Last year, Aspire sponsored the 6th Annual Landscape Industry Peer Benchmark Report, prepared by my team at The Herring Group. We covered several key takeaways from the report in my first blog post in this series of two.
Today, we will look at the power of benchmarking to win in your business.
According to the dictionary, benchmarking is “studying something, (such as a competitor's product or business practices) in order to improve the performance of one's own company.”
In other words, benchmarking is a method for winning.
Winners in business have 3 things: a goal, a plan, and the ability to execute.
It is no coincidence that there are also 3 points to benchmarking:
First, benchmarking is aspirational. It shows you how high you can jump, which gives you a goal to shoot for. Second, good benchmarking is also directional. It shows you how to “jump that high” by giving you important clues that you need to create a plan.
Third, benchmarking is purposeful. It gives you and your team fuel to execute on the plan. Famous NFL coach Vince Lombardi is often misquoted as saying, “winning is everything.” His actual quote was, “the only reason we show up to work every day is to win.”
Winning is not everything, but it does give work purpose.
When you “know the score,” you can plan to win the game with purpose. You get powerful insight when you can see the data that shows exactly how your peers are winning, along with data that proves how similar their business is to your business, so that you can be sure you are comparing apples to apples.
Peer benchmarking is extremely useful for showing your management team what is possible for your company. When a team knows that it is possible to win and there is a plan in place, they know for sure that there is a purpose for all their hard work.
Minimizing Risk and Maximizing Competitive Edge
Landscaping companies can be excellent cash-generating investments, but this is only true as long as the owner of the company has a way to minimize operational risk.
When a company is just starting out, the owner serves as the risk mitigator 24/7. Owners are responsible for observing all the moving parts and making all the management calls for the business. As the company grows, the need for a different solution also grows, because a single human brain only has so much bandwidth.
That is where the insight of data-driven peer benchmarking comes in, along with Aspire’s robust software platform, as well as proven plans and processes such as The Herring Group’s proprietary Path to 12% for landscape businesses.
Aspire is a way to gather data so that you can manage more tightly, which mitigates risk. Using Aspire makes it easy to collect data on every visit to every property, so that you can track the profitability of every single visit.
Aspire exists to give customers a tactical and strategic advantage.
Tactically, Aspire gives their customers timeliness, accuracy, and completeness of data about their business. Strategically, they give their customers the competitive edge they need for the long term through continually improving technology.
This probably is not the first time you have heard that “technology is the key to success,” but what does that sentence actually mean?
The fact is, the landscaping industry is going through the same thing the manufacturing industry went through. It used to be that all you needed to succeed was the right people, because highly trained craftsmen were the original “manufacturers.”
When the industrial revolution hit, business owners needed the right machinery to keep up. These days, the right technology is key for the most competitive manufacturing operations. Complex software runs in the background, maximizing the efficiency of both people and machines.
Small Percentage Points and Big Opportunities
A couple of months ago on the Aspire blog, we covered several of my key takeaways from this year’s report. Today, we will focus on one takeaway in particular that might be familiar to you:
The opportunity for profit.
The majority of companies in the report this year were operating at 5% profitability or less, consistent with previous years. (The Herring Group works with clients using our Path to 12% program to create a plan for 12% profitability.)
The example below shows the profit opportunity for a company current at 6% profitability and $8 million in annual revenue.
If the company is able to achieve just 10% profitability, they will unlock $320k in profit—every year.
Depending on the size and current profitability of your company, you can use the chart above to calculate the potential opportunity if you could shift profitability by just a few percentage points in 2020.
The actions required to achieve that profit will depend on the company, but there are always clues in the benchmark comparison numbers. The management team might choose to shift their definition of “ideal customer,” overhaul the service mix, or just focus on getting greater enhancement penetration of current maintenance customers.
It all depends on where the benchmark numbers point.
Benchmarking allows you to take data and turn it into strategy. Annual peer benchmarking combined with the right platform and processes will grow your business, as long as you have good people on your team to carry out the plan.
The message is consistent, because the opportunity is there.
If you enjoyed this blog post, you may also want to read Greg's previous article,
To learn how Aspire software can enable you to gain full visibility into your landscaping business; make informed, proactive decisions; and increase your profit margins, contact us here.