Balancing Landscape Profitability with Staffing Levels

It's great to look at your sales data after the month and see growth, but are profits keeping up?

As accountants, we don’t get excited solely based on sales growth, we get excited when we see our landscape business clients hit a combined sales and profit goal. A business with sales growth typically uses more cash than a business that is not growing, which makes it even more crucial to focus on profits.

High profits give you the ability to maintain cash flow levels and grow over a long period. There is no short-cut to growth. It is common that companies who ignore their numbers when growing will eventually hit a point where they are forced to dial in, due to low margins and cash levels. Staffing levels play a major role in whether a company is able to support continued sales growth and profitability.

Staffing's Role in Profitability

Your sales process is highly dependent on your staffing levels. Being overstaffed will mean you have more pressure to increase sales to recoup those increased labor expenses. However, being slightly overstaffed at points helps to reach your sales goal faster, since you have the necessary resources to perform the work.

It is a balancing act, but strategize how you can get as close as possible to the correct staffing level. If you are understaffed it will add stress to your team, decrease employee retention, and prevent you from growing in sales. In order to reach your sales and profit goal, your team needs to be at the right size and ready!

There Is No One-Size-Fits-All Staffing Solution

Staffing levels don’t tell the whole story, it is also the experience and seniority of your team members. Different green industry service-lines demand varying amounts of skill and understanding of the job. This is why its not always accurate to compare your staffing structure to other companies, because the service-line mix and seniority variable could play a huge role in efficiency, pay rates, etc.

An organization may not have much of a management structure, but instead relies on streamlined and effective entry level training processes. There could also be a different business that has a solid management structure, but the entry and junior level staff are highly dependent on managements direction and oversight. These two different companies may have similar productivity, even with varying staffing structures and approaches. There is not one set way to profits; sometimes you may need to get creative when developing your staffing structure to ensure you have sufficient labor levels.

The Seasonality Effect

The seasonality of this industry makes staffing even more difficult to navigate. The fear is often that if you don’t hire the number of team members it takes to support peak production, then you may miss out on sales opportunities when the peak season arrives. Then add the pressure of covering year-round fixed and overhead expenses, and then this becomes a major point to focus on.

How can you allocate an increased amount of resources and processes to improve the recruitment strategy upfront? If the bottleneck is your hiring process, then make that the priority within your organization. You can recoup these recruitment expenses in your estimates, but if you are understaffed there is little that can be done to combat that. Once you are properly staffed, then the focus should be on driving an increased amount of sales to support those labor expenses.

To learn how to do all that and more, watch this webinar on-demand with Cycle CPA and Grow The Bench.

This article originally appeared on Cycle CPA and was republished with permission.