Business growth takes time, energy and consistency. Sound familiar? Sort of like what it takes for a tree to grow. In fact, we can look to trees as a model to follow in building a sustainable tree care service.
Let’s consider the following areas: roots, trunk and branches.
The foundation of your company is like a tree’s root system. From a business standpoint, you should have a solid foundation – a firm understanding of key business principles. These include leadership, marketing, financial management, sales, human resources and production.
Understanding basic business principles puts you in a winning position. It enables you to adjust – no matter the economic environment, state of labor or even how advanced artificial intelligence (AI) becomes. There’s always an opportunity for you to excel. The key is mastering the fundamentals of business while harnessing the power of innovation.
Next is the trunk. A tree with a strong central stem or leader is similar to having a focused path. When building a solid tree service, having a clear focus is key, because it allows you to intelligently allocate resources to improve your operations. With focus, we can say “yes” or “no” to opportunities and place our energies where they are needed most in order to enhance and sustain our companies.
Finally, branches represent relationships. It’s easier to cultivate lasting connections when you have created a firm foundation (root base) and developed a laser focus (trunk). When you essentially make yourself “strong first,” it’s easier to collaborate with other entities and build synergies.
Now that we’ve discussed the root, trunk and branches of business, let’s climb into five strategies to supercharge your tree service. These strategies can transform your tree service from a mere business into a sustainable asset that provides enriching career opportunities for yourself and others.
1. Embrace numbers
Financial statements are more than numbers on a sheet of paper. They’re a reflection of the results of your behavior and actions. It’s simple: Your inputs (marketing and production efforts) determine your output (profitability).
Reverse engineer your financial reports to develop stronger marketing and operational procedures to improve the profitability of your tree service.
The key is using data to ask the right questions and then correcting course along your business journey.
- How can we increase revenue without shooting overhead through the roof?
- How can we enhance crew capabilities and margins while maintaining optimum safety?
- What equipment investments are necessary to ensure efficiency?
Measure where you are, then plot where you want to go. Execution will get you there. When you realize that everything is made up of numbers – your tasks, business decisions, actions – you can gain more control over your operations. More control enables you to maximize the key business activities that really move the needle in your organization.
2. Power up your pricing
Due to the nature of tree work and having to bid/sell jobs frequently – and in different environments and scenarios – you gain a gift: field experience. You develop the superhuman ability to assess the three P’s that can help you profitably price projects: people, property and production.
People – The client’s overarching goal/problem, completion timeframe, attitude regarding yard, etc.
Property – The terrain, environment, ease of access, hazards/targets, trees, utility restrictions, etc.
Production – Skill level of crew, number of crew members needed, equipment required, time requirements, etc.
These three areas can serve as a guide to your estimation of time, labor and equipment required. This helps you figure job pricing and profitability.
Now you can make a decision – like a “Choose Your Own Adventure” book – on how to approach the job. Do you:
- Take it – Complete it as safely and efficiently as possible?
- Outsource it – Refer/sub the job out?
- Walk away – Allocate your energy and talents elsewhere?
The job has to make sense, because the tree industry is too risky to be unprofitable. But more than that, arborists, whether in the realm of production or consulting, wield a delicate combination of skills that create value.
When you have a steady supply of new jobs, and can master how to configure the best mix of crew members and machinery to tackle any job, you will build unmatched confidence in pricing jobs at a premium while providing exceptional service to your clients – a true win-win.
3.Climb the four levels of profitability
As stated earlier, whenever your bank account (output) is not where you want it to be, think about your actions (inputs). Break your revenue-generating activities into four areas: leads, closing, pricing and efficiency. Then simply ask yourself, “Do I have a problem with leads, closing, pricing, and/or efficiency?”
In other words, are you generating enough potential sales (leads), converting enough leads (closing), selling profitable work (pricing) and managing production costs (efficiency)?
Let’s go deeper into each area, with just a few considerations.
- Are you bringing in enough leads or new business?
- Are you relying only on word-of-mouth?
- Are you using other means to advertise (social media, business groups, print/billboard, etc.)?
- Are you building strategic relationships with other service providers?
- Do you have a marketing strategy and invest in it consistently?
- If you have a lot of leads, are you skilled in closing enough of them?
- Do you establish professionalism during client engagements?
- Do you offer value to prospective clients and to the marketplace?
- Are you known in your community as a value-adding tree service?
- Do you offer favorable payment options?
- You may be closing new sales, but are you pricing jobs right?
- Do you understand your numbers (overhead, operating expenses, revenue per hour, key performance indicators (KPIs)?
- Are you considering as many job variables as possible when bidding?
- Are you considering the costs of machinery and skilled labor when pricing?
Are you efficient in managing costs and reducing overruns?
Is your crew equipped with the right skills and machinery?
Is your crew underskilled for the type of jobs you get?
4. Discover strategic partnerships
The relationships you build can send you up higher and quicker than an SRT climbing system. Maybe you don’t want or can’t handle all that comes along with additional equipment, crews and overhead. If you have skills, find the people with the jobs. Or, If you have jobs, find the people with the skills.
If you choose to focus on advanced climbing and not acquire heavy machinery, partner with the individuals with the necessary equipment. If you have marketing and sales skills but lack a production team, find a reputable tree service that can fulfill the work. Strategic partnerships facilitate this combination of resources, helping you conserve your greatest asset – time – which allows the creation of more efficiency and profit for all parties.
Strategic partnerships can extend to other organizations as well. Have you considered aligning with urban forestry and tree care education groups to share knowledge and build long-term professional relationships? This can open doors and expand your career in arboriculture.
5. Upgrade your education
Advance your knowledge and education. This could include obtaining new certifications, licenses or credentials. Provide opportunities for learning, not just for yourself, but for your crew as well. This can keep them engaged in their work, while allowing them to see themselves developing a career or working in their calling, not just doing another back-breaking job.
Credentials are more than nice pieces of paper to frame and put on your wall. Begin to look at credentials/licenses as revenue opportunities for your company, regardless of whether it’s just you, a lean operation or a large crew.
Let’s look at a couple of examples. With a pesticide applicator’s license, you can create a recurring revenue stream. With a commercial driver’s license (CDL), not only can you haul for others, but you also can take on bigger jobs for your own company and handle larger pieces of equipment and machinery that can help move more weight, capital or assets in shorter amounts of time.
You could create goals to achieve new credentials within set timeframes for yourself, your team and your service. Furthering your education enables you to consult, train or even provide additional services, such as plant health care. These new skills can enhance the value of your company or develop new revenue streams to facilitate sales growth.
Take advantage of the five mentioned strategies to create new opportunities for your tree service. Continue to think outside the box while adhering to sound business principles. It’s all about engaging your creativity and implementing systems to build a tree service that produces value for all stakeholders.
The tree care industry flows with endless opportunity. Whether you are a consulting arborist, production climber, business owner, industry trainer, investor or instructor, you can create your own market or niche by integrating your own unique talents and abilities within what you do.
Edward Morrow is an ISA Certified Arborist and holds the Tree Risk Assessment Qualification (TRAQ) credential. He uses his experiences as an accountant, arborist and author to help tree care professionals better understand business while creating sustainable careers in arboriculture. He developed TREE S.T.A.R.S., an arborist adventure novel, to inspire tree care professionals and bring public awareness to the importance of arboriculture. www.edwardthearborist.com
Check out his earlier article, “Arborist Accounting: It’s All About the Numbers,” in the July 2019 issue of TCI Magazine. Go to tcimag.tcia.org and, under the Resources tab, click Magazine Archive and scroll down to the issue. Or go to this page in the digital version of the magazine, under the Current Issue tab, and click here.