If you are anything like me, the desire to grow your business and grow quickly courses through your veins. Yet, the road to growing quickly is often riddled with setbacks and disappointment.
Several years back, I realized to get out of the day-to-day operations of my business and achieve the success I so badly craved, I needed to grow and scale my company and quickly. I am not about to tell you this was an easy feat. In fact, reflecting on winters past, I realize how many unexpected bottlenecks we experienced that slowed our growth at first.
In fact, there are three bottlenecks that most companies will experience on their path to rapid growth.
Growing fast without hiring the right people and reinforcing culture
This was the first bottleneck to growth we experienced at Callahan’s Lawn Care. We began our path to rapid growth by focusing solely on driving sales. As a result, we ignored our strongest asset -- our team. By ignoring the team, we also inadvertently ignored our company culture and core values when making hiring decisions.
To refocus our efforts, my manager and I attended a leadership seminar meant to assist companies in building stronger cultures. Through this two-day event, we were able to lay the foundations of our vision, mission, and core values that would lead us in the hiring, training, and termination processes moving forward. We became focused on stacking our “proverbial bench.” We interviewed for all positions in the company whether we needed to or not and focused on finding employees who were not only skilled but fit into the company culture.
To illustrate this point, consider our core value: “We do what we say we will do.” When interviewing we would ask, how do you feel about this statement? If the applicant responded with something along the lines of, “I hate when people say they will call me back and they do not,” that was an indicator that they may align with our values and the culture we were building. After working so hard to build the culture and core values for our business, hiring for the right fit employees became critical.
Growing fast without knowing your numbers
Fortunately, knowing our numbers was not a struggle we experienced. In fact, it was something we were lucky with from the early days. I have a thirst for crunching numbers and projecting and tracking profits throughout the season. To be honest, I hated and even struggled with accounting in college, but in the real world of snow, plows, and ice melt, these numbers come alive and just make sense to me.
So, after seeking counsel from many industry veterans and reading the book, The Complete Business Manual for Contractors by the late Charles Vander Kooi, business finances became somewhat fun. I found that once I had a clear understanding of the cost of doing business and what I needed to charge to cover labor, equipment, and general and administrative costs, this part of the business became a non-emotional math equation. Unfortunately, many businesses I encounter do not focus on the numbers until there is a problem.
My advice is to take the time to understand your numbers before the next snow season. In fact, it is critical to create a budget and an estimating system that will ensure profits no matter the winter.
Growing fast without managing positive cash flow
This can be the biggest and most problematic bottleneck to growth for all businesses small or large. This was a lesson I learned quickly in the early years and it changed the way we did business forever.
We did two key things to avoid cash flow issues. First, we changed our invoicing for residential properties. We were plowing 600 residential driveways and more than 70 commercial lots when we made this change. The residential properties bring cash flow. To ensure this, we required all residential contracts to be paid in full by November 1 of each season. The pre-payment was not discounted, but it was required to reserve a spot on our residential routes that inevitably maxed out quickly each year. This influx of cash helped us pre-purchase salt and ice melt and cover any major snow events before the commercial installments starting rolling in.
Then to further remove risk, we subcontracted all of our residential work, in essence fixing our costs and guaranteeing predictable profit margins on the work. Remember, no matter how you go about collecting payments and creating liquid cash flow, it needs to be addressed and monitored regularly. You can have the best team and financial systems in place, but if you are not getting paid quickly enough your business operations will freeze up quicker than Old Man Winter.
Keeping your attention focused on hiring the right people and reinforcing culture, knowing your numbers, and managing positive cash flow will allow you to grow and scale your snow removal business now and into the future. Ignoring one of these key areas will most likely cause bottlenecks to growth. By preparing and planning for these bottlenecks, you will certainly have the advantage to scaling faster and quicker than your local competition.
Contributing editor Mike Callahan is a 20-year industry veteran and owner of Simple Growth Systems.