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Business Insider: What’s your business model

April 15, 2021 -  By
Business Model graphic (Photo: AlexLMX / iStock / Getty Image / Getty Image Plus)

Photo: AlexLMX / iStock / Getty Images Plus / Getty Images

Landscape and irrigation companies with the highest and most consistent profit have figured out their business model. They have uncovered what drives their profitability and how to scale their businesses with ease and efficiency.

Too often, landscape company owners try to serve too many client niches, offering too many products and services. Their efforts become diluted and distracted, and it greatly hurts their profits.

Recently, I traveled to Ohio to consult with a large landscape company and its 10-person leadership team. It runs a great business with very efficient production, a strong brand and a strong team. Still, we found opportunities for improvement.

We spent a few hours unpacking the business model and making choices on where the company should focus its efforts. The team was totally pumped to pull together toward a new set of goals. Here’s what we addressed. These points might help you, too.

1. Pick the right subniches.

You have to pick not only the right client niche but also the right subniches. It’s not enough to say you focus on commercial or residential or on bid/build or maintenance. You must identify the subniches, or smaller segments, that you understand best and where you outperform the competition. Examples of subniches include servicing a commercial HOA, bid-building softscapes or offering full-service maintenance for residential clients only. “We do everything” is never a good answer to the question. What’s your niche?

2. Get rid of the dogs.

Even when you pick the right clients and services, you still have to develop a shortlist of the types of work you don’t do well and should avoid — or the “dogs.” For example:

  • You may do hardscape well but do poorly with vertical walls (ruff ruff).
  • You may do patios well but have trouble estimating large multilevel patios (woof woof).
  • You may love working with clients who know what they want but do poorly with overly needy clients who suck away your time and energy (bark bark).

The trick is to be super clear about what you do well and what you don’t do well and make a list with your team. Financially, you can track this by gross profit margin and by throughput (dollars per hour). Good work brings in high gross margins, better work brings in high throughput and the best work brings in both high margins and high throughput.

3. Identify your hedgehog.

What’s the one product or service that you are most passionate about, that you do better than anyone else and that drives the growth of your entire company and all your divisions? Many companies have one service that stands above the rest and brings in clients who then buy other services from their other divisions.

This is called the hedgehog concept. It’s from the book “Good to Great” by Jim Collins. It’s based on an ancient Greek parable that states, “The fox knows many things, but the hedgehog knows one big thing: how to defend itself.” What’s the one big thing your company should focus on?

4. Create synergy between divisions.

If you work in different niches where you can’t cross-sell to clients between divisions, that’s a huge waste and a bad investment. A great business shares clients among divisions and has fine-tuned how to cross-sell services once the company gains a new client.

Last summer in Iowa, during my Summer Growth Summit, we visited A+ Lawn & Landscape. It has a comprehensive plan to cross-sell between its many divisions. How about you?

5. Prioritize upselling.

A common error in landscaping is being too busy selling new clients and not servicing your current clients thoroughly. Most clients would like to buy more from you if you would only give them the time of day.

Forgetting to upsell clients means you are leaving money and profit on the table, and it also means leaving your clients open to being stolen by
a competitor. You must make an intentional choice to develop the people and capacity required to continually upsell throughout the year. It’s the best way to bolster your bottom line.

Your challenge

How do you make sure you’re focused on a great business model, even after you set your budget? Start with the following: Make a list of the work you do want to focus on and, conversely, make a list of the don’ts, aka the dogs or types of work and customers you need to avoid in order to build profit.

Profitability starts at the sale, so make sure your sales team is focused on the right opportunities!

This article is tagged with , and posted in 0421, Business, From the Magazine
Jeffrey Scott

About the Author:

Jeffrey Scott, MBA, author, specializes in growth and profit maximization in the Green Industry. His expertise is rooted in his personal success, growing his own company into a $10 million enterprise. Now, he facilitates the Leader’s Edge peer group for landscape business owners—members achieve a 27 percent profit increase in their first year. To learn more visit www.GetTheLeadersEdge.com.

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