Getting an Edge in Tough Times
|By JON EWING|
Having been involved in the green industry for more than 30 years, I am hard pressed to remember a time so difficult for our industry. In particular, we are facing a very challenging economy. Fewer projects and less business activity tend to highlight the competitive nature of our industry. Though competition is nothing new, the tendency to focus on lower pricing is a temptation that companies often succumb to.
With this in mind, seek out the opportunities that are available to you. And believe it or not, opportunities do exist! These opportunities present themselves through effort, commitment, and a single-minded approach to create excellence. Let’s talk about how you can create excellence and get an edge in difficult times through improving your organizational qualities, business development, managing your staff, hands-on financial management, having a laser focus on your customers and through strategic planning.
Understand that businesses get in trouble in good times, not always in bad times. With this in mind, use this period to create a more effectively run business and improve your organizational qualities. This means doing the right things. Businesses tend to seek efficiencies by doing things well when this is a time to do the right things.
Think about structuring your organization to project short and long-term plans that reflect a lean and competitive approach. This would mean communicating exactly what you intend to accomplish within a given timeframe and then seeking a companywide buy-in. Evaluate your activities and decide whether the activities you provide to your customers add value. If it’s wasteful, then it’s detrimental to your company’s ability to compete and sustain in this marketplace.
Given the circumstances in the current marketplace, it is time to really get involved and get active in your business. Be a leader, understand your market, find important sales opportunities and develop marketing strategies. For example, focus your sales and marketing efforts on your entire marketplace, and not solely on customers you don’t sell to.
You may choose to do this by getting more involved in your community, attending trade association meetings, spending additional time with your key accounts, or through increased marketing efforts. Should you choose to increase your efforts, they should help create your firm’s identity, reflect a differentiation from your competition, and project a positive and ‘can do’ attitude. You want to be seen as a business that is part of a solution and not a problem. Customers have enough problems right now without a service provider adding to them. Keep in mind that customers will not pay for your waste, they want value!
Through your services, protect your bottom line. Your margins are critical and cannot be made up by chasing poor quality sales. They are developed through proper pricing and by managing your expenses. Know what margins you seek to maintain and how to articulate them. This is not a time to take on sales that you wouldn’t consider during good economic times. Remember, focus on margins and cutting expenses.
It is a strong temptation to chase price, but oftentimes you are chasing prices of troubled competitors. In evaluating your expenses, know that employees are your biggest asset. Staff evaluations may be one of the most important activities facing your business today. It is imperative that you evaluate each position with an eye toward assuring that every job takes 125% effort. Only through this commitment will your business properly manage your single largest expense. To accomplish this, your company’s leadership starts with you, the business owner or manager. You will be asking each employee for a strong commitment to accomplish your company’s labor goals, adjust to staffing requirements, and dealing with a fluctuating workload.
Work to put your business in a position where it is as lean as possible. A much healthier buy-in will occur if you sacrifice first. This fosters an environment where everyone wants to participate and understands the commitment being asked from your business. It is very difficult to manage your human resources the way you would material resources. In other words, it is easier to sell a truck or buy a lesser priced fertilizer than it is to eliminate an employee’s position. In many cases, you have a long history with your staff and a personal connection. Nonetheless, each position requires a detailed review to determine that every employee provides value to your customers.
Remember—without value, you don’t survive. Being the best organization happens through a strong commitment. It is very easy to lose track of your finances when you are focusing so hard on your organization.
This is a time to get involved with your finances. In part, you can do this by making sure you sign all of your own checks, closely monitoring your A/P and A/R, monitoring your job cost reports and by keeping your records current. Your cash flow is critical. Explore all options to assure you have adequate cash flow. While managing cash flow, you want to explore any opportunity you have to improve your collection process. Keep receivables current, and billings prompt. For example, evaluate the sequencing of your invoices and consider advance billing cycles, improving your terms, etc.
If your cash flow is inadequate, make sure you have options. Knowing your banker and having a good banking relationship is extremely important in keeping options alive. Obviously, you must know that your bank is solvent. We have seen too many examples of bad banks. Be sure to verify that you have a solid bank; next, position yourself as a solid customer. You can do this by keeping all of your financial information current and up-to-date with your bank. You should know what your credit terms are and have them established prior to needing any cash flow assistance. By knowing your banker and your banker knowing you, this process can be fairly seamless and advantageous to your business.
As discussed earlier, make sure that everything you do in your business provides value for your customers. This means having a laser focus on your business. Know each customer, seek their input, and understand what services you provide that best assist in your customers’ success.
You can determine what your best services to your customer are by asking them. Don’t be shy about seeking their input. Chances are, they too are having difficulties doing business in this environment. You can build a long and healthy relationship by understanding exactly what a customer needs from you, how you can best service them, and by being a positive example through these times.
With this knowledge, you will better serve your niche and grow from your best business attributes. It is possible that you can even meet price needs through servicing more of their projects, adding to your services, or other creative options. These options do not mean sacrificing your margins. In many cases, your margins can be improved while better meeting their needs! In closing, nothing you will do in your business matters if you do not plan for success and create an environment where your entire company pulls the same rope. Strategic planning is an opportunity to really break your business down and capture a full team approach.
Through your strategic plan you must:
Define the purpose of your meeting.
Create/evaluate your Mission Statement.
Discuss your firm’s goals.
Define your customers.
Evaluate your vendors.
Discuss what’s going well with your business.
Discuss what isn’t going as well as you would like.
Develop individual and organizational goals.
Develop positive steps and a course of action.
A good strategic plan will give you a strong sense of organization, provide a strong team approach, and net you sound results. It is a great feeling to know that your entire organization is working together. Just remember to keep looking for opportunities and be adaptive. Opportunities do exist even in a poor economy.
EDITOR’S NOTE: Jon Ewing is a past president of the California Landscape Contractors Association (CLCA). He was the founder of Landtrends, Inc. a multi-state landscape construction and maintenance firm based in San Diego, and co-founder of Miramar Wholesale Nurseries.