We all know that creating systems and procedures in your business is crucial. You may have even heard us talk about them on this podcast.
Systems and procedures not only keep you on track but also allow you to focus on more tasks because your employees can continue working on jobs independently.
Today, we’re going to discuss the importance of an Estimating System.
Are You Guessing What to Charge?
You might be taking material costs and multiplying them by 2, 3, or even 5, hoping it’s enough to cover your costs. If this is your current method of estimating, it’s likely why you profit from some jobs but not others.
We’re all in the business to make money, right? We want to better our lives and those of our employees. To do that, we need to charge the proper amount. Check out our other article The Ultimate Guide to Pricing Landscaping Jobs (Without Losing Your Shirt or Your Sanity)
4 Reasons Why You Absolutely Need an Estimating System
Reason #1: Ensure Profitability on Every Job
This seems obvious, but too many people aren’t charging enough!
An estimating system helps ensure you’re on the right track to make money on every job. You’ll know that all your costs are included and accounted for, not just materials.
A proper estimating system ensures you include your overhead, labor, and equipment costs. You should also account for travel time, loading and unloading time, and the time to gather materials. All these costs should be factored into your estimates.
Reason #2: Improved Communication with Your Staff
Man hours? People hours? Labor hours? Production hours? Whatever you call them, your employees need to know how much time they have to complete a particular job.
If you tell an employee they have $2,000 to complete a job, that doesn’t tell them anything. But if you tell them they have 16 man-hours to complete it, and there are two people on the job, they know they each have 8 hours to get it done.
Reason #3: Win More Jobs with Accurate Estimates
What??? You heard me right.
With an accurate estimate, you know how low you can go and still make a profit. Do you want to do this all the time? No, but in some circumstances, it might pay off.
For example, when bidding on a job that could lead to future work, knowing how low you can go and still make a profit gives you a huge advantage. You can lower your price without eating any costs, ensuring you still make money.
If you don’t get the job because someone went lower, you can walk away happy, knowing you won’t lose money on that job.
Reason #4: Consistent Estimates Regardless of Who Creates Them
Having an estimating system ensures fairly consistent estimates, no matter who (owner/designer/estimator) puts it together. While there may be slight variations, it should be close to what you would estimate.
If a staff member creates an estimate and you have questions about it, using the same process makes it easy to review the numbers and see what they did. This helps designers and other staff members understand the numbers better over time.
Conclusion
There you have it, folks! There are countless reasons why having an estimating system is great for your business. These four should motivate you to take a serious look at how you currently create estimates in your business.
Key Takeaway: Implementing an estimating system ensures profitability, improves communication, helps win more jobs, and maintains consistency across all estimates.
To make this process even easier, we highly recommend our ProfitsUP Estimating Program. This comprehensive program dives deep into understanding all your costs, including labor, equipment, and overhead, teaching you a proven Overhead Recovery estimating system with step-by-step videos and templates for various types of landscaping work. With ProfitsUP, you’ll have everything you need to create accurate, consistent estimates that ensure profitability on every job. Don’t leave your profits to chance—invest in the ProfitsUP Estimating Program today and start seeing the difference it can make for your business!
