Return on investment is probably the #1 most overlooked number in the lawn care industry.
Essentially, it means this:
- You put money into a strategy (for example, a marketing campaign)
- The strategy yields you more money - either from increased sales, or new clients.
Why should you care about it?
Pay Attention to Your Return on Investment (ROI)
Sometimes, instead of looking at the big picture, we focus on the immediate consequences of our money. Save $20 to buy cheaper tires? Sure, why not.
Hire an inexperienced worker for $5 less an hour? That will surely save you money.
But sometimes the REAL consequences of our money-saving habits don’t hit us until it’s too late. Especially in the lawn care industry.
Those cheap tires might blow out a month down the road. That inexperienced new hire might not pull his weight during your busiest season.
Sometimes saving money can cost you money.
When Thinking about Your ROI, Easy Doesn’t Always Mean Profitable
You have a rare kind of personality if you’re able to keep a business afloat. But after months and years of hard work, some entrepreneurs have a tendency to work on 'easy money' projects.
Here’s an example:
Project A is going to take you a little while to set up, because it only has a few steps. Project B is much larger, with dozens of steps, and you know it’s going to take more work on your part.
Many business owners are going to look at Project A and say, “It’s simple. It’s quick. Let's do that one!”
Distance yourself from this kind of thinking. If Project A is going to return 20% of the money you invest, but Project B is going to return 30%, Project B is clearly worth more.
Prioritize Your Projects
When you are prioritizing projects in your business, focus on your Return on Investment.
When you consider how much money your projects will MAKE, instead of how much they will COST, an increase to your profitability is right around the corner.
Don't forget about the price of your time.
If Project B will return 30% of your investment in 6 months, and Project C will return 15% of your investment in only 3 days – you can turn Project C’s profit around much faster.
Return on Investment is not an easy concept, and it’s one you’re going to have to practice thinking about for years. But now that you ARE thinking about it, you’re one step ahead of your competition.
Here's a list to consider when you're looking to improve your return on investment:
- Which of your employees are not making you as much money? Can you help them improve?
- Which of your services are costing you too much?
- Would investing more in marketing help you grow faster?
- What part of your business is costing you too much time?
- Where are your teams slowing down and why?
For Field Service Business Owners, check out this handy calculator to help you figure out your ROI.
Now get out there and make your business smarter!