Risky Business

Departments - Business Management

How one contractor manages risk.

July 9, 2009
Chuck Bowen
Business Management

All of your employees come to work on time. The trucks, mowers and string trimmers all are maintained and run well. You just cut checks for payday and still have money in the bank. The sun is shining, and everything’s going smoothly.

But what about those thunderclouds on the horizon? A crew calls and says the engine died on the dump truck. The mulch delivery is late, and a customer is calling about a skid-steer that just sank into his soggy lawn.

Owning a business – especially a small business – can be risky, and one of the biggest challenges any entrepreneur faces is how to deal with the stress of knowing that any number of things can – and likely will – go wrong before the day is through. Brad Johnson, president and owner of LawnAmerica, tries to keep it all in perspective for himself and his employees.

“From a Christian standpoint, I’m just a steward of this business. I could lose it in a heartbeat. I told my staff this week – I could live another 20 years or another month, we just don’t know,” he says. “That affects my decision-making process and how I view things. That effects how I run my business. I just try to keep it all in perspective.”
The lawn care company is in its 11th year, but it’s not Johnson’s first. He has started several other lawn care companies that he eventually sold to TruGreen. Now based in Tulsa, Okla., LawnAmerica has 7,000 customers and 33 employees – and Johnson sees it as one, big family. 

“As a responsible business owner, you kind of view your employees as your kids,” he says. “You’re responsible for their paychecks and their well being. That’s a big responsibility having all of those employees who depend on you to earn a living.”

And that responsibility is something he’s learned more about. Now 55, he says he does things a lot differently today than when he got into the business more than two decades ago.

Johnson gives a recent example. A few weeks ago, he needed to get a trailer up to a branch office in Bartlesville, about an hour’s drive north. Well, Paul lives in Bartlesville, he can take it up in his personal truck. Great plan, except for the liability involved – if there’s an accident, who’s at fault? If Paul gets in a wreck pulling company property, his own insurance might not cover him, and Johnson’s business insurance won’t cover Paul’s personal truck.

“I don’t want him doing that,” Johnson says. “Five or six years ago, I would have said, ‘Yeah, go ahead and do it.’ You do tend to think about the things that could go wrong in a simple situation like that.

“We don’t shoot from the hip as much as we used to,” he adds. “We try to be more deliberate, and think about things with risk in mind.”

So, a large part of Johnson’s time is spent thinking about how to manage risk. One way he does that is to keep his employees happy – and working hard – with an incentive plan in place: Twenty-five percent of year-end profits go back to employees. Route managers get a cash bonus for accounts they sign up, as well as accounts they retain.

“That’s several thousands of dollars in a route manager’s annual salary,” he says. “So they care about not just getting customers but losing customers, because it’s money out of their pockets.”

And he’s been seeing more of those accounts retained, even in a down economy. In 25 years, he’s never had a year where the business didn’t grow. In the last two years, he’s seen growth of 30 percent. Cancels are up a few percent this year, but the sales numbers are keeping pace with predictions. 

“We’re going to scale down to 16 percent growth. The economy is helping us out,” he says. “We felt like our growth was outpacing our ability to do really good work and not have me pull my hair out and not have too much stress.”

His goal this year was actually to advertise less and become more profitable. He says he’s not more stressed out this year than in past years – the spring was rainy, but things are going well.

And Johnson knows any growth in this economy puts him in a unique position. One of his good friends runs a Dodge dealership that is under a lot of pressure. The dealership has been in his family for 60 years. “There are a lot of business owners who are just struggling. That’s the stress of the business owner the typical employee doesn’t see.

“I think obviously, the more successful you are and the larger you grow, you have more risk – you have more to lose,” he continues.

But at the end of the day, Johnson knows revenues could drop, or a ton of customers could call up and cancel their contracts. So, he tries to keep it all in perspective, and focus on the things he can change. “It’s important to work hard and do a great job, but the things that are going to last are the relationships with customers, employees and vendors. Especially employees; I try to take care of them,” he says.

“I try not to lose sleep over it, but it’s there,” he adds about risk. “You do have to plan for it and think things through and manage it … you can’t alleviate it, but you can manage it to where certain actions are less risky than others.”

The author is associate editor of Lawn & Landscape magazine. Reach him at cbowen@gie.net.