What is your business priority?

Discussion in 'Business Operations' started by B. Phagan, Aug 2, 2002.

  1. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    Bill... thanks for taking the time to post your perspective. I certainly appreciate it.

    I used to think the priority was to grow and invest in my business - and I still do. But the difference was that I wasn't allowing myself to make a profit in the process. I literally plowed everything back into the business and then some. Now I've got Officer Loan Payables on the books from money I've added back into the business. I didn't focus on the ROI from my investment. Sure the business has done better - but did I have to invest all that I did? And was the opportunity cost of my making the investment back into the company?

    I used to make investments in the business and justify expenses related to growth for the sake of growth. My priority was to build - if two trucks is better than one, than five is better than two and ten would be better than... you get the idea. I'm finding that it's not all about having lots of guys/crews/trucks/equipment. It's about making the most you can with your resources and using them wisely. It's about engineering the job to make more money on it than you originally had planned.

    I wasn't focusing on my bottom line. I some how fell in love with the romantic notion that growing the business was the noble thing to do at the expense of the profit. I'm seeing that it's a delicate balancing act of growing wisely through sound decision making on where and when to invest your resources.

    Right now I'm running at 50% of past staff levels and we're still doing 80% to 90% of the volume we used to produce. We're stretched thin and sure I need to hire two more guys for fall. But the point is that running lean and being careful is a fantastic way to grow. I think of it as growing internally. Focusing on systems and making our business tighter before we expand externally with more employees/trucks is critical... otherwise I'm working harder and making less money.

    To answer your question Bill - my priority is to squeeze everything I can out of what I have and to invest wisely so that I grow at a pace which is comfortable and attainable. My goal is to become more patient and realize that running a business is a marathon, not a sprint.
     
  2. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    Would you all quit reading my mind? I've been dealing with the same thing lately also. Too much working in the biz and not on the biz. Too much stressing over receivables that should have come in ages ago. It is hard to let go when most my work comes due to what "I" know and can do, not what the business knows. But I am tired of running my job and not my business. Am looking at another aspect of the industry in another area of the country. My head isn't in irrigation anymore. Especially with our drought and restrictions in place.
     
  3. B. Phagan

    B. Phagan LawnSite Member
    Posts: 95

    TSG & Lawn Lad

    Sorry to have ignored you........no, not chopped liver........great post LL.....lots of folks out there need to take another look at their biz like you have. Doing "volumes" of work won't put steak and grits on the table......doing profitable work will! Many of my consultations recommend cutting out the losers and focusing on the winners. Cutting back can sometimes increase profits. Keep in mind, seasonality plays a role in cutting back.

    Sometimes we don't recognize most of our income and subsequent profits come from about 50% of our customer base and that's where we should be focusing. Once we realize this, begin to clone those clients so all will be profitable. My experience dictates 20% or higher of most customer bases are marginally or NON profitable. Need to address these customers. Not to mention the slow pays and customers from HELL.

    One fella in NC called with a concern about his bottom line. Just not making enough profit. Spent 4 days up there and came to the conclusion that of his 2.5M revenue, $450k was maintenance and he was actually losing $50k per year performing maintenance. We decided to sell off the maintenance divison for $500k to someone else. Immediate effect was a substantial increase in bottom line profits and he was a happy camper to say the least.

    To preclude this from being a problem in the future, we established a Management Information System that would produce the info he needed to successfully manage his biz instead of it managing him.
     
  4. B. Phagan

    B. Phagan LawnSite Member
    Posts: 95

    TSG,

    By the way......my name is BILL, not Mr. Phagan. My dad was Mr. Phagan...............and besides, I'm on 39! I just look more mature than my 39 years! Ha Ha!
     
  5. site

    site LawnSite Member
    Posts: 168

    Thinking about the stock market lately and my plans for the future and worrying-how will I send my kids to college in 9 more years? Then I had an idea- I know I can generate a good ROI if I put profits back into the business. I also thought about real estate, but am hesitant because the maket here is so overheated it has to correct eventually. I plan to put some in each for now and see how it goes.
    I quit doing 40+hours of physical labor and all the paperwork at night about 2 years ago. I hired a good supervisor and delegated like crazy. Profits are up my stress is down, and our reputation looks better all the time. Working out a plan with a consultant was a critical step in this process. It was expensive, but worth every penny.
     
  6. B. Phagan

    B. Phagan LawnSite Member
    Posts: 95

    Right now, many people have been investing in real estate due to all the thieves in the stock market......a great investment if you ask me. You buy it, people pay you money to use your property, they make your mortgage payment PLUS, you build the equity and sell whenever.

    Downside? renters can be a Major problem.........upside? all the above if you get the property at the right price and the value continues to appreciate. Some twenty years from now, you can begin to liquidate the homes and reap the rewards.........
     
  7. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    Man Bill, are you ever in the office? Been trying to call you but only get the vmail. :)
     

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