Standardizing Estimates and 1st Year Blues

Today, a caller by the name of Nathan Jones had a question about creating standardized pricing for estimates… specifically, for fall cleanups and landscaping jobs.

Why is Standardized Pricing Good and Necessary?

1.) Is essential to creating consistent profit margin

2.) Must be done for the business to scale and grow

3.) Much easier to train an estimator as your business grows

 

Why is Standardized Pricing Hard to Do?

1.) You’ve always done it off the top of your head

2.) You think you need years of experience to eyeball work

3.) It takes a lot of thought and time to create a standardized pricing menu

 

How to Create Standardized Pricing

1.) Track time and expenses at all mowing and landscape jobs

2.) Determine break even point and expected/target profit margin

3.) Set your hourly rate for mowing and landscape jobs (this should increase as you grow and provide more value)

4.) Bundle services and products into a menu-like list so that the estimator can easily match “what is needed” to the corresponding price

 

To get one-on-one help with creating your standardized pricing list visit LandscapeBusinessCourse.com.

 

Mike Andes

3 Business Financing Options

Some people say that access to capital is the key ingredient to a startup’s success. Let me be clear. I don’t think that’s true!!

Neither do economic situations, boundaries, legislation, or tax laws dictate the ultimate future of a business. I believe that hard work, grit, determination, stamina, patience, and the ability to grind is the recipe to creating a successful business.

That being said, there is a tiny bit of truth to the notion that it “takes money to make money.” In the event that you have limited resources (which I would guess is most of the people reading this) it is important to know how to allocate funds during the infant stages of your business. Managing debt, cash flow, and startup costs will determine what type of financing you use to start and/or scale your landscaping business. Let’s talk about 3 of the financing options I have used and my experience  with them.

 

1.) Bootstrapping

This is basically using your own savings and cash. Notice, I don’t talk about taking loans from family. This is an option and is still considered “bootstrapping” but personally I would not recommend this. Although it is advantageous and positive for some business owners, I don’t want to jeopardize my personal relationships for business. If you are hungry enough, that might not matter to you… But definitely think about the worse case scenario and ask yourself if the damage to relationship would be worth it.

2.) Equipment/Asset Financing

Usually equipment & truck dealers offer low interest rates loans with little or no money down to purchase the asset. Remember, a 0% down loan isn’t free… you are paying for it. It’s marked up in the price. This a great way to scale your business without having to make large capital expenditures. For instance. if adding another truck and trailer mowing setup will net $8,000/month. It is a no brainer to get equipment and/or truck loans that cost $2000/month to finance. Yes, financing/loans of any sort will hurt your net profit margin… but it can greatly increase the speed that you can grow the business.

3.) SBA Loans

First of all, let me say that I have never actually received an SBA Loan. In 2017, I may use their 504 program to purchase land for our second retail/shop location. Listen to the last episode of the podcast for a breakdown of all the costs for that second location. One thing to remember is that SBA (Small Business Administration) loans are NOT given by the government. They are still funded by banks/ credit unions however the government is incurring the loan since they are high risk. The government does this to make sure small businesses still have a chance to get money… thanks Uncle Sam!