The season can look successful and still leave the owner broke in the ways that matter. Revenue is the number people repeat. Then the talk shifts to a profit percent, while the same person is still estimating at night, still on the machine, and still the only one who knows where the job stands. The company is busy. The owner is the subsidy.
This article is from Profit Comes Last with George Urvari of KTC, episode 295 of the How to Hardscape Podcast. George Urvari consults through Knowledge Tree Consulting and, as Michael described it, is hands-off at Oriole Landscaping after about five years of formal consulting. He talked about roughly forty years in the trade and about twenty-five years of strategy and budget meetings. Every hour count, dollar figure, and percent below is from that conversation, not a wage survey or a target for your market.
Get the Plan Off This Week’s Fire
Most of what owners bring him in the off-season is a tactical problem wearing a strategy costume. He shows up for a five-year plan and finds a quote due, an estimating mess, and a schedule that does not work, so the day becomes a spreadsheet for this week.
Book three days for strategic planning, as a recurring meeting aimed at the next ten years, and take the excuses away. If you plow snow, those days cannot be storm days. At Oriole, he said, they are down to one day because the tactical problems are mostly gone. That day is for the few things they will prioritize and then do. Stay at it for something like forty years, fix about three problems a year, and that is on the order of 120 problems that stop coming back. Skip the meeting and you are the company you were five years ago. He watched one client sit for five years on a single piece of advice: let a weak person go. He has never heard anyone complain that they let a bad employee go too soon.
A plan that is not done is not a plan. He wants a recurring meeting, an agenda, and a checklist. From the SWOT work he walks owners through, cash flow is the threat he names first. The early goal is less stress, not a prettier percent. He uses the Eisenhower matrix to cap the year at about three tasks that are both urgent and important and about three that are important. A seminar or two is a tip, not a strategy. He rarely sees one become a change the company keeps.
Stress, Time, and Pay, Then Profit
Everybody he talks to starts at profit. He does not. He walks the order as questions. Same money and far less stress: worth it? Add about a thousand hours back. Then a paycheck up about 20 percent. Then, after those three, profit up about 5 percent. Reduce stress, get your time, raise your income, and let profit follow. He said it again with the crew included. Get rid of the stress. Get your time back. Raise the pay of the workers and of yourself. Then profit. He would rather give up profit, work about a thousand hours less, and carry no stress than add a thousand hours, stay stressed, and call the growth a win. He has watched companies push profit hard, without the team and without a plan, until the wheels come off.
Profit, in his words, is the byproduct of doing the work well, the reward for planning, not the first lever. When he used the host’s companies as the example, he said the trade was not about profit first. If landscaping profit moved from about 12 percent to about 2 percent because that company had become a platform for the rest of the plan, that was the strategy. Near the end he said getting ahead is sometimes not a profit-first result.
He counts three currencies: grief, time, and dollars. Most owners only watch dollars. Clearing grief and getting time back is already a win, and the money tends to show up later because you can finally think. It is not one move and then a return. Sometimes the crew gets paid more before you do, turnover drops, the weak people leave, and you are not richer yet. He puts a rough return on the planning itself at least one to one, and often something like ten to one. Losing about 500 hours of stress, with no profit gain, still counts.
Pay Yourself Before You Admire the Percent
His own rule was to pay himself first, as a salary, not as a way of treating people badly. He put himself on salary immediately and made that pay a cost the business had to cover. If he was ineffective, he was an overpaid employee. He was still an employee of the company, not a leftover.
He would rather see an owner pay themselves about $120,000 or $150,000 a year with about a 5 percent profit than pay themselves about $70,000 and post something like a $200,000 profit. You will not see that larger number. It disappears into expenses. If you are growing, he said you may not see a dime of it for about ten years. Unless it lands in your account as a dividend, it came in and it went back out. A high percent with a cheap owner means the owner is subsidizing the shop. If you are not budgeting, the same money gets burned on poor returns.
When you replace yourself, your pay goes down or the profit goes down, unless you offset the hire immediately. The free hours need a job or you just work longer. Before the next dollar arrives, decide whether it is a machine, a person, a raise, marketing, or a lawn sign. He budgets in big strokes and line by line: door knockers, SEO, phone calls, an email campaign. Some of those spend time instead of cash. You feel the cash the day it leaves. You do not see the hour until it is gone.
He threw out a million-dollar example. Real bookkeeping, taxes, payroll, payables, receivables, and reconciliations, at about 600 hours a year, is about $24,000 if a competent person costs about $40 an hour. Operations at another 600 hours is another $24,000, so you are near $50,000 before anyone is on a machine. Field time at about 1,800 hours at that same $40 belongs in the total, or you are subsidizing the business. Those rates are his illustration, not a quote for your town. He agreed with baking the admin hours into the overhead salary you already price from, so hiring the person does not force a new price.
Do Not Manage From a Percent the Books Cannot Support
After something like a thousand profit-and-loss reviews, he said he can red-flag misallocated dollars in about twenty minutes. The first pass is spending less on the wrong things.
He does not trust a gross-profit comparison when the chart of accounts changes shape from shop to shop. Some put equipment in cost of goods. Some mix it into overhead. Some never separate the yard loader and the overhead trucks from the machines that produce field work. Straighten that before you manage from the ratio. Over-measuring is a waste on top of overproduction. If the books are not current, a finer report will not save you. For most companies even up toward about $10 million, unless a strong controller is not already buried, he thinks that measuring is wasted. You knew on the job whether it went well. The financials are the rear view. A leading indicator is what happens if you do the thing in front of you.
Use the day, not the hour. Revenue per hour is micro money management. Revenue per day is something you can schedule, see across a week, and say to a customer. “You will be here for a month” lands. A pile of hours does not. A job you figured at a week that finishes in a week is fine. A week and a day is trouble, and a week and a day every week is a real problem. He does not feel one hour, or two, or five. He feels a slipped schedule. If the hours ran long and the week still held, he can live with it, because you did not create another week of unproductive overhead.
Buy Time, Then Let the Percent Follow
Idle iron is a strategy problem. He used about $50,000 of gear sitting barely used. That cash could be a strong employee, a better machine, or a measuring tool that stops someone from redrawing a bad sketch. A tool like that may not raise profit in the year you buy it and might still find you about 200 hours. The business dies by a thousand cuts. Pull the cuts and the pain drops before the money shows.
Judge the purchase by the margin, not by last year’s revenue. What does the next loader add, what does it do to cash flow, and do you make more? Ask the same thing of a hire at about $50,000 a year across five years. Sell what you do not need first. “It is paid for” is not a return. He said he could do better with that $50,000 in the bank at about 5 percent than with depreciation you never feel. Then clean up the people: offer a chance to change, then follow through. He calls it addition by deletion. Get rid of the wrong stuff before you buy the next thing. A stronger balance sheet can earn money the income statement does not show. He said they make more on the holding company, including how they buy and sell equipment, than on the landscaping work.
Charge for design in steps: about $50, then about $200, then about $500, then about $1,000. A client he pointed to, and he thought the name was Geller, had a design minimum up around $6,000 after starting from zero. Clients who made that change, he said, did better. Not every add-on belongs on a maxed-out company. Landscape lighting can look like easy margin because you already have the customer. The lamp that fails in peak season, because the wire was shallow, is the part that gets skipped. Take that work when the stress is low. Do not take it only because it should make more money.
Write the long cost of a leak. About $50,000 a year is $500,000 over ten years. At the 5 percent he used, he called the cost of not fixing it about $750,000, before you count what that money could have funded. Healthy growth looks like steps and landings, not a line straight up.
Block the Week, Then Build Something You Can Sell
Personal time goes on the calendar first. Date night. The trips. Then flex time, which can be personal or business, and the business wins if next week’s payroll depends on it. Work that cannot sit in Monday to Friday gets a window that does not move. If you still do the books, his example was Saturday from 7 a.m. to 10 a.m. Estimates might be Thursday from 7 p.m. to 10 p.m., plus about two hours on Saturday so peak season has an overflow instead of a pile of unquoted jobs. Sales calls live in their own windows. He will break a window for a rare client. He will not break it because the phone rang. Sort the hats you wear as good, could be better, or stop. He can scale a company where people work about 2,000 hours, and about 2,200 to 2,300. He cannot scale 3,000. At Oriole, no one works more than about 2,200 hours a year, his own load came down, and the company runs without him. Profit did not rise in a straight line to get there. He would rather pay a premium for talent than save his way into prosperity. One client he described grew to something like $20 million in about twelve years by paying up and not keeping people who are not good. Your best person often outproduces the person next to them by about two to one. If you are not the strategist, and he thinks only about 10 percent of people naturally are, hire that skill and hire someone who will implement. He said companies pull away when someone will actually implement, which is rare.
A buyer does not need your 20 percent profit. He said a saleable company needs something like a 10 percent profit and it needs to run very well. Nobody wants your 3,000-hour job. A lower percent that survives you beats a higher percent that dies when you leave. Owning the yard, he said, would strengthen the balance sheet more than the income statement. Tenants in his setup cover about two-thirds of the rent.
If the Market Will Not Pay Your Cost, Change the Lane
Price from real overhead and the market may still not close. He did not say to cut the price and hope. One path is to get faster than everyone else. He described patios with no cutting, only where the grade does not change: standard options, cheap, fast, and a larger pool of buyers who do not need a curve. The other path is to look different on purpose. Where other crews set armor stone, his set granite boulders.
Different is not unbounded creativity. He called it a trinity of design: price, creativity, and buildability. You can design yourself out of a job anyone will buy. The useful version is a look that is yours and a build the crew can still produce. Those lanes sit at the top of the market or at the bottom. The middle, he said, is where you compete with everyone and stand out in neither speed nor look. Growth is also at someone else’s expense. If every company grew at once, there would not be enough work. Sometimes the company that takes the share is not winning on a profit-first scoreboard.
He figures the tactical years cost him millions he would not spend again. If you want the outside push, email george@ktc.biz. Hear the conversation before you copy a figure onto a budget: Profit Comes Last with George Urvari of KTC.