December is the month when projects slow down and planning for the upcoming year ramps up. This is the time to look at your landscaping company’s benchmarks and use those metrics to strategize for the new year. Your landscaping business KPIs calculate your performance. Here are 10 key metrics for you to analyze in your year-end landscaping business review!
Revenue KPIs for your Landscaping Business Review
1. This Year vs Last Year : Entire Business
Compare your total revenue this year to last year for your entire landscaping business. This number gives you a quick and high-level insight into your company’s growth.
When people ask “how’s business?” this is the metric you’ll be thinking about. Figure out the big picture and from there break things down and dive into “why” your company performed better, worse or equal to last year.
2. This Year vs Last Year : By Quarter
Gauge the impact of seasonality on your landscaping business by comparing each quarter between last year and this one.
Ideally, there will be a trend for which quarters bring in the most or the least amount of revenue. Your strategy from this point can go a number of ways. Perhaps you’ll decide to concentrate your efforts on the strong quarters next year and let the weak ones ride out. Alternatively, it might be time to let your staff maintain what they do during the strong quarters and focus on improving the weaker ones.
No obvious pattern is also a key performance indicator for your landscaping business. Investigate what went wrong when there are big discrepancies between the same quarter last year compared to this one.
3. This Year vs Last Year : By Service Type
Your business has many divisions. Measure how each one performed this year compared to last.
Use this landscaping business metric to pinpoint which divisions would benefit from increased marketing, which may need additional resources, and which may be costing more headache than they’re worth.
4. Revenue by Employee : This Year vs Last Year
Perhaps one of our favorite landscaping business KPIs! Comparing revenue per employee from year to year measures team efficiency and output. You can calculate this by dividing your total revenues by number of employees. You can even calculate this by crew or business division to see which teams are more productive. You can then use this information to plan detailed strategies for the following year. Certain departments might benefit from an extra set of hands. Some may be less productive versus last year and require a closer eye or an increase in motivation.
Landscaping Business metrics indicate an outcome, however they don’t tell the entire story. For every number, ask yourself “why” and really take the time to answer.
For example, revenue per employee could be down because your team is burnt out, which in turn led to high turnover throughout the last few months causing job delays. You may conclude that in this case, hiring a few extra crew members will benefit team efficiency in the long-term, even if it reduces revenue per employee in the short-term.
Customer-related Landscaping Business Metrics
5. This Year vs Last Year : Total Number of Customers
On its own, this number shows you half the picture. Combine it with your revenue numbers to gain some true insight into how your landscaping business is faring. Divide your overall revenue by your total number of customers to see the average revenue per customer.
If you have more total customers compared to last year, but the average amount they each bring in is lower, reconsider the type of client you’re attracting. Avoid spreading your resources thin on low ROI opportunities.
6. New vs. Returning Customers
How many of this year’s customers are new or returning? If the split changed since last year, it assesses whether your company’s focus has been on new sales or on retention and up-selling. While you may have been able to do both successfully, there is also a chance that you neglected one for the benefit of the other.
7. Customer Drop-off
Drop-off is a benchmark that needs to be closely scrutinized. In the best case scenario, you’ve “dropped” customers who weren’t a good fit for your landscaping business. It’s unfortunate yet sometimes necessary.
On the other hand, this metric indicates you’re not spending enough time on customer service and retention. If the customer’s needs can be met by your landscaping crew, analyze what made them take their business elsewhere. Your plan for the upcoming year should include adjusting whatever caused former clients to leave for greener pastures.
Profitability Metrics for your Landscaping Business Review
8. This Year vs Last Year : Total Business Profitability
Profit goes up, profit goes down. What changed and how do you keep the numbers in your favor? 2021 was a hard year for supply and labor availability. These shortages may have impacted your landscaping business’ bottom line.
When reviewing your year, consider what steps to take in order to mitigate the profit loss in the future. Reach out to third-party suppliers or services such as GoMaterials to help reduce costs and outsource certain business tasks. In short, find the hole that’s sinking your ship and plug it.
9. Profitability by Service Type
You’ve analyzed the revenue by division, now consider the profit brought in by each one.
Examine your low profit divisions and consider whether or not there’s a strategic reason you’re maintaining those services.
Your low-profit division might excel in volume. Ideally, this is the division that brings customers in and eventually feeds them to the rest of the company. Installations are a prime example because they feed the more profitable (and predictable!) maintenance contracts.
If your low profit division doesn’t benefit your landscaping business, it may be worth putting your time and resources elsewhere in your plans for the upcoming year.
10. Are Your Employees Happy?
It takes teamwork to achieve greatness. Each landscaping business metric thus far has been quantitative. Measuring happiness isn’t black and white, but you can calculate it nonetheless.
Give your employees anonymous surveys to get honest feedback. It’s important to have your finger on the pulse when it comes to grievances or satisfaction issues. The sooner matters are addressed and resolved, the better it is for the health of your landscaping business. You can find countless templates online if your plans for the new year don’t include a designated HR professional.
Ultimately, you need to determine your landscaping business KPIs and key metrics when you perform your year-end review. Know where you stand before you build a plan for where you’re going next year.
Once you’ve done the math and figured out your benchmark figures, take a look at our 3 strategy questions to build your landscaping business plan for 2022!
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