This is the first of a three part series on business process and financial management for landscape contractors.
Can you trust your numbers? Maybe you can… But maybe you shouldn’t.
I suggest you check. Drill into the numbers in your Accounting software. I bet you will find at least a few areas where they are not accurate… that lack of accuracy is usually a function of assumptions or mismanaged transactions in your system and work-flow.
Assumption – method by which numbers are handled. For instance, tracking all crew time to a profit center regardless of where they work or using some percentage to charge a profit center.
Transaction – step in the process where numbers are created, entered, reviewed, and approved. There are five major transactions areas in a landscape business:
2) Work order/ticket
4) Time sheet
In simple terms, your numbers are only as good as your assumptions and the way you manage these key transactions.
The best way to get consistent and trustworthy numbers is:
MINIMIZE the number and type of assumptions and MONITOR transactions at the source.
I spoke to this idea at the GIE 2015. The response was, “It’s scary to see how wrong my numbers might be!”
The System Is The Solution
To get things right you start with a system overview (See the chart). This shows how things should work. Looking at the chart, it is easy to see that your Sales and Operations people have as much to say as the Administrative people do about the accuracy of your numbers. Sloppy assumptions and transactions must be removed to make the system work.
In the next two blog posts of this series, I will outline the proper approach.