Planning With Purpose

They say that great minds think alike. The landscape contractors who recently attended the annual financial planning week at LandOpt headquarters in Pittsburgh can render their own opinions of whether their minds are truly “great,” but there’s no questioning that the thinking going on during the November 2012 event was “alike.” In fact, that’s the whole idea.

LandOpt is a service organization that licenses the use of proven business systems for a large network of landscape contractors. These contractors are located in different geographic markets across the country — and since they don’t compete within the same territory, they are not only able to work with LandOpt, but can openly communicate about business matters with each other.

Components of technology, processes and professional development are offered, all of which LandOpt supports with ongoing implementation services and coaching. The systems are scalable to meet the needs of different size landscaping companies, but otherwise everybody in the network builds a plan in an identical template. By using the same structure, all the numbers that factor into the financial planning process are captured and categorized in a uniform manner.

Financial planning week

The consistency with financial terminology and format of the plan pays dividends throughout the year for LandOpt contractors, but it’s a particularly productive benefit during the annual financial planning meeting, when nearly the entire network converges to discuss each company’s plans for the new year. At the meeting held November 12-15, 2012, 98 percent of LandOpt contractors were in attendance.

“The goal of the week is to ensure that everyone has all the components they need to put the finishing touches on their financial plan,” said Steven Bach, a LandOpt success coach. “We also educate as to [ital>why<ital] we’re asking them to build their plan a certain way, so there’s a clear understanding of the rationale behind a structured plan.”

Contractors who are newer to the network (the “rookies”) start off the week with two days of educational sessions covering the planning principles for sales, revenue and overall finances. More experienced contractors who have developed multiple financial plans with LandOpt (the “veterans”) arrive on Wednesday. From there the meeting is a combination of individual courses for the rookie and veteran groups, respectively, and collective group activity — including a chance for both new and experienced contractors to present their financial plans to the whole network for feedback and discussion.

Homework assignments

Asking any company to put together a thorough, detailed financial plan in just two to four days is simply unrealistic. That’s why each contractor goes through a “homework” process starting several weeks prior to the planning meeting.

“It’s a very regimented program,” said Bach. “We have a series of webinars beginning in early October. We’re coaching them on the data they should be pulling and the format they’ll need to build their plans. In fact, by the time everyone meets in Pittsburgh, they have already submitted a rough draft to LandOpt, which we’ve reviewed and given back to them.”

Luke Henry is the president of ProScape Lawn & Landscape Services, based in Marion, Ohio. The company was founded in 1998, and the 2013 financial plan is the third that Henry has created as a LandOpt licensee. “A lot of the early work is just collecting data — actuals from the current year or previous years — and plugging that information in,” said Henry. “The challenging part is determining the financial implications of a future strategy, such as adding team members or service lines. It really forces you to think and figure out the real dollars and cents in advance, so that you’re getting out ahead of those types of issues.”

Having founded Mountain View Landscape and Lawncare in Chicopee, Mass., back in 1976, Steve Corrigan is, by any measure, an industry veteran. He’s also a relative veteran to the financial planning process, having just completed his fourth plan with LandOpt. “It’s a nice, step-by-step process for doing your homework and putting a financial plan together,” said Corrigan. “For example, we can put in employee salaries and allocate the time they’re dedicating to different departments. We can account for the backlog of work coming forward into the next year and consider what we may lose in attrition from maintenance accounts. Having worked with financial plans for years, I can say this method is a lot more systematic.”

Shawn Knight and Jeremy Durgan co-own Green Earth Landscape Services. Founded in 2006 in Panama City Beach, Fla., the company acquired a second location in Santa Rosa, Fla., in April 2012, just a few months after joining the LandOpt network. “Since it was our first year being involved with financial planning, we spent the summer updating our data and building a plan,” said Knight. “You evaluate your labor and equipment and then break down your entire business. And then in addition to gathering and evaluating data, we participated in periodic webinars with licensees and success coaches, so we felt really prepared going into the financial planning meeting.”

David Arnold, president of Corion Landscape Management in Ferndale, Wash., was another rookie at the November planning meeting, having joined the network in May 2012. “We were really looking for structure,” said Arnold, who founded the company in 2001. “I thought the budget I put together for 2012 was pretty detailed, but it was nothing compared to what LandOpt drove us toward. So starting off there was a lot of data entry — sales costs, management costs, hourly rates. Preparing for the planning meeting could potentially have been more difficult, but since we had literally just gone through the initial process of establishing a basic financial plan as a new contractor, a lot of it was pretty fresh.”

Getting a handle on planning

It’s clear that compiling data is a huge part of the battle in tackling the LandOpt financial planning process. But it isn’t the only part. “You can get some pretty good answers once you’re familiar with all the line items and know where to pull information from,” said Corrigan. “But you also need to forecast the mix of work you’ll need to sell in order to achieve a given growth number and have real expectations for where the revenue will come from.”

“There are a number of moving parts,” added Henry. “The addition of one key team member changes a lot of metrics, not only from a revenue producing standpoint, but also all the ancillary costs on top of salary, like health insurance, office supplies, vehicles. Trying to look into the future and account for all those things can be difficult.”

Forecasting is an even more difficult task for the newer contractors, who often don’t have enough historical data to be accurate with their financial plan, forcing them to make some sophisticated projections.

“I think the biggest challenge was being able to pull enough detailed information from our current records just to have some benchmarks for comparison,” said Arnold. “The process covers everything — sales plan, cash flow assumptions, financial planning – so we’ll be making adjustments through 2013 as we watch the actuals stack up and actively work toward redeeming the plan.”

“In the past we would build a budget and project sales, but it wasn’t done with proactive reasoning,” said Knight. “We would look at profit-and-loss from prior years, take an average and make a projection. We had never used sales and labor plan forecast for planning. For our company it was a very different way to approach planning for the next season.”

Putting the group together

Knight was able to put this new way of thinking to a legitimate test during the planning week in Pittsburgh. After the first few days comprised of line-item-by-line-item education and an open forum to ask questions, Knight got an opportunity to not only see some established contractors present their financial plans, but to present his own to the group as well.

“It helps you think about and better understand the process when you have to explain it to a larger group,” said Knight. “And it was very encouraging to have veteran guys sit down with you and go through your data. You gain a comfort level with the projections you’re making. Likewise, it’s helpful to watch other companies present their plans and see their data and how they use it. You recognize that other contractors share similar struggles in certain areas, and that LandOpt has provided a structure that allows them to work through those and achieve success.”

Arnold concurred with that feeling. “Getting the perspective from the seasoned contractors was very beneficial,” he said. “They’re able to confirm what the coaches are teaching, and they’re living proof that success will come from following the process.”

Henry added that he sees value in simply knowing he’s in the right ballpark with where his numbers stand. “Not everything works as a direct comparison, when you factor in varying cost structures and scopes of service, but it provides benchmarks to see what others are doing,” he said. “Hearing certain questions come up reminds you that you need to give careful thought to some of these issues, and it also helps us recognize how far we’ve come along … not only with planning, but with the execution of the plan.”

Getting the numbers right

Having a well thought out financial plan — and the best intentions to execute it — doesn’t mean it will come perfectly to fruition. Corrigan readily admits he’s been aggressive with his company’s goals for project work the last couple years, but he also recognizes some of the reasons why actuals didn’t meet projections and how to adjust to the results.

“There’s more accurate historical numbers going forward because of the way we’re tracking things,” said Corrigan. “Having that history and knowledge helps us drill down to figuring out what our average account size is, how many proposals we need to put out to reach our goals — things like that. Every year we are fine-tuning the process.”

According to Bach, the group forum during planning week encourages contractors to hold each other accountable and ensure they’re writing realistic, achievable plans. “Sometimes a licensee will write an accurate financial plan, but they don’t like it,” said Bach. “They want a certain profit and will try to reverse engineer to get there, but it doesn’t work that way. Sometimes there’s confusion about the difference between an income statement and a cash flow plan, or there will be a lively debate about how to classify certain costs. Occasionally percentage of revenue on specific line items may get too high or too low, and we’ll need to look at that.”

Finalizing the plan

The official due date for completed 2013 financial plans in the LandOpt network was December 20. But given the defined structure of the process, most contractors left the Pittsburgh meeting with their plans already anywhere from 80 to 90 percent complete, and most were completely done well in advance of the deadline.

“Ultimately, the process is really about building confidence in myself as an owner to make better business decisions,” said Arnold. “Not only is it understanding what it takes to put a solid financial plan together, but also recognizing the benefits of being able to manage that plan. Success isn’t guaranteed. But we’re putting a plan in place, working toward it, and when things change, we’ll adapt and make adjustments that will allow us to be successful.”

Article provided by LandOpt.

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