Three steps to creating the sales and profit you want over the next year

By John Corban

The new financial year has begun, and  if you have not already done so, now is the time to analyse your P&L from the year just finished.

By following my three simple steps, you can analyse your numbers and percentages. Then use the analysis to forecast the coming year to drive sales, marketing, and make changes to the way jobs are managed.

STEP 1:

Analyse your 2024 P&L
Usually in July each year, I analyse my clients’ P&L from the last financial year and check the percentages of materials costs, site wages, superannuation, subcontractors’ costs, and products sold, in relation to total income. For a landscape construction business, we are looking for 30% or better gross profit. For a maintenance business, 40% or better, and for a design business, 30% or better.

Now if you operate as a sole trader, your drawings (or wage will not appear here, it will be in your balance sheet), so add your wage or drawings for the year to either your site wages or expenses (depending whether you are on the tools or not).

I also work out the expenses total amount and compare it to the income total. The aim here is to be 20% or lower when compared to total Income.

Lastly, net profit should ideally be 10% or higher.

If you find that gross profit is lower than the suggested 30% or 40%, or your expenses are higher than the suggested 20% and your net profit is not where you want it, this can be amended

A full analysis can tell you whether materials need to have a higher markup, site wages need to have a higher charge out rate, or design fees increased. Perhaps a cost-plus system needs to be included on some projects, and better planning and tracking should be tweaked or implemented.

This is the time of year to be making changes to your quoting, planning, project management and the clients you decide to choose. The P&L analysis is the first step to making some powerful changes.

Once you can see what you need to improve when viewing the P&L, you can set up a new forecast for the 2025 financial year.

STEP 2:

Forecast profit for 2025 (use your sales target to drive monthly sales and profit)

Creating a ‘Profit forecast or Financial forecast’ is as crucial as reviewing your P&L. I like to set up an Excel spreadsheet and place the past year on one side of the document, and the new financial year on the other. Planning out the new year will help you make clearer financial decisions, because your forecast has allowed for any estimated growth in sales, and additional expenses (like a new employee), and clearly shows what the estimated profit will be by June 30, 2025. In other words, you are planning for your future and eliminating any big surprises. Then set up monthly sales and profit targets so you stay motivated and hit the numbers you want.

STEP 3:
Make the changes to your systems and planning

Implementing changes to your quoting markups, charge out rates, project management planning, and growing your list of alliances for more sales will ensure your monthly targets start being realised.

These three steps are a powerful way to ensure you start seeing the financial results you want, and relieve the cashflow pressure while earning the income you deserve as a business owner that provides a great service to your clients.

John Corban
Business Coach for Landscapers, Horticulturists and Nursery owners
Mob: 0433 27 1980
www.landscaperscoach.com.au