In this economy, everyone should be experiencing fast growth, but the key is to do so profitably.
As I prepare for an upcoming event I am hosting in New York (Scaling Your Landscape Business), I have taken time to think about the biggest obstacles to profitably scaling one’s business.
Here they are, with examples:
- Your current leadership.
Your current team that is running your business can be the biggest obstacle. Here are two contrasting examples to explain what I mean:
Example 1: I am working with a small landscape firm, and we surveyed the leadership team with a personality profiling system that I employ. I was immediately able to tell him what the owner already suspected deep down in his gut: that his team is a big part of his challenge. But now that there was no denying it and we saw the specifics, he had to take action. What’s your gut telling you? What you have been avoiding?
Example 2: To contrast that, I am also working with a $12 million landscape firm. I sat down with its top 20 leaders who are extremely smart, experienced and ready to rumble. This team will take the company to $20 million in no time.
Which team do you have in place?
- Unclear strategy.
As Peter Drucker used to say, “Culture eats strategy for breakfast.” And while it’s true, culture is not enough on its own to scale a profitable business. It’s the starting point but not the ending point. Once you have a strong culture, you still need to know who your target client is, how you plan to go to market and how you will price and package your work.
For example, I just facilitated one of my landscape peer groups in the mid-Atlantic area. The host has an excellent multidecade reputation with a fine team and strong culture, but it turns out he and his team were unclear on their strategy. He asked us if his people needed “sales training,” and we responded, no, they need better sales processes and clarity of client focus.
If your foundation seems to be set for success, and yet success eludes you, you have to take a hard look at your go-to market strategy.
- Reactive leadership.
Urgency is good to have in a service business, but false urgency will drain you and burn you out. How the leader or owner runs the company day to day — and thus month to month — determines the level of false urgency in the business.
Back to the example of the $12 million firm. The team is excellent, but the leader is overreactive, diving too much into the problems of the day. These problems can be solved by others in your firm, if you let them. It takes a proactive leader to stay above the fray, work on the big items and guide a super leadership team.
You need to “major in the majors” if you want to scale a profitable business.
- Poor cash flow.
It takes money to make money, and it takes money to scale your business. If you want to grow at a 30 percent clip, then you need to be making good profits and converting that into cash. I know this sounds like a “chicken and egg” problem, but good profits will solve your problems, and retained earnings will give you the cash to scale. Poor cash does not always come from poor profits, so you have to look at the areas that influence annual revenue, accounts payable, contract structure, inventory and cost of goods.
- No shared rewards.
At the top of any great company is a team that leads that company and shares in the rewards of the success. Or, to turn the org chart on its head: At the bottom of any great organization is a team of leaders supporting everyone on their shoulders. I like that better: a company tree. Either way, a proper reward system will set the tone for how people work together to tackle the day-to-day issues.
How are you pulling your team together to row in the same direction and keep rowing even when they are tired?
- Wrong KPIs.
When you are driving fast on the racetrack, you need to know which gauges to look at and how often. It’s the same with a fast-growth business. The challenge I see is that companies are looking at the wrong gauges or key performance indicators (KPIs) and don’t really have a handle on how their company is doing day to day, week to week.
For example, I am working with a firm that is making great money, but they didn’t take the effort to dive into their divisional breakdowns; and so once we did, it was clear that one (strong) division was supporting another (weak) division. Within the weak division, there were both strong and weak areas. Profit turned out to be a patchwork on strong and weak areas.
The solutions are simple when you can see the problems. You have to be a data scientist to see how well you are doing and then track the right KPIs per area to ensure ongoing success.
- Lack of courage of leadership.
To scale profitably, it takes the courage to “aim high.” You won’t make high profits and high growth by aiming for average results and hoping that your team will somehow pull out the monster win. It takes courage to set the go-to market strategy that aims for excellence in pricing, team and product performance.
Look in the mirror, and see who is looking back at you — a courageous captain or a doubting Thomas? Sometimes you just need a guide and guidebook to help you walk the path to the top of the mountain.
If you want to dive deeper into how to profitably scale your irrigation, lawn care, tree or landscape business, join me in New York on March 16, for Scaling Your Landscape Business.
