Tony Bass
Tony Bass

Should you grow your company?
By Tony Bass

Grow in 2023? Should you add more crews? Should you, the owner of your business, get out of the field?

Allow me to share relevant facts about growing your contracting business. I’ve had the blessed opportunity to work for over 400 lawn, landscape and hardscape business owners since 1998. So I’ve got some experience on this subject.

First, sales growth is a reasonably good idea. Like, if you want to pay yourself a higher wage so you can take better care of your family, growing your sales may be one way to increase your pay. But if sales grow and you can’t raise your pay – that’s not good.

There are 3 ways you can choose to measure growth:

  • Increases in sales or top line revenue
  • Increases in owner salary
  • Increases in bottom line net profit

Growing top line revenue is easy. Significant increases to your personal salary and bottom line profits are not so easy. Consider this: Growing top line revenue can be achieved in these ways.

  • Marketing your company
  • Improving your sales processes
  • Adding customers
  • Increasing the size of your jobs
  • Increasing the frequency of purchases from all customers
  • Adding new services
  • Mergers and acquisitions

You could dedicate your time to master any one of the subject areas above and your sales will grow. But, be careful with how you approach the idea of growing your business. Top line revenue growth has the power to destroy your company.

The more you grow, the more you have to become a business manager. Managing cash flow, adding people, training people, retaining people, quality control, job safety, adding equipment, managing debt, government compliance and customer service systems are high-stakes responsibilities. Goof these things up while you’re growing your top line revenue and your company may not survive.

Before you jump on the fast-growth increase-your-top-line-revenue band wagon, I’d recommend you consider a different approach.

Consider how you could simply increase your salary and increase your bottom line net profits. Just as there is a list of activities to master the top line, there’s a list of activities you could master to improve your salary and profits. The list is significantly different from above.

  • Price right
  • Improve productivity
  • Lower costs

Everything that happens inside your company is subservient to how you price your jobs. Seriously, until you learn the skills to price future jobs correctly, correct the prices on your existing contracts and confidently raise your prices as costs go up – your ability to grow profits will be in question.

Our work with over 400 contracting business owners has shown that 20% of all contracting jobs are underpriced. One out of 5 jobs is a loser! These pricing mistakes are never fixed by growing top line revenue. Nope! Growing top line revenue amplifies pricing mistakes.

Here’s my warning to you: You can neither improve productivity nor can you lower costs as fast (or as easy) as you can raise prices. Raising prices is as easy as a pen stroke or digital keystroke.

And, here’s my recommendation: Until you see your salary and your profits grow 10-30% per year, for 2 or 3 years in a row, forget about top line growth and hold off on the urge to get out of the field.

Raise your prices 10% right away. Do it again next month. Then do it once more a month later. Your profits will grow without adding more crews. Your confidence will grow as your bank account grows. You can thank me later for this advice.

Since 1998, Tony Bass has been helping contractors grow profits. He is the co-author of The E-Myth Landscape Contractor: Why Most Landscape Companies Don’t Work and What to Do About It. You can learn more about pricing right and growing profits at www.SuperLawnToolKit.com/profit-builder.

Digital Edition
December/January 2024