Mar 2013 6 Ways to Outprice and Outsmart your Competition in 2013
You will have experienced most clients delaying projects, getting more comparative quotes, being more price conscious and shaving their budgets in 2012. And according to many economists, 2013 will probably be similar to 2012. So how can you outsmart and out-price your competitors so you win more jobs without decreasing your profit margin?
After working with 60 Landscape contractors around Australia, I know that the majority of landscape contractors don’t know their numbers well enough to be able to quote to make a profit. What I mean is; that, as a Landscape contractor you need to update the purchase prices of your materials so they are current and preferably use quoting software to eliminate human error.
Also know your staffing costs include workers compensation and superannuation and know how much your overheads are as a percentage so you will know if your quote will cover overheads and make a profit. A good estimating software system will factor in your overheads. What is the point of winning jobs all year if you lose money or break-even at the end of the financial year?
Quote Jobs that suit your business
As I have mentioned many times, too many contractors are quoting jobs they shouldn’t be quoting. If you have made 15-20% profit after wages and materials have been deducted, you still have another big cost that needs to be deducted and that is overheads or business running costs. 15-20% margin usually means you will lose money on a job after overheads have been deducted and job fix ups have been attended to. Some jobs are waste of your time quoting, so I suggest that you get to know which ones they are.
Some contractors say to me, but aren’t I better off with a job with 15% margin than no job at all. My answer is most of the time ..no, because you will lose money plus you will be engaged in a job that is not making a profit and are preventing you from quoting a job that could make you 30% margin and make a profit.
An exception to winning a job with a smaller margin might be to boost your profile because the job has the potential for variations that will generate good profit.
Train and Motivate Employees
If you just reduce your prices, you will be cutting into your profits, but if you run your jobs according to a project schedule and budget and your guys complete jobs faster and without stuff ups, you will greatly improve your profits.
We all know this, but why doesn’t it happen enough?
Perhaps its because many contractors haven’t set up a system for running their projects that includes discussing the scope of works properly, explaining and mapping out the schedule for the job, keeping the site manager under pressure to run the job according to the schedule and according to the budget or quote. Often a job takes too long to complete and that contributes to minimizing the profit for the job.
So train your guys properly so their work is to your standard. Set up a system for each job that allows them to finish on time that includes the elements I mentioned above and make sure someone qualified and skilled is training your guys to continually improve their skills.
An incentive scheme or profit share scheme is what will be needed to keep your better employees from going and setting up their own landscape business or being poached by a competitor. Plus it is a great way of ensuring that they finish your jobs on time and on budget with minimal or no stuff ups.
Every landscape business has waste. What I mean by waste is; the areas in your business that cost you money such as – over ordering materials and throwing them in a storage shed where they rot or get forgotten or buying materials at a nearby hardware store because you forgot to order them or your guys taking longer lunch breaks or taking several smoke breaks throughout the day. There are over 30 different ways of creating waste in your business that are happening right now.
So how do you start to eliminate waste?
Well you won’t eliminate all waste but if you start by identifying all the different ways that waste is happening and then talk to your guys about them. Attach an incentive scheme to eliminating waste and making more profit per job, I bet your guys will pull together to help.
Manage your Tools
Having your management and construction teams with a fully equipped workable set of tools is essential to making sure your teams work efficiently and finish a job on time. So that means making sure each team is responsible for the equipment they use and that they must clean, care and put their tools back into the designated trailers or vehicles every day. The site manager should be responsible for making his team look after and clean their tools. If you attach the incentive or profit scheme to this responsibility, your site managers and his team members will make sure the tools don’t get lost/mistreated because it will hurt their future bonus earnings.
You probably know which marketing strategies are cost effective and work for your business, just make sure you do them every month. One such strategy is making sure you have a good SEO expert to get your website on the front page of Google. What about keeping in touch with those companies and professionals that can feed you potential work?
So how do you do that and do you have a plan or is it just a random thing you do when business is quiet?
Everyone tends to stop their marketing when things get busier, but that is a big mistake. Consistent marketing will alleviate the quiet times and the busiest companies are running several strategies every month, every year.
So the six ways to outsmarting your competition are really a business plan for 2013. Place your attention on these areas and watch your business improve while your competitors continue to wonder what they need to do.