The following six strategies may surprise you. I learned them when I met Mike Bogan, CEO of LandCare (formerly TruGreen LandCare), a few months back when he spoke at our Wealth Building Summit in Louisville in October. He shared many pearls of wisdom, including these observations on what makes a company more valuable. He was a generous speaker and held everyone's attention.

Six Strategies to Strengthen the Value of Your Business in 2016

1. Younger companies are more profitable than older ones. Companies in their first 10 years reach a peak profitability due to their hungry and lean approach, according to Mike Bogan. (I am paraphrasing.)

For those of you who have companies over 10 years old, the challenge is how to reinvent your company so that you stay hungry and not over-bloated. The second challenge is how you attract and engage "youth" into your company to keep your stamina and energy up, and your capabilities on the cutting edge, especially with technology. In the future the companies that understand and incorporate technology will be the winners.

Some elderly people are youthful at heart, and some are not. The same goes for companies. How youthful is your company? For every 10 years your company has been around, there should have been at least one major reinvention of the business, with new blood and focus. Is it time to re-focus your business?

2. Companies that focus on a narrower band of service offerings are better at what they do. Being better at what you do means you are more efficient, make more money, and have happier clients. On the other hand, diversified companies are protected against wild swings in the economy. So the trick is to diversify within your niche.

Don't try to serve every customer in your market with every conceivable service; you will be jack of all trades and master of none. Pick a lane, then diversify carefully within that lane.

3. Owners that groom and retain top talent avoid hitting a revenue ceiling. Strong growing companies have a bench strength with up-and-coming talent (without the bench strength, they would neither be strong nor fast growing). So, if you have aggressive growth goals, you need to have aggressive employee growth goals. Do your two growth plans match up?

Do you have a system for assessing and upgrading your talent? I don't mean just an annual performance review, but a leadership team review of all your talent—reviewing your talent pool as a whole, and identifying if you have enough talent to fill your future needs.

4. Highly profitable companies track financial performance by service line. Among the companies I coach this has become a steady drum beat: track the division performance—GPM, OPM and NP. I was happy to hear Mike beat this same drum. When companies take the approach of maximizing profit in each division, their overall profit grows.

Brent Nienhuis, an award-winning contractor from Holland, Michigan, just emailed me that his profits have grown tenfold (i.e. 1000%!) in the few short years we have worked together. It is based in part on drilling down on his divisional numbers, pricing, etc. It works!

5. Business owners that join peer groups perform better. As you can imagine—since I run so many successful peer groups—it warmed my heart to hear Mike describe these as a top factor in what differentiates low-value from high-value companies.

6. Owners who treat equipment as an expense rather than an asset perform better. Equipment is a depreciating asset that you own (or rent or lease) in order to perform your work and meet your business goals. It is an expense that must be paid for with each sale, it is not an asset that reflects the value of your business and wealth of the owner. Plan each year with this philosophy in mind.

Breakthrough idea
You can can learn from the best by paying attention and emulating what makes them successful.

Share this article, and ask your people where you are doing well and where you can improve. Celebrating and recognizing your success is just as important as improving your weak areas. If your current approach to business already incorporates these strategies, make sure you are utilizing them to their fullest potential. 

Article courtesy of Jeffrey Scott, MBA, former landscape company owner, author and consultant on growth and profit maximization in the landscape industry.  Learn more from Jeffrey Scott at ProGreen EXPO 2016, when he presents “Become a Destination Company: 7 Steps to Attract & Cultivate Top Talent.” 

Read more in this issue of Colorado Green NOW:
ACA information reporting deadline extended by IRS
Benefits of employee education
Designing our future: sustainable landscapes
Colorado landscape industry wage survey in the works