This is What it Means to “Know Your Numbers”
“Know your Numbers” is a cliche term that gets thrown around a lot in the landscape industry. You see it dropped in Facebook threads, events, seminars, courses, etc.
A lot of newer contractors will go to a landscape or hardscape Facebook group, post a photo of a job they’re bidding, and ask what they should charge. The response they usually get (well, there’s a lot of responses, with varying levels of rudeness 😅) but at least one comment will usually chime in and say: “you gotta know your numbers!”
In fact, I’ve commented that personally on posts like that myself many times! ha ha
And it is true.
To know what you need to charge, you DO need to know your numbers. There is no easy one-size-fits-all answer to that question.
It might be frustrating for you though. Everyone’s throwing around the “Know Your Numbers” phrase as if they automatically expect you to know exactly what that means.
Well, I’ll explain what it means.
I’m not going to go on long-winded, showing you HOW to know your numbers. I’m just going to explain WHAT it means to know your numbers. If you want to learn HOW to know your numbers, I created a free course on hardscaper.com that goes in-depth, teaching you all the nuts and bolts of HOW to know your numbers.
So, there are two main components to knowing your numbers.
- Budgeting and estimating
- Job Costing to compare estimated vs actual profits, man-hours, expenses, etc.
Budgeting and Estimating
The budgeting and estimating part of knowing your numbers is what is going to show you what you need to charge. To start, you need to build a budget, which means tally up and project your:
- Sales goal
- Material & product costs
- Field Labor costs
- Equipment costs
- Subcontractor costs
- Overhead costs
for the year. You can do this in our free budgeting tool. Once you’ve done this, that budgeting tool does the math to figure out how much you need to mark up your direct costs like materials and field labor, to also cover all your indirect costs, aka overhead.
The whole point of building a budget is to find out what you need to mark up your COSTS to cover your OVERHEAD, so you can know what your BREAKEVEN is. Breakeven is your costs + your overhead recovery amount added together. Once you have your breakeven, you can then add your desired profit margin, and bingo, you have your customer’s price.
Here’s what you do NOT want to do:
And, here’s what you DO want to do:
- knowing where you went right
- knowing where you went wrong
If you only do the budgeting and estimating part, that’s a huge step in the right direction, but you still leave yourself open to the risk of losing money by not bidding quantities correctly.
Ping me a reply in the comments if you have any questions on any of this, or need a hand. We have a full-time staff that helps figure all this out for you, dramatically expediting the learning curve, when you sign up for SynkedUP.
If you find yourself struggling in this area, you need to dial in the “know your numbers” element of your business to truly unlock profitability and growth for your business.
Cheers! and have a great week!
CEO and co-founder