Five Ways to Create Financial Stability for Your Landscaping Business

Five Ways to Create Financial Stability for Your Landscaping Business

Discover strategies to stabilize your landscaping business year-round. Learn about forecasting, incentives, diversifying services, and reducing cash burn rates.

Five Ways to Create Financial Stability for Your Landscaping Business

Five Ways to Create Financial Stability for Your Landscaping Business

Running a seasonal business like landscaping has its moments in the sun, and times when it’s left out in the cold. There’s a silver lining, though: downtime can fuel growth with some planning. Done right, managing cash flow then becomes less about just scraping by and more about strategic moves that set you up for success  

Let’s break it down into a game plan to keep your business blooming all year round. 

Strategies for Building Financial Resilience Against High Cash Burn Rates

Managing a landscaping business is a bit like gardening – it needs care throughout the seasons. Here’s how to cultivate your finances so they’re as perennial as your plants.

1. Seasonal Demand Forecasting 

Knowing your business's seasonal peaks and troughs is crucial. This foresight helps you manage your cash burn rate by preparing for busy periods and conserving resources during slower times. One approach is to embrace Seasonal Demand Forecasting, a strategy based on historical patterns. No complex statistical analysis is required; simply observe common trends. 

Here is a step-by-step exercise to guide you:

  • Look Back to Look Forward: Think about when you were swamped with work last year. You can also review past sales records for the last few years. Let’s say it was mid-April to August. That’s your peak time. Jot it down.
  • Spot the Patterns: Did you notice fewer calls for big landscaping projects in October but a bunch for leaf cleanup? That's a mini-season within your business year. Mark it on your calendar.
  • Prep the Crew: As February rolls around, start hiring some extra hands. Don’t wait until April when everyone is scrambling for help.
  • Stock Up Smart: If you can anticipate customer needs, such as mulch, stock up in April. But don’t go overboard in September when things slow down, avoid overstocking during downturns.
  • Money Matters: Save profits from the busy spring and summer months and set aside some cash to cushion the slow winter months.

2. Financial Rewards and Incentives for Services

The landscaping service industry in the US boasts approximately 641,782 businesses as of 2023. With stiff competition, landscaping companies must adopt unique and customer-friendly approaches to attract clients, emphasizing the importance of customer service. Offering new incentives can solidify year-round customer relationships and help to streamline your business cash flow. Here are some examples:

  • Subscription Model: Offer home visit packages that give your customers discounts when they sign up. For example, you could offer six home visits that are flexibly scheduled based on the customer’s needs. 
  • Neighborhood Discount: Let your clients know they will receive a discount when their neighbors sign up. You can also schedule the work during the same period to reduce noise and disruption.
  • Loyalty Rewards Program: Reward your repeat customers with points for every service visit. After reaching specific thresholds, the points can be redeemable for free or discounted services.

3. Diversify Your Offerings and Maximize Your Potential

To keep your income steady year-round, consider offering services that homeowners and businesses need outside your traditional busy season. This approach helps your business maintain cash flow and broadens your client base.

  • Autumn: Branch out with gutter cleaning and leaf removal services to prepare homes for winter.
  • Winter: Stay busy with snow plowing or holiday light installation/decorating. As LED lighting becomes more elaborate for the holidays, your clients will appreciate having your expertise to get to those hard-to-reach places outside the home. 
  • Spring/Summer Additionssome text
    • Power Washing and Window Cleaning: Post-winter cleanup services are perfect for homeowners looking to maintain curb appeal. Window cleaning outside and inside the home particularly appeal to clients with children.
    • Landscaping: Have you considered offering design and plant selection services? You could start in winter/early spring to kickstart projects for the planting season. As a bonus, offer to go with your clients to the local nursery to help familiarize them with local selections.
    • Outdoor Lighting Installation: As the longer days approach, extend outdoor enjoyment for your clients into the evening hours by selecting and installing outdoor lights.

4. Cutting Costs to Reduce Cash Burn Rate 

A high cash burn rate poses a significant obstacle to expansion for landscapers. While looking for ways to increase sales or offer more services, consider ways to cut operational costs during slower periods. Here are some strategies to consider:

  • Adjust Variable Expenses:  Regularly review and adjust expenses such as promotions, inventory, and staff costs to minimize cash burn during off-peak periods.
  • Outsourcing Back Office Functions: Functions like marketing, customer service, and bookkeeping are essential but may not directly contribute to sales. Outsourcing these functions can reduce overhead and cash burn rate. Consider arrangements where these services are contracted on a monthly basis.
  • Utilize Contractors: During low seasons or when you need a temporary burst, consider working with contractors instead of maintaining a sizable full-time employee base.

5. Promote high-margin services for greater profitability

With consistent bookkeeping throughout the year that tracks the business's performance, you can run exercises around job costing and project profitability. With that extra detailed view of the business’s performance, you will be able to identify the services with the strongest margins to eventually run marketing campaigns against. If the same amount of time can be spent with a customer, why not focus it on services that add the most to your bottom line?

  • Identify loss-leader services:  There are some activities that many customers will want as a baseline that are great to get your company in the door. Figure out which services aren’t the ones bringing in the most significant margin and form a strategy to use those as a stepping stone towards the greater profitability projects
  • Discontinue services that are too costly: If add-on services seem like good offerings but cost the business too much, potentially remove them from the portfolio of offerings. Think about whether most of your customers require this or just a few, and decide whether the costs are justified or if it would be better to focus on other activities. Beware not to remove services that could potentially cause your customer to look for alternatives with competitors.

Implementing these alternative approaches can help landscapers manage their cash burn rate more effectively and navigate through seasonal fluctuations.

Contact Decimal today for financial management solutions and operational platforms to navigate challenges and ensure business continuity in all seasons.

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