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Business Insider: Understanding the difference between revenue and success

June 17, 2021 -  By
Photo: ipopba/iStock / Getty Images Plus/Getty Images

(Photo: ipopba/iStock / Getty Images Plus/Getty Images)

Congratulations to the companies listed on the LM150 list. This is an accomplishment to be proud of, for sure. At the same time, wouldn’t it be equally great to have another list of the top companies in our industry based on profitability or company value? Of course, not many companies would volunteer their profit or EBITDA data to be published for all to see, so this is somewhat wishful thinking. However, it does bring up a question that is worth exploring: Is revenue the same as success? 

Take another look at the LM150 list. What’s missing? You may need to look at last year’s list for reference. What happened to the companies that aren’t included in this year’s report? Some chose not to participate. Others lost revenue and fell off the bottom of the list. Still, others no longer exist, either because they were acquired or dissolved. Revenue only tells us part of the story. The real story lies in the profit margins and value drivers. 

More to revenue than numbers

Let me give you an analogy. Let’s say you’re considering buying a classic car. The car looks amazing with a new paint job, shiny chrome and new tires. It’s impressive from the outside. It may also be impressive mechanically and in its performance, but there’s no way of knowing without popping the hood, inspecting the engine and driving the car in various conditions. When we see revenue, we are only seeing the shiny car. It’s not unimportant, but it’s only part of the story — and usually not the most important part of the story. 

One of the most interesting aspects of the story is how the revenue was produced or where it came from. Was it a result of acquiring other businesses, which may be extremely fascinating in terms of the story, or was it a result of organic growth? Was it a combination? Another great part of the story is regarding the mix of services, customer segments, geographic markets, self-performance versus subcontracting, etc. Still another part of the story is regarding the use of technology and support resources that have allowed significant growth to occur. 

My point here is that many leaders become fixated on revenue at the expense of other items, such as producing consistently strong profits and building long-term value in their businesses. There is nothing wrong with walking through a car lot and drooling over the shiny cars on display. It’s fun but you never truly know what you’re looking at by looking at the paint job. 

Learn from the best

My advice is to go deeper. What are the top revenue producers in our industry doing that you might also be able to do? How are they growing? What are they investing in? What resources are they utilizing to develop their people? What core business processes have led to their success? What technologies are they employing? Many in our industry are fairly open to sharing their experiences with others. The three companies profiled in this issue — Ryan Lawn & Tree (No. 45), Caretaker Landscape & Tree Management (No. 85) and GreenScapes Landscape (No. 140) — are perfect examples.

Take advantage of industry virtual networking opportunities, which are more prevalent today than they have ever been, to get to know people from some of these industry titans. You may be surprised at what they’re willing to disclose. Become a student, be willing to learn and pay attention. The goal is to not simply chase revenue but to chase success. They are not the same.

Some of the biggest revenue producers in our industry are no longer in business. Some have been acquired, while others have liquidated. These are interesting stories to learn from as well. Building long-term value requires generating revenue, but it also involves so many more interesting things of which to be mindful. As you drool over the shiny cars, don’t forget about the ultimate prize: building a valuable company. You just may end up on the LM150 someday as a result. 

Now go forth.

This article is tagged with , , , and posted in 0621, Business, From the Magazine
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About the Author:

Harwood is a Managing Partner with GrowTheBench and Pro-Motion Consulting. Reach him at Phil@GrowTheBench.com. He is a Landscape Industry Certified Manager, NALP Trailblazer, NALP Consultant, and Certified Snow Professional. Harwood holds a BA in Marketing and Executive MBA with Honors from Michigan State University.

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