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The author is editor of Greenhouse Management & Production. Send him an e-mail at email@example.com.
The marketing strategy at Ryan Lawn & Tree is all about the people. President Larry Ryan focuses on recruiting motivated workers – the company is 70-percent employee owned, so for the right people, there’s opportunity to grow and prosper. He commits to employees’ success and encourages them to grow their own routes. Each employee sets a goal at the beginning of the season and bonuses are awarded to those who meet their growth targets.
This is marketing. And though it’s warmer and fuzzier than a splashy billboard ad or catchy radio spot, Ryan says a focus on people is how business expands – the ultimate goal of any marketing campaign.
Ryan, a forester by trade, recalls 10 years he spent in the restaurant business before launching his company in 1987. “We spent 5 percent of our total gross dollar volume on marketing,” he relates. “I thought, you spend this much money on TV and coupons to get people to come into your restaurant to try you out. But you don’t spend anything on your people, so when customers do come into your store, your people disappoint them with the experience. It seemed backwards.”
That’s why Ryan focuses on giving customers strong, personal experiences, and he does this by encouraging employees to engage with clients – smile and say “hi” to the neighbors (a sales lead), make suggestions to improve a property’s appearance, simply show up on time in a clean truck with a positive attitude.
Charged to grow their routes, Ryan’s employees go out of their way to market the business in a grassroots way. They are prepared with yard signs to let neighbors know who performed the work. But aside from the trucks and signs, they let the work they do speak for the company.
Meanwhile, Ryan says community involvement positions Ryan Lawn & Tree as a trusted organization. For 20 years, the company has donated a weed-and-feed service to a school auction. “Years of doing that has cemented our reputation as a company that is committed to the community,” he says.
That worked more effectively than the $20,000 Ryan spent on a radio advertising some years ago when he was breaking into a new market. “We got almost no phone calls,” he says, quickly adding that he knows radio works. “But it sure didn’t work in a new market for us. I thought we’ve got to try it – maybe we can blow the doors off. Radio seems to work better when people already sort of know about you.”
Another popular method larger firms use to market to new customers is to pay customers for referrals. Ryan Lawn & Tree began doing this, figuring they’d bring in even more referrals than they already did. They dole out $25 for each referral, but Ryan says fewer people pass referrals to the company now.
“You almost create a mind-set where a person thinks the only reason a friend referred them is for the bonus money,” he says, relating to Time Warner’s customer referral deal and an office manager that wanted everyone to sign up with the cable provider. “Once we figured out there was a bonus, then the service wasn’t attractive to us.”
Direct mail has also not been nearly as effective for Ryan Lawn & Tree as sticking to the basics of people and giving back. However, one campaign that did work was last year, when the company sent out an evaluation with a $10 gas card incentive. Ryan estimates 30,000 to 40,000 people responded to that survey, costing the business upward of $400,000. Because the company isn’t running this campaign in 2010, the marketing budget will decrease about 20 percent. Currently, the company dedicates about 1 percent of the budget toward marketing efforts.
In the end, Ryan prefers to go back to the basics, and this method has proved itself through the company’s aggressive growth.
“We try to be visible, proactive and help people out,” Ryan says, noting employees speak at garden club meetings, they are involved with their churches and other civic groups. “You can’t help enough. If you give without the attitude, you’ll get something back.”
The author is a freelance writer based in Bay Village, Ohio.
Jim Calhoun left the high-tech world 30 years ago, started his own one-man landscape lighting business and never looked back.After three decades in the semi-conductor industry, Jim Calhoun started his own one-man landscape lighting business. Since 2003, he’s been the owner of Northern Lights in Mountain View, Calif. Lawn & Landscape caught up with him to talk about what he’s learned about dealing with clients and selling projects after 30 years in the technology industry and how he uses that to stay successful in the green industry.
Where did you work and what did you do there?
I worked in the semiconductor industry, specifically in quality control. I did that for just shy of 30 years. Back then, Intel was in the adventure of the microprocessor. A semi conductor is basically the heart of the computer age that we live in. I worked for several companies: 10 years at Intel, 13 at DuPont and then a few startups in between.
Describe a typical day at Intel or DuPont.
A typical day was meetings. Planning strategies, dealing with minute problems. In quality control, my job was to address the quality issue internally, but also externally with our clients, with our customers. I would be in a room with unhappy clients most of the time, because they didn’t call me in to tell me everything was running right. Or that they wanted to move in a new direction, or a new specification.
At the other end, I would don a smock, go inside a clean room, peer into a microscope and look at a particular problem at a micron level. It’s smaller than a hair. Down to the tenths of microns. It’s small stuff.
What prompted the move from DuPont to the landscaping industry?
I didn’t have a pension plan, and felt that I was going to have to fend for myself in retirement. I wanted to go into business for myself to hedge my bets. In 2002 I started to do some work in the landscape lighting business. In 2003 I got laid off. I was smiling because I never would have pulled the trigger and started my business. God closes one door and opens another, you know?
How did you start?
My wife was a landscape designer. She was going to a class in San Diego, and didn’t understand the math, the voltage, whatever. We went down there. It was all the math and controls and the design, too. This stuff is fun. I started reading, buying some fixtures and aiming them around, finding people who need this stuff.
Semi conductors seem like a world away from landscape lighting. How are the two jobs different?
Not at all. In one sense, they’re different. One is outdoors, one is subject to the elements. It’s a lot less stress. It’s a lot simpler than other things that I’ve been in. The things that are alike is that my understanding of the client is light years ahead of my competition’s understanding of the client. I work by myself, and by the time I leave, I know where the hidden key is, I know where the cats are, the kids; everybody knows me. Sometimes they give me hugs when I come back. It creates a tremendously great environment.
I learned how to dance in front of the clients, not over-commit, to be reasonable but show responsiveness. It has really taught me to under-commit and over-deliver.
It’s the opposite with my competition. Those client skills are why I’m successful today.
Also the attention to quality: I don’t just take the manufacturer’s word for it. I get out the microscope, so to speak. I look at the product and the method of installation. I look at it in great detail. They appreciate the obvious effort and the care I put into their lighting system. That came as a direct result of the years of quality control.
What skills or lessons did you bring from that career that benefit you as a contractor?
The most valuable thing is my interactive skills with the client, because it parallels exactly when I went to a client. We have a product that we’re going to sell you, the quality level that’s required, and being easy to understand without boring them to death. I’m selling myself – ‘Hey. This guy knows what he’s talking about.’ Giving them that feeling without being condescending. Responsiveness. All those things came out of interacting with the customer in my previous work.
Now, I do a lighting demonstration. It’s much like a presentation, but instead of standing up at the front of the boardroom and using a slide show, I’m standing out in front of the customer and I’m holding a remote control of my lighting system. I have the sensitivity to understand where their interests lie. I know how to shut up. You might not be able to believe that, but you’re not my client. [laughs]
Do you miss that line of work?
Zip. This is immediate gratification. When I push the switch, the lights turn on, there’s a pause and then the customer says “Wow.” And I break out in goose bumps.
In quality control, I was either dodging bullets or heavily stressed to create something out of nothing. And quality programs sometimes ran for two or three years and you never knew whether you made an improvement or not.
The semi-conductor industry is a charged industry. Delivery times were tracked by hours. You get an order, you crank it up, manufacture it and deliver it in a matter of hours. Hundreds of thousands of dollars were at stake. If you made the wrong decisions, you’d also be out of a job. So, don’t miss it.
Any final thoughts?
I’m a baby boomer, and so I go way back with the old traditional parents who went through the Depression. Now I’m reading about myself, and people are re-inventing themselves. I have effectively reinvented myself as far as how I make my money. It is a very rewarding kind of thing. I really feel blessed that this is working out the way it has.
I’m not driving fancy sports cars, but I’m living comfortably. That transition is on a lot of people’s minds. In the old days, my dad was a business man himself, but the typical person of my father’s era went to a company and stayed there for 30, 35 years. During my work time, that’s the way it was. Now, you’re moving into new jobs – it’s not even enough to go from one company to another. You have to go to another career.
My dad was in livestock and agriculture. He owned and was in partnership and worked for a variety of livestock auctions. He owned the cows. He would buy and trade anything. He went into land. He had a store that he built and rented out to a guy. He owned that damn thing for 15 years. We still own the building. We’re reaping the rewards every month from his shrewd thinking.
He was a wheeler-dealer. One thing I learned from him: I was selling a car, and my neighbor wanted to buy. I wasn’t going to charge him much, because I hated to ask for much money from a neighbor. He said, “If you can’t do business with your friends, who can you do business with?” He meant you should only be doing business with people you like. Make friends with every person you deal with.
The author is managing editor of Lawn & Landscape. Send him an e-mail at firstname.lastname@example.org.
Brian Yaffa started B&L Landscaping, Oak Park, Mich., more than 30 years ago with a couple of push mowers and a truck. Now, the company pulls in $6 million a year and employs more than 100 people in season, with divisions for landscape construction, maintenance and snow and ice management. But when the economy hit Detroit and its suburbs hard, and B&L’s margins on landscape installations took a hit, too.
To adjust, the company shifted its focus to more commercial and sustainable work – installing live roofs, rain gardens and bioswales – and reevaluated its relationships with nurseries, growers and other suppliers to save money and enter niche markets.
“We try to use the word ‘team.’ We’re all in this thing together,” says Dick Angell, director of landscape construction. “People are starting to understand that. If we all want to stay in business, and move forward and have positive results, we need to work together.”
B&L Director of Landscape Construction Dick Angell, right, and Vice President Larry Yaffa look for quality – in plants and people – from their suppliers. Photo: Dwight CendrowskiWhat they look for
Angell and Yaffa say they look for flexibility when establishing a partnership with a plant material supplier. Margins grow ever smaller, and any wiggle room the company can provide on pricing and payment schedules is appreciated – especially when B&L’s own customers are slow to pay.
“We don’t’ consider ourselves a bank,” Angell says. “They understand that we really don’t like to pay them until we get paid.”
Also important is the quality of the plant materials delivered, and the people caring for them, Angell adds.
“It’s a living, viable product. If it gets mistreated … we have to warrant it and it can be pretty roughed up,” he says.
And he’s not interested in someone just selling him plants. He wants someone who understands their end use, and how to work around problems. If the nursery doesn’t have the exact specimen he needs, he’ll ask what they have that’s close enough to fulfill the design.
“Architects want to see material,” says Larry Yaffa, vice president. “We walk with our customers and go over how they care for it, where it’s come from, its background. A good nursery … helps us on the backside with warranty situations, so people are receiving quality product. If they’re just pushing material through the yard … it could be a detriment to us.”
During the construction boom, many landscaping companies couldn’t keep enough plants on hand. Now, with building slowing down, having all those trees and shrubs on hand is a liability. So, B&L reached out to its suppliers and asked if they could change the system. Instead of having a nursery drop-ship plant material or asking B&L to keep it in its own holding yard, the company asked if suppliers would hold materials until B&L is ready to install them.
Eric Joy, sales manager at Christensen’s Plant Center, Plymouth, Mich., has worked with B&L Landscaping for six years. The re-wholesaler and distributor has 26 employees and sources plant material from 30 states and two provinces – from British Columbia and California to its own growing operation down the road. Christensen’s now holds plants for B&L longer, which lets the landscaping company be more aggressive with pricing. Joy described how the arrangement works. – as told to Chuck Bowen
We do it several different ways. We’ll bring in job-specific materials and hold them for B&L. We have 37 acres, and a 16 acre field where we’ll hold materials. We can hold them for months. They’re balled-and-burlapped trees we’ll auger into the field and re-ball them if we need to.
“We really work with them on changing around their philosophies,” says Yaffa. “They’re looking at their operation as more of a holding situation than they were before. It’s a new thought process for us all. Before, we had it in a holding yard for ourselves. Now, everybody’s looking to the wholesalers and the growers to more of that for us. Obviously, that makes for good relationships.”
B&L works with about 15 growers and nurseries and last year spent about $500,000 on plant materials. Angell says the company started asking about changing logistics a few years ago, when freight prices spiked. And sitting down with suppliers has proven beneficial – Yaffa says the money saved by having Christensen’s Plant Center, Plymouth, Mich., hold plant material has given him room in his profit margins to be more competitive on bidding certain jobs.
“For the most part, we wouldn’t be who we are without them. That’s one of the biggest things that’s very important – the relationships with all the vendors we have … landscaping or parts – are key elements of our business,” Yaffa says. “To be able to provide the quality product we’re looking for in the timeliness that we need it, that’s built on relationships. Timing, payment – it’s a total package.”
B&L’s 2010 strategy is to increase sales from referrals and find niche businesses where it can stand out. To that end, the company has built a strong business in rain gardens, wetlands remediation and other sustainable services for large commercial clients. Yaffa says the specialized skills required in that niche mean the competition there isn’t as fierce as, say, commercial maintenance, and more business comes from referrals.
“We’re trying to find any avenues that we can get an insight into and not battle against 20 other 30 (other companies),” Angell says. “We know that price is important. We are really trying to sell value. After last year, a lot of clients are starting to see that. They went with low price, and they got what they paid for.”
One of the main reasons B&L has been able to focus on sustainable services is Jim Ashley, who owns Reed Perennial Farms with his wife, Cheryl Reed. The two companies have worked together for more than a decade, but the Fowlerville, Mich.-based grower has been producing custom-ordered wetland plants for B&L rain garden installations for four years.
B&L just finished building eight such gardens for the city of Auburn Hills, and all the plant material was custom grown. Reed also supplied the materials for four boulevard islands in Pleasant Ridge – projects the company might not have undertaken if it didn’t have a reliable material source.
“It’s just a phone call and he gets things going,” Angell says of working with Ashley. “He’ll set stuff aside. That’s just the relationship we’ve got. He’s right on time planting. The stuff he’s growing he knows he can sell. I knew I had somebody backing me up who could do it.”
And, Angell says, all he had to do was ask. “I asked if he’d be willing to do it. He said, ‘You bet.’ If you don’t ask the question, you’ll never get an answer,” he says.
Reed Perennials has worked with B&L Landscaping for more than a decade, and custom-grown wetland plants like swamp milk weed, sedges and ornamental grasses for the company for four years. Twenty percent of the business is custom growing, and co-owner Tim Ashley says the relationship has been good for him and his Fowlerville, Mich.-based business. Here’s how the process works. – As told to Chuck Bowen
B&L usually works with an architect who will specify certain plants, perennials they want to put in an installation based on color scheme or ease of care in location, or a theme.
The author is managing editor of Lawn & Landscape. He can be reached at email@example.com.
In this economy the merger, acquisition and divestiture (MAD) market is alive and well. Here’s the first of two methods that I’ll share if you’re looking to sell. I call it the gross profit margin (GPM) evaluation model.
The real world
As its name suggests, this model uses GPM to value the goodwill or blue-sky portion of the value for a service business. Service companies normally sell for one year of gross profit margin for the blue-sky portion of the company. Assets (office equipment, inventory and accounts receivable) and liabilities (loans, accounts payable) are handled separately from goodwill.
The GPM model, based on past sales, is an excellent way to value a service business with good historical documentation. Three to five years of financial statements are available and complete. Analysis of the financial statements determines that the internal ratios and percentages within them are consistent and in line with industry benchmarks. Customer records and files are complete and in good order.
After the appropriate documents are signed and/or exchanged, evaluate the company’s goodwill by reformatting three years of the seller’s profit and loss statements by putting them in the format of a P&L statement.
First, calculate the gross profit margin. Second, calculate and verify the items in cost of goods sold, and general and administrative overhead costs. This will accurately determine the company’s ratios and cost percentages, check them for internal consistency and compare them to industry benchmarks (see figure 1).
Determining the gross profit margin for smaller (up to $1 million in annual sales) target companies isn’t always as easy as it sounds. Often the owner’s salary is not a fair market value (FMV) salary. Also, it’s usually not split between the field and G&A overhead accurately. As a result, the GPM is distorted.
First, determine the fair market value for the owner’s time for actually working in the field. Simply multiply the owner’s hours working in the field by a FMV labor gross rate. This normally is the rate for a crew leader or a little higher.
Based on future sales
It’s not uncommon that good historical documentation is unavailable for evaluating the goodwill value of companies with less than $1 million in annual sales. Here, you base the price to be paid for the goodwill portion of the company, not on the gross profit margin of past sales, but on future sales.
Even if thorough documentation is available, many buyers prefer this method for new acquisitions, as it provides the seller with an incentive for staying with the buyer and maximizing sales. This method also appeals to many buyers because it’s “self-funding.” This means a percent of new sales is paid to the seller, in addition to any salary or other compensation. If there are no new sales, there’s no payment. However, if sales increase above historic levels, the seller has the opportunity to make more than if the goodwill was based entirely on historic sales.
The goodwill payout is usually spread across three to four years. Payment for equipment and any other assets are usually paid upon the consummation of the deal. I’ve seen the payment percentage structure for goodwill vary.
The incentive to the seller is to help the new owner sell as much as possible to maximize the goodwill payment, which is not a set amount.