Brotherly love

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When being blood almost made them draw blood, the Pughs had to change the way they operated their business.

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July 28, 2017
Brooke N. Bates
Before they could move forward as successful business partners, Mark (left), Tim (center) and Michael Pugh had to establish a way to communicate as both brothers and colleagues.
© Jen Howell

The transition from brothers to business partners wasn’t easy for the Pughs. In fact, two of the brothers came to blows in a conference room, which eventually led to family counseling (more on that later.).

But when their father suddenly passed away, leaving behind several flower shops in Memphis, they had to learn how to work together – or they would fall apart.

When Bill Pugh died in 1987, Mark, president and owner, was only 16, Tim, vice president and owner was 19 and Michael, chief financial officer was 22. The older Pughs helped deliver flowers for years. But Mark’s busy sports schedule didn’t allow him to work regular hours, so he landscaped around the neighborhood.

They had no idea they’d end up owning their father’s business, spinning off several companies or expanding throughout the region.

“I actually took a leave of absence from my job for a few months to help dad’s partner with some of dad’s responsibilities because I thought we were going to sell the business,” says Michael, who was managing a sporting goods store at the time. Instead, with their mom’s help, Tim, bought out their father’s business partner to keep the flower shops in the family.

“One day my brother’s driving a delivery van, the next day he’s the owner of the company,” Michael says. “The employees were twice our age; they’d known us since we were 10 or 12, and now we’re their bosses.

“To have that much responsibility all of a sudden in your early 20s was a challenge. We had no clue how to divide up our responsibilities – or even that we needed to. It took us years to figure out where we fit and how to respect each other.”

Merging ownership.

Although Tim and Michael shared a 10-by-10 office, they struggled to get on the same page. Tim might write a check without telling Michael, leading to an overdrawn account. Employees picked up on the discord, so if they didn’t get the answer they wanted from one brother, they’d go ask the other.

The Pughs worked long, hard hours – even refusing to pay themselves to ensure that employees got paid – but times were tough. When the Gulf War hit in the early 1990s, the economy contracted and the flower shop business shrank from six locations to three.

The brothers rebranded the business to stay top-of-mind in tough times. They worked with marketing consultant John Malmo, who suggested branding the name Pugh’s Flowers with a cute cartoon skunk – an unlikely icon that quickly caught on.

Meanwhile, Mark’s landscape business was booming. The acquisition of a small commercial maintenance company introduced him to yearly commercial contracts, which eventually became his sole focus as a full-service commercial maintenance contractor.

“One day my brother’s driving a delivery van, the next day he’s the owner of the company.” – Michael Pugh

When Mark saw the Pugh’s brand gaining traction, and his brothers saw the commercial landscape business growing, they realized they needed each other. “Subconsciously, we knew we could be better together than we could be on our own,” Mark says. “The draw for Tim and Michael was the rapid growth of the landscape company and the diversification that it brought.”

Michael knew there was no way to grow a retail flower shop the same way they could grow commercial lawn care, which brought in steady income year-round.

“What we brought to the lawn care side was top-of-mind awareness and name recognition, and the value of that branding was tremendous,” he says. “It gave the lawn care business instant credibility when people saw Pugh’s logo on the side of the truck because they’d seen the flower shops in town for years.”

The Pugh brothers merged ownership of their businesses in 1992. As part of the family brand, the landscaping company became Pugh’s Earthworks. Mark gave two-thirds ownership to his brothers and gained one-third ownership in Pugh’s Flowers.

Brawling brothers.

The problems that began brewing in a two-Pugh office started seething with three brothers on board.

“I was used to being autonomous and then when we merged, I had to be accountable to two partners,” Mark says. “All of a sudden to have somebody telling me what I should or shouldn’t be doing and questioning what I was doing was very difficult for me – which was very frustrating for them. So you can see where the lack of respect continued to build.”

For example, Mark would be in the field, he says, “and then all of a sudden I’d get a call from Michael about cash flow. He didn’t understand I’m covered in mud, knee-deep in a hole, fixing an irrigation head. It was the timeframes of how and when we interacted that really caused the strife – not so much what we were interacting about.”

Clashing schedules and unclear division of duties caused interruptions and frustrations all around.

“Part of the problem was that we didn’t have any boundaries set up – for ourselves or our employees,” Michael says. “I’d be in the middle of running payroll and somebody would come into my office and say, ‘Michael, you’ve got to come out here and help us.’ I couldn’t stop what I was doing, and they didn’t understand why. It caused Tim more problems because I’d make the employees mad, so that caused some friction.”

Although employees wanted the brothers to succeed, they started to worry.

Once the Pughs delegated responsibilities, it allowed each brother to focus on his particular strengths, making the operations run much smoother.
© Jen Howell

“The employees could hear the screaming matches,” Michael says. “We had no private space to have a meeting; we were right there amongst employees, so there was no way to have a disagreement without people hearing about it.

“So it started to affect the employees: ‘Are they going to close the business? Are we going to have jobs?’ And that went against everything our dad wanted.”

It affected the family, too, because the brothers were reluctant to get together outside of work. They did it “for mom’s sake,” Mark says, “but didn’t enjoy it.”

Ultimately, the tension erupted when the feud got physical.

“When it finally came to blows, me and Michael were actually fixing to have a fist fight in our conference room,” Mark says. “That’s how bad it had gotten.

“We grew up beating each other up, and then you get in a business setting and you have to figure out how to respect one another on that level. We realized that we needed counseling because we were going to destroy the business.”

Learning to share responsibility.

When fists started flying, Tim, who Mark says has always been the peacekeeper, suggested counseling. “We just needed a third-party mediator to listen and say, ‘Look, you don’t respect what he does; he doesn’t respect what you do, and if you can’t figure out how to respect one another, it’s not going to work,’” Mark says. “We just had to get over ourselves.”

It only took a couple of counseling sessions to straighten out. The counselor interviewed everyone individually and asked what they each like to do and what they gravitate toward in the business.

“It was pretty clear that I’m not a people person,” Michael says. “I’m an introvert. I like accounting and technology. Tim’s always been the people person in the family, and Mark’s always been the worker bee. When we figured out that everybody had a responsibility and a niche to fill, that was the turning point.”

It was a natural decision for Tim to take charge of Pugh’s Flowers, Mark to lead the landscape company and Michael to become chief financial officer of both. The counselor had them create an organizational chart to establish clear chains of command. Once they divided their responsibilities, they could defer to each other and focus on their strengths without fighting for control.

“By going through counseling, we found a way to respect one another, and having multiple businesses was key to that,” Mark says. “The three of us jointly own all of the businesses equally; they all operate separately. The separation and clear delineation of roles keeps us from killing one another. The three of us have very different skill sets. That’s a prime reason why we have been successful.”

The first change the counselor recommended was separate offices, so Michael relocated to another flower shop for a few years. “Everybody needs a private space,” he says.

“Especially when it’s a family business, it’s hard to share space 24/7. Part of our problem was when Tim and I got mad at each other, there was nowhere to go blow off steam except right there in front of him. When I moved my office, that smoothed things out.”

The counselor’s next recommendation was carving out time for regular communication. The Pughs set a weekly “brother meeting” to touch base, often having lunch away from the office before discussing business. Then, once a month (still to this day) the brothers have a longer meeting to review each company’s operations and finances.

About 15 years ago, the Pughs consolidated their businesses into one location in Memphis that serves as retail headquarters for the flower shops, with space behind the building to house landscaping and corporate offices located upstairs. The family businesses fill all but 4,000 square feet of the 20,000-square-foot building, and the 3 acres out back have doubled to 6 acres as they’ve bought out surrounding neighbors to accommodate growth. Each brother has his own office now – next door to each other.

As the brothers have matured and gained business experience, it’s become easier to make joint decisions. “The biggest thing we did is changed the way we interacted,” Mark says.

“We still have our moments, they’re just not as frequent or as heated as they used to be. There’s a shared commonality now that we can vocalize more than we could in the past.”

They still disagree – like when Mark wants a new truck but Michael wants to make sure they can afford it – but “that’s why it’s good there’s three of us,” Michael says, so there’s always a tiebreaker.

“We may argue, but when you get outvoted and the decision is made, once you leave the room you’re on board. We present it to employees as a unified front.”

As a result, communication and camaraderie have become central to Pugh’s company culture. They regularly provide donuts or pizza for the staff to show employees their appreciation.

They also have two-day managers’ retreats off-site for training, strategy sessions and socializing.

“It allows guys to interact with one another away from work, away from tension, in a fun environment, so that will carry over when they do get into tense moments,” Mark says.

“That’s one of the most important lessons we’ve learned – is the importance of communicating outside of work.”

Diversifying with spin-offs.

Once the Pughs learned to work together, their companies grew organically. They began spinning off separate businesses – creating value for customers and opportunity for employees.

The first spin-off, Lickety Split Couriers, grew out of the flower shops. The company had a delivery department with seven or eight trucks on the road each day delivering flowers.

When the economy took a turn in 2007, they filled that void by delivering other products. When the flower business picked back up and continued to grow, the brothers separated it into a courier service.

“We realized that we needed counseling because we were going to destroy the business.”– Mark Pugh

The next addition came a couple of years ago when Earthworks’ pest control division spun off into Rosie’s Pest Control.

“We’ve always looked at pest control because it’s a very good business with recurring income. We have such a large pool of clients that have pest control, so we’ve got a built-in customer base,” Mark says.

“To keep costs down, we started it within our landscape company, using Earthworks employees, but once we built enough clientele, we split it out.”

Before spinning off the company, the Pughs met with their long-time marketing advisor John Malmo to conceptualize the pest control brand. They came up with an image of Rosie the Riveter and the tagline, “Women declare war on bugs!” Most of the techs are women, at least on the residential side, because most of their residential pest control clients are women.

Michael, left, Tim and Mark Pugh eventually learned how to get along and run their business.
© Jen Howell

The Pugh brothers share ownership of these two newer companies with key employees who have grown with each division. “As we’ve expanded and diversified, we’ve tried to promote from within because we want (employees) to have opportunities to own their own business, too,” Michael says.

“We’re always looking for opportunities because we want to keep the people we have,” Mark says. “We’ve got to innovate and grow and create opportunities for younger guys to be able to come up through the ranks. The addition of this (pest control) business allowed us to offer ownership to some key employees in our landscape company.”

Growing strong.

Since spinning off as Rosie’s, the pest control business has doubled in size. Pugh’s Earthworks – the largest company in the family – grew by $1 million in 2015 (a 10-12 percent growth) but saw a relatively flat 2016. This was buffered by record profitability in both the courier business (which grew 15 percent last year) and the flower shops (which grew 4 percent last year, following 8 percent growth in 2015).

Eventually, Mark wants to spin off a chemical division, but for now the Pugh brothers are focused on growing their existing companies. The company has almost 250 total employees, 200 of which work for the landscaping business. Earthworks has six locations (in Memphis, Nashville, and Jackson, Tennessee; Jackson and Southaven, Missouri; and Little Rock, Arkansas) and Rosie’s has potential to expand into all the same markets. “The scale is tremendous because we can open up Rosie’s Pest Control in every landscaping office as an add-on,” Mark says.

Pugh’s Flowers has doubled in size over the last decade as other flower shops consolidate. With three shops in Memphis, and a recently acquired fourth location in Southaven, the flower shop’s long-term growth strategy will include more acquisitions. Meanwhile, as customers of the courier business start requesting deliveries outside of the city – like from Memphis to Little Rock – the Pughs are looking to expand across the region.

“The growth potential of the businesses is huge,” Mark says. “All of the markets we’re in can still grow and we’ve identified other markets within our regional footprint where we want to go. There’s (lots of) opportunity, and we’re not just looking at it (in terms of) one specific location; it’s about capitalizing on our regional presence.”