Where is that off button when you finally crash at the end of the day, set your alarm and lay your head down to sleep? The phone is quiet – there’s no snow in the forecast tonight. No need to sleep in front of the Weather Channel. You finished the day’s paperwork and prepared tomorrow’s schedule. You paid the bills, cut the weekly checks to employees and returned customer phone calls.
But your mind won’t stop racing.
“My office is at home – it never closes,” says Alan Martin, president, Fertilawn Landscape & Maintenance, Grayson, Ga.
“If I hear the phone ring while the family is eating dinner or watching a movie at home, I always want to be on top of things, and I wonder who’s calling,” says Adam Linnemann, president, Linnemann Lawn Care & Landscaping, Columbia, Ill.
“If I could clone myself, I would,” says Aaron Jung, president, Horticultural Impressions, Platte City, Mo. “But that’s not an option, so you just work harder and you learn to work smarter.”
Lawn & Landscape found out what’s keeping you up at night, and what you can do about it so you can rest easier in 2010. Insomniacs, let this guide be your sleep aid. Because you’ll need to be sharp this year to continue running a lean, mean organization in a highly competitive marketplace.
Now, write down your worry list and compare it to this one. We bet you’ll find the reasons you wake up at 3 a.m. and some solutions to get you on the path to a stronger business and sounder sleep.
Cash Flow Concerns
Cash is king, no matter what the economic conditions are. Without liquid in the bank, it’s lights out for the business. And if you’re counting on a generous line of credit from the bank to save the day, you’d have better luck uncovering hidden treasure.
“Without money, your business doesn’t operate, and while we have an operating line of credit we can pull from, we have to pay interest on that,” Jung says.
Lack of cash flow chokes a company. It’s the root of other problems – budgeting stress, collections anxiety. “I spend most of my time making certain billing gets out and watching our receivables – almost on a daily basis,” Jung says.
According to the American Express OPEN September 2009 Small Business Monitor, service businesses such as landscape maintenance are more concerned with cash flow issues (63 percent) vs. other industries (60 percent of retailers and 61 percent of manufacturers).
Sleep aid: The easiest way to raise cash is to prevent it from leaking out of the business unnecessarily. There are certain expenses that are difficult to downsize, such as your building, points out Jim Huston, president, J.R. Huston Enterprises, a green industry consulting firm based in Englewood, Colo.
“I’m telling people to plan for a repeat of 2009, and have two budgets: one for a best-case scenario, and one for a worst-case scenario,” Huston says. Trim expenses accordingly.
Also, watch collections, and consider ways to “right-size” your organization as Jeff Oxley, president, Swingle Lawn Tree and Landscape Care, Denver, Colo., did in 2008 and 2009 (see “Missing Financial Goals,” page 51).
Pay Up, People!
Last year was the first time Eric Brand, president, P&L Landscaping, Merrimack, N.H., enforced a “cease of service” clause on customers who did not meet the 30-day payment terms.
“We had about $80,000 we had to write off in a period of two years,” Brand says. That’s $80,000 that customers owed and did not pay. That’s annual payroll for a couple of employees, several new pieces of heavy-duty equipment, a down-payment on a facility. Those monthly invoices that go unpaid add up, Brand recognized.
“I worry whether people will pay, when am I going to get the money,” he says.
Brand has filed lawsuits in small claims court before. Those just cost him more. “At the end of the day I end up not getting the money,” he says. “Even if we win the judgment in court, the customer will file for bankruptcy in the meantime, and we waste time and effort and don’t get anything.”
Sleep aid: Brand delegated collections phone calls to a couple of employees in the office so he can keep up with invoices that are nearing past-due. “There are some customers I feel close to that I would rather make the phone call to and ask when we should expect payment,” he says.
And he’s persistent. “After a few phone calls, you’re not as friendly as you were during the first conversation,” he remarks. “Especially if they are not following through with their commitment.”
His advice: Seems like common sense, but Brand says many companies don’t require customers to sign a contract. “Even friends and family,” he says. “You have to make sure you have something in writing – an agreement everyone can follow.”
Also, don’t allow receivables to age too long before making phone calls. “Money is money, and you have to be tough and not listen to excuses,” he says. “You have to work hard and diligently at collections to make sure you are getting the money.”
Where Did the Day Go?
Before you know it, everyone at your house is sound asleep and you’re still plugging away at the computer. There’s paperwork, payroll, scheduling – and business planning, which is supposed to be the owner’s key role, but there’s no time for that during daylight production hours, especially for small and mid-sized firms.
The end of the month is always the worst. “I may be tired or not have one stitch of energy left, but I will crawl into the house at the end of the day and make certain the bills get sent out,” Jung says.
The to-do list for a business owner is an evolving, ever-expanding load of roles and duties that only grows as a business matures. The pressure of “getting it all done” will stoke the brain into overdrive – the sort of mind-racing that keeps you up at night. Did I remember to call this customer back? Did I send out this bill? Did I talk to this employee about this issue?
“I worry about what we forgot to do that day,” says Brandon Granger, president, Granger Landscapes, Florence, S.C. “If you have customers who have last-minute service requests and you don’t write them down….”
At Swingle Tree, the company motto is “Keeping our Promises.” This puts a lot of pressure on president Jeff Oxley to make sure customer expectations are met.
“If you lose one customer, you’ll probably lose 10, because they’re going to talk,” he says. “If I get a phone call and learn that we didn’t do exactly what we said we were going to do, it wears on me and the rest of the team.”
Sleep aid: Granger organized a company job board where every project is logged, along with customers’ special requests. This way, everyone at the company knows what tasks to complete, when and where.
To ensure that customers needs are met, despite complaints, Oxley says the company will do what it takes – even lose money on a job – to keep clients happy. “We have had instances where we’ve taken the wrong tree out on properties,” he continues. “How we right that is by planting a new tree and caring for it for a number of years pro bono.”
And in an ideal world, an owner would hire an assistant, but this is not always possible. Taking a break to spend time with family gives Granger some balance.
“I try to leave my work at work, but I do have an office at home and I usually work there for about an hour after the kids go to bed,” he says. “But after that, I try to settle down and watch some TV with my wife.”
What Happened to Loyalty?
It’s frustrating. Longtime clients who supported the business for years will cancel to save a few bucks. No matter that the guy who cut the better deal isn’t insured or experienced – or even all that interested in providing good service. “The most troubling issue at this moment is the demise of customer loyalty currently plaguing the Tampa Bay-area market,” says Ray Bradley, president, Raymow, Oldsmar, Fla.
Bradley’s customer philosophy is simple: Put people first. “Historically, we have thrown our own budget limitations by the wayside in order to meet a customer’s needs,” he says.
For the 20 years Raymow has been in business, clients have shown their appreciation for that extra-mile service by staying loyal. Not anymore.
“Regardless of the depth or longevity of any given customer relationship, and regardless of the professionalism or quality of our service, price is not only the dominating factor but sometimes, it is the only factor,” he says.
Most contractors are dealing with cancellations – 72 percent, according to our 2009 State of the Industry Report
We don’t know how many of those customers are buying services cheaper from someone else, or simply doing without.
“With so many unprofessional, fly-by-night landscape companies infiltrating the market, the value of our services is being cheapened, driving both price and quality down,” Bradley says. “For those of us who have strived to elevate the professionalism and worth of the green industry, this can have a devastating effect.”
Keith LoCascio, president, Barefoot Grass Co., Mount Pleasant, S.C., hasn’t raised prices in four years because of pressure from pick-up truck start-ups with rock-bottom prices. “If anything, we are pricing our jobs a little cheaper just to get the business,” he says.
Sleep aid: Bradley will not lower quality for price – no matter what. “I will not compromise my own integrity and the integrity of my company by providing a less-than-quality service just to retain or acquire business,” he asserts.
He is confident that some customers will always recognize quality work. “And they are willing to pay for it,” he says.
“Low-balling will always exist,” Bradley adds. “But I prefer to take the high road and stay true to my belief that you get what you pay for.”
In general, customers want to pay for less. Lawn &Landscape research showed that 11 percent of contractors’ clients reduced services and/or spending, and seven percent of customers cancelled services last year.
Alan Martin, president, Fertilawn Landscape & Maintenance, Grayson, Ga., bought loyal customers and expanded his business when he acquired the contracts of a longtime company in town that went out of business. Some of the contracts were 15 to 20 years old.
“Sound contracts like that pay dividends because those customers are starting to do new installations and re-upping their landscaping around their homes,” Martin says. His strategy is to use those contracts as a base and upsell customers from there.
Good help is hard to find. Adam Linnemann employs eight people at Linnemann Lawn Care & Landscaping in Columbia, Ill. Because college students are attracted to these jobs, his turnover is generally every four years – after graduation, workers move on to different careers.
“I can’t afford to pay a lot for labor, so having reliable laborers is a worry of mine,” he says. “If you have one or two call in sick, it puts a damper on your day.”
That’s putting it lightly. Call-offs cause chaos. And Linnemann can’t control this aspect of his business. Even more stressful is rounding up employees and sub-contractors to plow snow in winter. Because Linnemann lays off six of his workers in the off-season, he never knows if they’ll be willing to help during snow season.
An entirely different personnel issue is keeping employees happy and busy during tough economic times. Martin knows his workers have families to support. Most of his 15 employees have worked for him for at least five years.
“I know they can’t just go out there and find another job real quick because of the economy,” Martin says, noting that he feels pressure to help his workers earn a living. “I want to make sure they can pay their bills just like I’m trying to do myself.”
But the sporadic workload in 2009 didn’t make this easy for Martin. “It was like a yo-yo – feast or famine,” he says. “I’ve had some periods where I thought I needed to hire more help, and there were times when I really considered letting help go.”
Sleep aid: Most of Martin’s employees are simply happy to have a job. “This industry has been hit really hard here in the Southeast,” he says. People who lost corporate or other service jobs broke into the green industry and have forced unhealthy prices and competition into the market. The trickle-down affect of this price-gauging and bloat of contractors is less work for more people.
Despite tough times, Martin maintains his people-first philosophy. “I’ve always said you’re only as good as your people and your equipment,” he says.
“You’re A-team will have to wear more hats,” says Judy Guido, president, Guido & Associates, Moorpark, Calif. As the workload becomes too much for employees, consider implementing technology that can ease the burden. “Everything from back-office technology to sales force automation technology will streamline the amount of people it requires to do certain functions.”
The Weather Gamble
The only unknown that can damage a business as much as the economy is the weather. Mother Nature is an unpredictable force, and all the technology in the world won’t create rain during drought, snow during winter or sun during wet seasons.
After two years of drought, the economy in 2009 and the fifth wettest season on record in the Atlanta area where Martin’s crews maintain properties, he’s feeling beaten down and stressed by the weather. “During the drought, you had to beg people to put annuals in the ground,” he says. “Then (the city) shut the sprinklers off and we couldn’t water. It’s been a very trying three years. I’ve seen a lot of good companies just fold up and quit.”
In 2009, all the rain sparked interest in plant installations, but maintenance was a nightmare. “Yards were so wet, we couldn’t put equipment on them,” Martin says. “You’re doing more by hand, making the situation tougher. And you fight weeds harder.”
The precipitation Linnemann worries about most is snow. “If the meteorologist says we’re going to get 6 inches of snow, that stresses me out to where I set my alarm for every couple of hours to see if the snow is falling or accumulating,” he says.
Then, time to call in the subcontractors to plow. Anxiety runs high, and often the coordinating occurs in the middle of the night. “We could be out for 30 hours straight or just four hours – that’s always another worry,” Linnemann adds.
Sleep aid: Linnemann makes arrangements with a local concrete plant that closes during winter to hire subcontractors. This way, he has back-up for stormy weather. “I contacted the manager there and we use their laborers to help us plow snow,” he says.
Because Martin balances his business between maintenance and installation, when weather disrupts one service, the other department thrives.
Bills, Bills, Bills
Keeping the doors open is no easy task during a recession. “Just keeping the cash flow coming in and getting work sold to have cash flow is a concern,” Granger says. Business expenses will suck the life right out of a company.
According to Lawn & Landscape research, operating costs increased by 3.4 percent in 2008, and survey respondents anticipate those expenses will rise by 7.3 percent in 2010.
The numbers scroll through LoCascio’s head at night. The only way to stay profitable is to trim the fat. LoCascio will stop accepting credit card payments in 2010 to save the $1,800 in processing fees he spent last year. “That doesn’t sound like a lot, but it’s three weeks of payroll for one employee,” he says.
Barefoot Grass Co. hasn’t raised prices in four years, so the company must gain its profit by “finding” dollars in the business. “This year, when it was time to renew our payroll processing software, I said no,” LoCascio says. “It was $300. I have three employees. It will take me an extra five minutes to do payroll, and we haven’t updated our ACT software for several years. What we have works.”
Granted, LoCascio is a former CPA who knows how to count beans and scrape pennies out of his budget – but this doesn’t mean implementing leaner operations is easy.
Sleep aid: LoCascio scoured every line item in his budget for opportunities to cut costs. He found many. And, he adopted practices from successful businesses such as UPS. “They have a program in place where their drivers only take right-hand turns,” LoCascio says. “We do that. Our crews make right-hand turns all day except a left-hand turn into the driveway at the end of the workday.”
LoCascio installed GPS systems in his trucks that track routing, gas mileage and service needs. “We have a no idling policy,” he adds. This rule reflects the No. 1 concern survey respondents expressed in our 2009 State of the Industry Report: rising fuel prices.
As Huston advised, create a best- and worst-case scenario budget and cut costs accordingly. Don’t wait to make adjustments in labor or to reduce overhead expenses. It could be too late.
The Pain of Injuries
“When we have a personal injury, no matter how minor it is, I start second-guessing myself, whether that person was the right hire, or what I could have done to prevent the accident,” Oxley says.
Accidents in the tree business can be especially serious. “I’ve had chainsaw strikes where people had very serious cuts on their arms or legs to where it has impaired them quite a bit, and it’s a matter of figuring out what you can do for them, their families, and your team,” he says. “You want to make sure it doesn’t happen again.”
These workplace injuries deeply affect Oxley. “It scares me,” he says.
Sleep aid: Safety training is critical for all employees at Swingle Tree, and many landscape companies will find that having a program in place can reduce workers’ compensation fees. Address safety during weekly staff meetings. Don’t miss an opportunity to teach a safety lesson.
Most manufacturers and distributors offer training for the equipment they sell. Take advantage of this resource. “Unfortunately, many employees are given equipment to use without training, and that will really help with longevity,” Guido says, noting an added benefit of training aside form safety.
Missing Financial Goals
Everyone at Swingle Tree took a 5 percent pay reduction in April 2008. “It was a matter of right-sizing the organization to get our expenses in line,” Oxley explains. “If the industry benchmark is a 5- to 15-percent profit margin and you don’t have that, you fail to exist.”
Oxley says business has never been this tough. “What the future holds, I don’t know,” he says.
How many companies actually met their financial goals in 2009? The average landscape company grew 2 percent this year, 8 percent down from last year’s 10 percent average. Revenue-per-employee figures were also down in 2009, from an average $46,378 to $41,193.
“Everyone has had to feel the pain,” Oxley says. “If you don’t meet financial obligations, you don’t grow. You don’t grow the corporation, and you don’t grow the people. We want to protect our company and employees.”
Those numbers – the goals and the reality – will keep a concerned contractor up at night. “We strive to hit all of our goals and benchmarks, and over the last few years, this has caused a lot of angst in our company because of the economy,” Oxley admits. “By not meeting these expectations, we fail to keep top talent and be able to invest back in our company.”
Sleep aid: Swingle Tree focused on getting its budget in line with the economy to meet financial goals. “To protect as many of our players as we could (from lay-offs), we had to reduce expenses, and part of that was a wage reduction and looking at other benefits,” he says.
Guido says the last decade, for the most part, has allowed business owners to spend more freely. “Business was easy when times were good,” Guido says. “The country was going through some of the most fruitful times in American history. We’ve been pretty fat and happy, and you know what, we have to get back into fiscal shape and start becoming responsible companies,” she says.
Drained by Insurance
Barefoot Grass Co. gets hit with a 11- to 12-percent insurance price increase each year. “We have never filed a workers’ compensation claim,” LoCascio says. “We have never filed a general liability claim. We have never filed an automobile claim.”
That doesn’t seem to matter.
“You get the audit at the end of the year and you feel like you’ve done everything right and they hit you with an increase,” he says. “You find out that one guy you subbed out to wasn’t insured to the same limit, so you have to pay the spread on the difference – or something.”
The cost of insurance prevents LoCascio from hiring new employees. Though his hourly rate is an average $11.50 per hour, with insurance and taxes, each worker costs him about $16 per hour. “I don’t look at people now as employees, I look at it as what’s this going to do to my workers’ compensation rate,” he says. “I’d rather pay overtime to my existing guys than hire new workers.
“It gets to the point where we can only charge customers so much for what we do,” LoCascio continues, noting that recouping the cost of insurance by raising prices just isn’t realistic in this competitive market.
The worst part is, LoCascio has a feeling that many landscape contractors – and most one-truck operations in his area – do not carry insurance. They undercut his prices and avoid paying what is LoCascio’s most costly business expense outside of payroll.
Insurance is a catch-22 in LoCascio’s opinion: You can’t be in business without it, but to pay for it, you struggle to stay in business.
Sleep aid: LoCascio’s has cut costs in other areas, since he can’t control the rising cost of insurance. Also, he doesn’t offer health insurance. A 2009 Kaiser Family Foundation survey found that 60 percent of firms offer health benefits.
Less than half (46 percent) of the smallest employers (three to nine workers) offer health benefits. Among those firms that do, 21 percent reduced the scope of benefits or increased cost sharing; 15 percent increased worker’s share of the premium.
Health insurance is a benefit for employees, but workers’ compensation, general liability and automobile insurance are requirements. Look into group insurance options through business associations. National Federation of Independent Businesses provides discounts on workers’ compensation through a member program, and PLANET’s affiliation with a commercial insurance provider gives members perks. These opportunities can strengthen your buying power.
The author is a freelance writer based in Bay Village, Ohio.