Tiedeman grew its profit by decreasing services and becoming a niche company.
When Troy Tiedeman launched Tiedeman LLC in Clare, Mich., in 2001, his goal from the start was to keep it small and focused. That’s because, if he believes in one thing, it’s that niche market companies provide better customer service and have the potential to earn higher profit margins.
“I’m a firm, firm believer in specializing, because it allows you to compete with the national companies on both service and price,” he says. “You have systems in place, you’re faster and you know more about the area, so you can respond quickly.”
Given this core philosophy, it made sense when Tiedeman dropped his landscape maintenance and installation services over the past few years to focus on pest management. After all, he’d always earned 60 percent of his revenues from this area, with the rest coming from maintenance, installation and snow removal.
Yet although this momentous decision was in keeping with Tiedeman’s approach, it was neither simple nor easy to make. In fact, he endured several grueling seasons of headaches and scheduling nightmares before he was ready to pull the switch.
“We made it through one installation this spring – an absolute killer because we lost money when our supplier fell through – and I finally said enough,” Tiedeman says. “We got to the point where it was more of a headache than it was worth.”
Yet today, Tiedeman has a lot fewer headaches – and higher profit margins. Not bad for a small company with three full-time employees and $200,000 in annual revenues. Through it all, Tiedeman attributes his success to keeping a strategic focus.
“Overall, the margins are higher in a specialized industry,” he says. “There are more stringent requirements and you have to be licensed, which means less competition.”
Even though Tiedeman faces competition from larger, national companies that also provide pest management services, he’s not particularly worried about it. “Smaller companies can compete by specializing,” he says. “There are so many acquisitions that are happening right now, but the big companies try to do everything and spread themselves too thin. Ultimately, I think that’s bad for business.”
Like many others, Tiedeman first got started in the lawn and landscape industry as a young man, mowing his neighbors’ yards for extra money. He soon found that he enjoyed working with customers and had a natural affinity for the lawn care business. So he started asking family members if they knew anyone that needed help.
At one point, Tiedeman actually left the business to focus on his education – he wanted to be a psychologist, he says. He soon got bored working part-time in a party store, however, and six months later, when customers wouldn’t stop calling him, he jumped back in.
“The industry didn’t shake me or I didn’t shake it,” he says, chuckling about his youthful experiment. “It grabbed me and pulled me back in, so I figured I’d better make a go of it.”
What appealed to Tiedeman about owning a lawn and landscaping company was working independently and being in charge. “I guess what it comes down to is that I’m a natural leader,” he says. “I’m not one to stand on the sidelines – I’d rather get in there and get my hands dirty. I love dealing with clients, so I decided to make a career of it.”
Despite the fact that Tiedeman’s roots are in the lawn maintenance business, the entrepreneur quickly saw its downsides as his business grew. Between the scheduling headaches, equipment costs and cutthroat-price competition from competitors – some of which were unlicensed – it just didn’t seem worth it.
“Profits were low, and if we had a mowing client that wasn’t using our other services, he could jump ship and ask his nephew or the guy that just got laid off to mow it,” he says.
A few years ago, Tiedeman also began to see landscape installation as a distraction from his core services. With installation, he learned to hate the constant change orders, cost overruns, difficulty of working with multiple vendors and scheduling issues.
“With installations, the profit margins can be higher than on maintenance, but we’d run into unexpected problems that chipped away at our margins,” he says. “It can also be stressful at times – when things don’t happen, clients get upset.”
Over the past few years, Tiedeman’s bad experiences with maintenance and installation led him to make the tough call of focusing exclusively on pest management and maintenance. To shed these other services, he began referring his maintenance and installation customers to other contractors he worked with. Yet he decided to hold onto a dozen or so maintenance clients that also use him for pest management.
“I got into pest management in the first place because I wanted to provide full service to my clients,” he says. “During the transition, we continued to market ourselves as a full-service company, but simply pushed the pest management services a lot more.”
Because Tiedeman has always been a small company that uses a lot of subcontractors, making the switch internally actually wasn’t that stressful. Tiedeman simply referred his maintenance and installation clients to other firms he trusted.
Tiedeman’s laser focus on his specialty has helped him to earn new business. “I’ve done more vegetation control this year than in the past,” he says. “I’ve been hired by waste water treatment plants and industrial parks to do vegetation control around their buildings and parking lots, because it’s cheaper than maintaining it themselves.”
Selling Tiedeman as a pest management company wasn’t too tough, either, Tiedeman says. He simply shifted gears and began to focus his marketing efforts on his core services. “Instead of pushing Tiedeman as a full-service company with postcards, fliers and other marketing materials, we began to focus on individual pesticide products, such as a crab grass preventative application,” he says.
Now that he has successfully made the transition and is operating a profitable niche market company, Tiedeman says that he would recommend that all lawn and landscape companies take a long, hard look at their services and profit margins.
“Business owners need to evaluate whether or not keeping a lower margin service helps them to do the other services that make them money, or causes them to lose money,” he says. “In our case, we ended up with a happy medium – we hung onto a dozen or so clients, but were still able to concentrate on a specific service.”
This is one of three stories that appeared in Lawn & Landscape's Growing Green e-newsletter. To continue reading about Tiedeman:
Employees vs. subcontractors: Here is how Troy Tiedeman assigns work.
Selling attention and detail: Tiedeman found customers will pay more for better service.