are chaotic and they don't have their act together despite being multiple millions of dollars in revenue. And then I know some people that run their 300,000 or 500,000 or whatever, and they do have it together. So I agree. Who you ask is a big factor in that. Talk to me, maybe. What are you seeing, though? I guess from the market for the demand for landscaping.
Jack Jostes [00:18:37]:
So we've worked in the industry for a while. We saw the record peak in 2020 was kind of like the top of it. I saw that we came down from it. We're in a high inflationary period as a country. Is it too early to say what the market is like for landscaping this year? Or do you have a sense of what it is?
Christeen Era [00:18:58]:
Yeah, I haven't heard from anybody that they're having any issues with sales. They're having issues with delivery. So it doesn't seem that the market has slowed down very much. I think that over the last three to four years, the value of our outdoor living has increased. Right. So it's like, as a culture, we value it so much more to have some sort of sanctuary that we can go to and relax and connect with people that we care about and just enjoy and unwind. And I think that the American people still highly value that, and it's something that they want to invest in, and so they're still investing in it. From the challenges I'm hearing, it's around hiring. Right.
Christeen Era [00:19:52]:
It's around having the right people to deliver with skills in the trade industry, to deliver the services that the company sold. And that seems to be where the challenge is.
Jack Jostes [00:20:05]:
Well, so I agree, and I think it always will be because landscaping is a skilled trade and you need people to do the work well. You need people to meet with clients. There's, you need your managers and crew leads and your office team. So it's a human dependent business. So the, there will always be some level of employment being the issue. What I'm curious about, and I was talking internally with my team, is it seems to have decreased, though, or at least the severity of the hiring problem. Whereas like a few years ago when demand was off the charts and there was the cares act and there were restrictions around people riding in a vehicle together and all sorts of things going on, it seemed to exacerbate the need for people. And I've actually heard from some people that they're over hired.
Jack Jostes [00:21:04]:
And although the market is strong, and I agree that as a culture it's changed that, I don't know, it's not a lack of demand, but maybe they overstaffed a couple of years ago. Are you seeing that or not so much?
Christeen Era [00:21:20]:
Not so much that they've overstaffed? No. And it depends on the industry. Like, I work with some other trade companies and in their situation, that need has been pulled back and the staff that got them here aren't going to be the ones who get them there, you know, so they're kind of realizing that maybe we don't need as many people, because over the years, the people that we do have, there's a percentage of them that have stepped up and they have grown with our company, but then there's another small percent that hasn't. So they're realizing they can do more with less, you know, than they did in the past. So that's one thing I'm seeing.
Jack Jostes [00:22:06]:
I agree. Doing more with less and, and especially with some of the improvements and efficiencies and software and things like that. I definitely think some, some businesses are seeing that. So we did, we did a full interview together on an intro to Profit First for Lawn and Landscape Businesses. I don't want to rehash that. I want to ask the audience to check it out because it's such a powerful thing. And if you haven't heard that one and you don't know about me, I personally implement Profit First and would say that it was life changing for me and for my business. And it's a whole framework and you've done such an excellent job.
22:50 - Identifying Profit Killers: Hidden Bleeds to Watch Out For
Jack Jostes [00:22:50]:
So people check it out. I did want to ask you, Christeen, about this episode. We have a few minutes left. What are maybe some of the hidden bleeds that kill profits? If you could give somebody a little nugget to take away and look for that could help them win the year. When we're looking at things in December, what would you have them do this summer?
Christeen Era [00:23:14]:
You want to look at what your pricing and what are you charging for? Because a lot of the time they don't have their markups and margins correct on their materials and as well as their equipment. And then we also have the labor problem where they have too many people working on a job or on a route. So that's a major bleed to where if they could just get that right coming into this season, it's going to be a game changer because if they add it all up, that's going to be the profit that they're not going to lose this year. No matter how hard it gets, no matter the push that they have with their team. If they're pricing right then and they know who they have on account, you know, what their materials are and what their equipment is, they won't lose that profit.
Jack Jostes [00:24:05]:
So having too many on a job, I agree. I also think of all the landscape companies I work with who tell me that they have people who come and work for a week or two days or three weeks or, and then they quit. How do you, I mean, I think part of that is pre qualifying people in the hiring process and really writing clear job descriptions and then interviewing and vetting people. And even doing that, though, you're going to have people come on and they realize, wow, this job is really hard. It's hot, it's July. I quit. So I don't know, part of me, I'm agreeing with you. And I'm also wondering, how do I get to that sweet spot of the number of employees knowing that some of them are just going to peace out.
24:57 - Finding the Right Balance of Employees: Strategies for Success
Christeen Era [00:24:57]:
Right. Yeah. And I agree. It is the hiring process. Right. So it's like making sure that you, during your interview process, you're taking your time to make sure that you're just like you would be with a customer. Right. You go through this whole process of qualifying them.
Christeen Era [00:25:13]:
Right. Are they the right customer? It's the same concept. And even more important with an employee because they're working in your business, they're communicating with your customers. You know, if they do, you know, exit stage left mid season. Right. Then it's like, then what? Right. So it's like having Plan A and Plan B, getting in front of it with the hiring process is important. Some of the things that, you know, we coach around with that is, you know, maybe it's not the manager's job to hire.
Christeen Era [00:25:46]:
Right. There might be somebody better on the team that really gets into, and there's a term and it's from Malcolm Gladwell called “Thin Slicing”. And it's where somebody can really get a great read on a person and their intentions and their personality and whether they're a good fit. Right. So if you have somebody on your team that just really can dial into a person, they might be the better person to hire through the interview process because they'll know, is this person being honest? Do they really want this job? What do they value? Do they fit our culture? We also suggest you do a working interview. So they come on, you say, hey, this is part of the interview. Besides the culture fit and looking at their background and all this other stuff, you can put them through a working interview, which could be just a half a day of them doing the hardest things that they're going to do on that job. So in that role in the company, what are the hardest things you can throw at them? And that is going to tell you, like, are they going to stick in or are they going to realize, like, this is too much for them? And that has also helped weed out some people to where you're being intentional.
Christeen Era [00:27:07]:
You're investing in these people. They're going to stay. So, you know, if they're cut from the cloth that you need, I like that.
Jack Jostes [00:27:16]:
Yeah. At Ramblin Jackson, we do skills assessments and that's one of the ways that we vet people before they come on our team. And I know several landscape companies that do working interviews or they have a really clear 30, 60, 90 day onboarding. And sometimes it just concludes at 90 days. Hey, thank you so much. We've reached the end of 90 days and we love you by, or, you know, hey, we've reached 90 days and here's the next promotion for you. So having structure and that onboarding, I absolutely agree, is a major profit opportunity. And it's an area where many businesses struggle because they feel so overwhelmed that they got to hire people, hire people, hire people.
28:03 - Webinar Preview: Set to Scale with the Profit First Model
Jack Jostes [00:28:03]:
And you do need to hire people and give them a shot, but qualify, qualify them as best you can. Well, Christeen, so there's, there's so much more we could talk about. And I can't wait to have you on the Landscaper’s Guide Webinar on August 22. So we're going to be expanding on this topic with Set to Scale: The Profit First Scalable Growth Business Model for Landscapers. Can you tell us a little bit about what we'll expect to learn from that?
Christeen Era [00:28:29]:
Yeah. So I'm going to bring you through the scalable growth business process. The model, I'm going to introduce you to it. I'm going to let you know kind of what's the outline of it. What points should you be hitting on these dashboards? So what are some of the key financial matrix that you want to follow and which ones are consistent and just bring you through it, help you gain a better understanding of it and how you could really utilize this model to intentionally scale your business versus just all this expansive growth.
Jack Jostes [00:29:10]:
I like that. I can't wait to see that. And that's going to be great. So you'll have a chance to not only see Christeen present this, but it'll also be interactive. You'll be able to ask questions. So check that out landscapersguide.com/events and definitely go and buy the Profit First for Lawn Care and Landscape Businesses book or audiobook. And Christeen, how else can people listening network with you if they'd like to?
29:40 - Final Thoughts & How to Connect with Christeen
Christeen Era [00:29:40]:
Yeah, so they can always go to, you know, our greenprofitacademy.com website. You can contact us there. We are also on Facebook, Instagram, like all the social media channels. So if you just search Green Profit Academy, you will find us and be able to connect with us.
Jack Jostes [00:30:01]:
Very good. Well, thanks so much for joining us on The Landscaper’s Guide today
Jack Jostes [00:30:08]:
Like today's video and subscribe to our YouTube channel to get upcoming videos to help you grow your snow and landscape company. My name is Jack Jostes and check out my free resources in the show notes and click the next video to grow your business.
Jack Jostes [00:30:25]:
And what I mean by that is so like, I have employees and right now. Excuse me, the spring pollen is wonderful!
Show Notes:
???? Register for the Upcoming Webinar - Set to Scale: https://landscapersguide.com/set-to-scale-the-profit-first-scalable-growth-business-model-for-landscapers/
???? Watch the full episode + see the transcript at: https://landscapersguide.com/podcast/
???? Tell us where to send your beef jerky: https://landscapersguide.com/toolbox
Connect with Christeen Era:
???? Green Profit Academy: https://greenprofitacademy.com
???? Connect on LinkedIn: https://www.linkedin.com/in/christeen-era-profit101/
???? Get the Profit First Book for Lawn Care and Landscape Businesses: https://profitfirstforlawncareandlandscape.com/
????️ Previous Podcast with Christeen Era (March 2023):