The following is a great article from our friend Tim Robinson, Operations Manager for R & R Lawn Care.

Ok it time to start the year end horror. Preparing for next year, supplies and materials. This can be good if done properly.

Do you track materials you purchase throughout the season such as mulch or fertilizer?

If not, you should, and here’s why.

In order for you to grow your business you must set realistic goals and here is how you can achieve those goals. If you are not tracking how much product you purchase how are you to know how much or how little to buy for the next season? If you do know your one step ahead and then you should set a goal and prepare for it. This means what you bought in product last season you should increase 20-30% each year until you reach your customer base goal.

Knowing how much materials used on a job/customer will help you for the next season, making you more efficient and raising profit margins. In turn growing your business.

Setting goals gives you the incentive to attract more customers. Be realistic when setting these goals, some call it baby steps I call it setting a customer percentage increase (CPI). With out tracking how are you to know if you are growing or not. Most that do not track will never make it in business. 80% will fail in the first 3 years of business.

I track everything, fuel, cell phones, mulch, ferts, weed control, right down to the pants we purchased. I can tell you how many ‘Moon Shadows” we bought last year and these are our trade mark plant. Total 46 I can tell you how much we spent on pavers and wall block on each job. This comes from job costing or known as job material tracking.

[!AdServe:banner1!]

Why is this so important, well lets say First it is profitable when taking your books to the accountant, because if he/she has a shoe box full of receipts and has to go through them to sort it all out just to do your taxes, you just lost money because their going to charge you for the extra time it took them to figure out what is what.

Second, again how are you going to be profitable in not knowing how much material you used and cost of it, and how are you going to set your CPI to that service.

Even more important you fine extra money in the bank and you think wow we are doing great, think I can afford that new Z turn or that new mini skid-steer I was wanting, so off to the bank you go and the first thing the loan officer ask is I need 2 years of tax returns and a P & L. Oops you didn’t track or do proper basic bookkeeping and now your P & L looks like, well I don’t have to say it. So now you go back looking at them saying well this is what I came up with on the P & L, here’s the total amount of jobs we did and here’s where we paid all our bills and here’s what we got in the account so I guess this is my profit. This might work but I personally don’t care for a might, I am more of a yes/no, right/wrong type of person, no grey…don’t have room for it.

When you are presenting yourself at the bank as a business owner you should at the very least appear to be professional and have proper basic accounting practices. This means just because they have known you at the bank for some time doesn’t mean they know what kind of business person you are when it come to handling business finances. Saying it and doing it is two different things. You’ll find most bankers are like Missouri, the “Show Me” state.

Bottom line is proper accounting practices and keeping up to date with them will make you more efficient and profitable for time spent. If you are spending 3-4-5 hours a day just doing paper work and trying to catch up on the accounting then you need to work on time management. Proper time management can be beneficial to everyone especially the family. Set a time schedule and stick to it. I set one of 8am-6pm M-F and Every other Sat 8am noon after that I don’t work on business stuff.
Time Management will be another post.

If you lack the accounting skills to be proficient, then check with your local library for free computer classes in accounting.

Good Luck,

Tim Robinson
Operations Manager R & R Lawn Care