Why you need to create a culture of high profitability

(Photo: Jeffrey Scott)

Top-line growth drives many entrepreneurs. Yet when the economy gets more challenging, the focus switches to profitability.

The saying “sales are vanity, profits are sanity” takes on a new meaning when it’s harder to make sales.

However, it’s important to create a culture of high profit regardless of the economy because you need to play the long game.

For this article, I asked some of my coaching and peer group clients for their input. I asked: “What have you implemented and what has worked for you?”

Their answers are inspiring.

It starts at the top

“If the owner’s expectations of profits are low, then so will be the rest of the company’s,” said Barry Schneider, owner and president of Surrounds Landscape Architecture and Construction, in Sterling, Va.

He told me he “sees others in our peer group hitting high profit marks that I first thought were unattainable. If they can do it, so can I.”

He recently started a monthly job cost review with all 10 leaders from sales and installation. It immediately improved the company’s efficiency fade by 50 percent — with more to come.

Chris Di Stefano, president of Di Stefano Landscape in Underhill, Vt., takes it a step further by creating a culture where “profit is not a dirty word.”

We visited his company for a peer group retreat and saw firsthand that profit is one of his core values hanging in his yard (see photo). As we interviewed his team, we could see everyone bought in.

Build a marketing machine

“Build a marketing machine” has always been my mantra. Without lead flow, it’s hard to drive profitability.

Marcus Kerske, owner of Gardens of Babylon in Nashville, Tenn., has done a great job implementing this strategy.

“Our company profit was transformed by brand building,” he told me. “We spend a butt load on marketing, get a ton of leads, aim for really high gross margins and fill the pipeline to the extent that we turn away good leads.”

Good leads are not enough

Dale Drier, general manager of Drost Landscape in Petoskey, Mich., shared this: “A positive company culture fosters a sense of purpose, leading to higher job satisfaction and engagement. Team members are more motivated and committed to their work, resulting in increased productivity, which boosts company profitability.”

Drost believes each team member should treat their role “as an owner.” By holding biweekly, open-book meetings with all employees, Drost shares the wins and opportunities and keeps goals top of mind. It works!

Hitting on all cylinders

I worked with Barney Naylor, founder and president of Naylor Landscape in Kalamazoo, Mich., to bring in a second in command. With his new partnership, the company’s leadership team has tackled a host of profit drivers, including:

1. Become a destination company. “We attract and retain the best team members from our competitors and surrounding industries, building an A-team that knows how to get ‘er done,” Naylor said. ”Our long-term retention allows us to achieve substantial efficiencies in the field.
2. Better estimating. “We have worked hard as a team to improve this process on larger jobs, which means fewer stinkers and more consistency,” Naylor said.
3. Selling better work at higher profits. Capturing a higher volume of enhancements and small to mid-size jobs and following my Profit Pyramid (learn more here), has significantly raised Naylor Landscape’s margins.
4. Speed of sale has also been a focus, allowing the company to be aggressive across the board with pricing.
5. Negotiating exclusive purchase agreements with vendors saved 7 to 10 percent indirect expenses. A dollar saved is a dollar earned.

While all great companies have figured out purpose, people and processes, a high-profit culture requires the leader to drive it home. Sam Bauman, CEO of Earthscape Landscape Design and Build in Wallenstein, Ontario, Canada, said it best: “A culture of profitability means it gets talked about a lot: why it matters, how the team can affect it and how they get rewarded by it!”