Larry Ryan says higher wages and a strong ESOP plan are excellent recruiting tools.
Photo courtesy of Ryan Lawn & Tree
Larry Ryan just wanted to do it right.
His company, Ryan Lawn & Tree, which ranks No. 45 on Lawn & Landscape’s 2020 Top 100 list, started the transition into an employee stock ownership plan (ESOP) in 1998. After 20 years of gradually working itself into becoming fully employee owned, Ryan says his company now recruits with an excellent sales pitch: Employees can become fully vested in the company after six years.
“We could’ve done it faster but if we would’ve sold out at a certain price when we were small, the payments were smaller in relationship to the total revenue,” Ryan says. “We could’ve asked for a higher interest rate. We’re just old farmers and making money is not what we’re here for. We get more satisfaction seeing really good people work together rather than getting rich.”
There’s a lot a business needs to do before becoming an ESOP company. From managing the specific costs of making this leap to ensuring your company is even ready, Ryan has a few recommendations for anyone interested in following his lead.
First thing’s first.
Ryan didn’t start the transition into an ESOP until his company had been in business for 11 years. He wanted to make sure his company was both large enough for an ESOP and had been building the right culture to embrace the plan.
“You really have to be a growing company to make it work,” Ryan says. For reference, Ryan says a company would probably need to be around $5 million in annual sales to make this work. He also says employees generally take around three years to fully buy in to a company’s culture, though it only takes one year before an employee becomes eligible to get into an ESOP.
Ryan says that some employees may always be hazy on the details, even years down the road of working for the company, so they might not get involved. But generally, he estimates most of his employees sign up after two years of working for the company.
“Because we’ve integrated everything together and we’re truly committed to our people, even when we were less than 100%, they bought in,” Ryan says. “If you have a bunch of bad people who do not feel good about the company, it is not a good situation. If you do it well, it will certainly pay off.”
Finding the right people.
Of course, Ryan says recruiting is a key element to this. He says they have 315 employees from 69 different universities, and not all of them are horticulture grads. Ryan says companies need to figure out how to find employees in places they might not ordinarily recruit. Ryan himself spent time in the restaurant business, for example.
“Early on, we brought in some gifted and very sharp people,” Ryan says. “We almost don’t care about what the degree is in. We care about where their heart is.”
When the company started 33 years ago, Ryan was his one – and only – employee. Two years later, he hired his first full-time worker, who is still with the company all these years later. Ryan says that companies must be willing to show employees that they’re invested in them by offering wages that are higher than most neighboring companies. To do this, Ryan says they charge roughly double per lawn than his largest competitors in the area. Given that 35% of the company’s work is tree care, he also feels that his employees should be fairly compensated for the additional safety precautions they must take.
“You know there are people who won’t pay it,” he says, “But, it hasn’t hurt our growth at all. We need to be charging the value of our product because there’s a lot of risk in what we do.”
Ryan says that recruiting now is easier than before they can talk about the established culture, which for Ryan Lawn & Tree does include a faith-based element. He says this has helped them also recruit high quality people. Plus, he shares that many employees who stick around have well over $100,000 in their ESOP accounts.
“That makes their eyes pop open,” he says.
The next step.
Once a company gets an employee on board, they also need to feel like they’re a part of the decision-making process in order to really buy in.
“You get employee buy-in if people truly feel like they’re an owner,” Ryan says. “I own 10 shares of IBM, but the president doesn’t come to me to ask for advice. You try to listen to your employees as much as you can.”
For Ryan, he says that the process should be gradual and deliberate when setting up the ESOP. From 1998 to 2004, they gave 20% of the company to the employees. After that, they sold in two 40% increments over the next several years.
Ryan says they followed the Great Game of Business model, which includes hiring consultants to help set up the ESOP and educate the employees on all the different steps of financial management for the company.
He also readily admits the process isn’t pain-free, and it requires an open mind from the company owner before they launch into an ESOP. They’re expensive and time-consuming to set up, and company leaders need to be ready to do annual payout for people who leave. Ryan says each employee also needs to be looked at as a partner, and if company leadership isn’t willing to do that, things could get ugly.
“(Owners) may not know their place in their own company. You’re going to lose some control,” Ryan says. “If there’s a selfishness in management, they’ll see it. If there’s an arrogance in management, people will see right through it.”
Larry Ryan says anybody is welcome to reach out to him for guidance at larryryan@ryanlawn.com.
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Whether it’s a new company starting out or a well-established one looking to streamline operations, mower attachments can help with efficiency.
Companies don’t have to buy the biggest, most expensive attachments to improve that efficiency, according to Pete McNamara, general manager of Dependable Lawn Care in Blue Island, Illinois, and Ryan Panarese, landscape & snow manager with Constantine Property Management, in Loudonville, New York.
Variety is the spice of life.
McNamara says his inventory includes mulching kits and some other useful tools, including a tow-behind aerator, power rake, catchers, fertilizer spreaders and a tow-behind spraying attachment for pesticide control.
“Most of the implementations we have are attachments for a walk-behind machine where a person could stand on it,” he says. “A lot of the other attachments are for mulching – things you would put on the deck itself to mulch the grass in the summertime.”
Constantine Property Management also utilizes mulching kits quite a bit.
Photo courtesy of Constantine Property Management
“All of my machines have mulching kits and striping kits on them,” Panarese says. “On our bigger machines, we have a dethatching rake and blower buggy.”
When it comes to choosing an attachment, McNamara says adaptability is key.
“It all depends on how inventive you want to get,” he says. “The more versatile you can be with one piece of equipment, is the way you want to go.”
Getting work done faster is an added benefit of having the attachments on hand.
“It saves us from having to get additional pieces, but it also saves hours,” Panarese says, adding he has a blower attachment to save time on a job. “I don’t have to have a guy out there pushing a push blower.”
“The more versatile you can be with one piece of equipment, is the way you want to go.” Pete McNamara, GM, Dependable Lawn Care
Seasonal supplies.
Panarese says his rake attachments comes in handy for spring cleanups.
“It gets all the organic material that settles in the grass from the winter,” he says. “It gives the lawn a nice, clean appearance.”
McNamara says a catcher and attachments for towing can also be good seasonal tools.
“Obviously, your catcher is another main attachment,” he says. “Basically, it’s what we mostly implement in the springtime. We’re in a suburb of Chicago, so obviously the grass growth changes. In the springtime, the grass has a lot of growth versus the summer when growth is a little more dormant. There’s no way to mulch anything when the grass is wet. It’s just not practical.”
Dependable Lawn Care uses wheel attachments as well.
“We’ve experimented with different types of wheels too,” he says. “They’re making all different kinds to lessen the impact on the turf.”
Photo courtesy of Grasshopper
Eyeing future buys.
Panarese says he’s looking to add more attachments to his fleet.
“We are certainly looking into buying an aerator,” he says. “I’ve got to rent it now. Some of the lawns we have now are pretty big in square footage and using one of those little walk-behind ones is like bringing a spoon to the beach.”
McNamara says that as a landscape maintenance company, he doesn’t need too many attachments.
“What we use here is just to improve upon what the machine is meant to do – mow,” he says. “Up here, you don’t have too much more time to do anything other than mow.”
Do your due diligence.
Panarese and McNamara suggest companies just starting out consider how attachments could help them better provide services.
“The ability to identify what you want to do as far as services will dictate what attachments you could use,” McNamara says. “For a smaller crew, you’re all about volume.”
Panarese says for the companies with smaller crews, the attachments will be a major time saver.
“If it can go on the machine and it costs less than $1,000, by all means, certainly get it. It’ll pay for itself fairly quickly. It’s also not another motorized piece of equipment that you have to store and service,” he says. “Especially for these smaller businesses where it’s just a one-person operation, they don’t need to walk for 14 hours a day. They need to be as efficient as possible.”
Another piece of advice both men have is to do your research before purchasing anything.
“Do your homework and research the piece of equipment,” he says. “Different manufacturers have different things. You might buy a $400 attachment that isn’t feasible for the piece of equipment you have.”
“I look at a couple of things,” Panarese says. “I might think this will be a great piece of equipment to have right this second for a particular job. But once it’s over, did it pay for itself already? Or do I have to sell more to justify having it? Should I just rent it? If it costs me $500 a month to rent and $5,000 to buy, and I need to rent it three to four times a year, then I need to purchase it.”
Our official 2020 Top 100 list
Top 100 - The Top 100 | Commemorative Poster
Click here to see our commemorative poster and where your company landed.
In the past, Paul Welborn would have taken the lead on assembling his company’s career ladder. But not this year, as Welborn continues to learn to delegate at Lawn & Pest Solutions in New Albany, Ms. He’s put his managers on the lawn side of the business in charge of creating the steps a technician has to take to climb the ladder.
“A year ago, I would have put a lot of the information together and had them look at it and see what they thought,” he says. “Now they're building out that information and I'm giving my feedback, which is the way it should be.”
Welborn has learned through the process that his managers are more than capable of taking on the responsibility, and saves him the headache of one more task.
He says they always had the ladder in their minds and operated as if it was official, but never had it in writing.
“It's sort of the way we did it anyway,” he says. “But the value in it now, it's putting it on a piece of paper and being able to put it in front of a guy and say, ‘Here's your path. Okay, here's the things you need today.’ Maybe we were pushing them towards some of these things, but it wasn't a formal, ‘Here's your plan, here's a way you can attack this and continue to move up in the company.’”
Paul Welborn continues to delegate as he works with the Harvesters.
Allowing managers to assemble the career ladder has provided Welborn teaching moments. Technicians will have to take 7-10 tests to move to a new level. The tests are taken via training software the company uses.
The managers were in charge of formulating the questions technicians would have to answer to pass a test. One manager was asking entry-level technicians for knowledge that a technician who’s been there a year and a half would know. So, that manager was asked to create tests for the more advanced levels. And now that the lawn side has a foundation for a career ladder, Welborn wants to build one out for the structural pest side of the business.
“We've brought the pest manager in and he’s going to start giving some feedback of, ‘Okay, we can tweak this to better fit pest’ and make everything match up for their job responsibilities, versus a lawn tech,” Welborn says.
Sales challenge.
Right now, Lawn & Pest Solutions is 80% lawn care and 20% structural pest, but Welborn would like to grow the pest side. For 2020, they have mapped out a sales challenge where they will focus on growing one segment of that division a quarter – perimeter pest in first quarter, termite in the second quarter, mosquito third quarter, and then back to perimeter pest in the fall.
Since they started mapping out the contest in the first quarter, the pest challenge wasn’t too much of a priority, which was a good thing.
“Luckily (we didn’t have a) real strong contest in place for first quarter because our weather here has been rainy and very uncooperative,” he says. “So, our customer interaction or upsell ability has been very limited in the first quarter of this year.”
Harvesters’ take.
Paul is faced with several key challenges not the least of which has been the weather in February. Rain, and more rain, has affected their production goal drastically from a goal of $116,000 down to $18,000 for the month.
This has put quite a dent into their overall sales goal of $2 million. The team will have to hustle to get caught up and we believe this team will do just that. We will follow this team very closely as they make up this temporary setback.
Another key front is with people. In our last Harvesters’ Take, we shared that Paul had executed our retention game plan Perfectly with a key player and they have decided to remain on board! After deciding that the pay rate was probably too low for this high-skilled position, Paul made an adjustment but that was still lower than the offer they had received. After considering everything, this person stayed on board for two reasons:
• Culture: Lawn and Pest has an excellent culture! People feel engaged, challenged and part of a team that has strong core values and an excellent team atmosphere.
• Location: Yes, location! The excellent job opportunity this person received was a considerable drive to work each day while the Lawn and Pest location was very close. This was discovered during our meeting to learn why they were leaving. Once it was brought to their attention that they would spend more than an hour more per day driving to their new job, they agreed that a better work life balance was worth staying at Lawn and Pest.
• Lesson: Don’t undervalue the location of where you are based.
Making headway
By Kim Lux
Frank Leloia Jr. says he feels his business, Custom Landscaping and Lawn Care, in East Brunswick, N.J., is improving.
Since the team’s initial meeting with the Harvesters in December 2019, Leloia says they’ve already made a number of changes.
“The biggest factor that we’ve worked on so far has been HR-related issues,” he says. “Harvester Steve (Cesare) has been working with our operations manager, Syril, to make sure we are fully compliant.”
Leloia says the company has performed a full I-9 audit, looked into EPLI insurance and restructured the company handbook.
The business has also done some hiring recently, which will help streamline operations and allow the company to better delegate tasks.
“We hired an operations manager just for our residential lawn care,” Leloia says. “That went along with our strategy to organize more internally. We feel this will make us stronger. Our retention and our recruiting should increase.”
Frank Leloia Jr., left, has spent the early months trying to sign more commercial clients.
Before the new hire, three employees were contributing to heading up the department.
“Now, with the hire we are more streamlined. We’ve essentially decluttered our organization chart,” Leloia says.
Along with the behind-the-scenes upgrades, Custom Landscaping has been striving to grow its commercial customer base.
“We’re out there chasing commercial accounts,” he says. “We’re very proud to say that we just got our sixth new commercial account. I think we should increase revenue by half-a-million dollars contractually.
“We’ve talked a lot with (the Harvesters) about how we can have better sales presentations put together,” he adds, “so that when we’re meeting with commercial clients, we want to be able to wow them and set ourselves ahead of the competition.”
To improve their presentations, the company has been holding mock sales pitches.
“Now we’re quicker on our feet,” Leloia says. “We’ve also been preparing more and our no longer just giving estimates. We’re more transparent in our contracts and we’re looking into incorporating some unique, video presentations, too.”
One of the goals set by the Harvesters was for Custom to have a 50-50 blend of residential and commercial accounts by 2022.
“Obviously it takes work, but the main thing they taught us is to have a target and identify what we want. At that point, we were able to focus on what we wanted and go get it.”
Leloia says to get to the 50-50 split, Bill and Ed urged Custom Landscaping to review its residential accounts and eliminate those that aren’t profitable.
“They wanted us to cut back a little on our residential accounts,” he says. “We haven’t cut back as much as they have wanted us to, but we’ve trimmed the edges of our less dense areas in order to make our denser areas more profitable.”
Harvesters’ take.
Frank and his team are going after more commercial work and leveling off on their residential work as we have agreed upon from our original Harvester visit. This will require a significant change in their mindset and what has been done here over several decades…. Frank is all in.
In order to take advantage of this market it will require some tune ups, changes and key action items if they are to be successful, here are some key points:
• Editing of Non-Desirable Residential Work: This will require a review and ranking of accounts coupled with some professional termination notices.
• Keep the Keeper Residential: The primary focus here will be to keep a dense route location to best serve the customer and to be most efficient.
• Learning How to Say No: Get a very clear selection criteria in place and know when to say no both with residential and commercial work.
• Build Killer Proposals: Build a proposal format that is more relational and less transactional and deals with solving their pains vs. selling and telling them how great we are…
• Estimating: Get a more formal estimating process in place using the Harvesters’ triangulation method: Crew Hours per Visit - Hours Per Task – Production Method – Compare to Similar Jobs
• Hire and Commercial Business Developer: Keep on the hunt full time with a business developer that is committed full time for selling commercial work.
It all starts with the leader in each organization. Frank is doing great and understands the importance of having a better balance of market types. Change is hard, especially if a business has been doing it one way for a long time. Frank has surrounded himself with good people and that is always a good start for the path of success.
Next take, we want to share how Frank got a top flight CFO on board at a most reasonable cost.
Remaining calm
By Jimmy Miller
David Hawkins Jr. says his employees are doing everything they can to prevent the spread of the novel coronavirus.
Of course, he adds that these measures are all things they should’ve been doing anyway: wiping down trucks at the end of the day, creating wash stations around the company yard and washing hands before lunchtime. But there’s only so much he can do to prevent the spread of germs and fear at his own company – clients are going to be equally concerned about the virus as well.
To this point, Hawkins Jr. says he hasn’t lost much business yet, which is a positive. He says his company has many long-standing relationships with clients that are handled differently now to maintain physical distance. No handshakes or hugs; just service and quick conversation.
“We just talked to them and we’re taking everything that we can do,” Hawkins Jr. says. “We want to keep our people safe. We’re one big family and try to do the right thing, which is not panic.”
David Hawkins Jr., left, says a mild winter allowed for a head start on spring maintenance.
Photo courtesy of Hawkins Landscaping
Among the chaos caused by COVID-19, one thing’s remained constant: Harvester Ed and Bill call Hawkins Jr. and the Hawkins Landscaping crew, based in Frederick, Md., every three weeks to catch up on the progress made on the team’s objectives. They’ve had plenty of time to focus on big-picture stuff given that it was a mild winter, though that presents a variety of problems on its own. With $60,000 worth of salt still in storage, it’s taking up space where seed and fertilizer usually goes. Plus, it resulted in less business over the winter than usual.
“But that’s part of the animal that you deal with when you do when you do snow removal,” Hawkins Jr. says. “It seems it’s either feast or famine.”
They never took any days off over the winter though, and Hawkins Jr. says they got a head start on spring maintenance work since the weather was so mild. They also did some hardscaping work, and some of the clients they have for snow work ended up giving the go-ahead for more work this spring. Plus, through word-of-mouth advertising with the clients they already have, Hawkins Jr. says they’ve landed some extra accounts like a nursing home recently.
The word-of-mouth helps because he says their prices are probably higher than some of the larger competitors in the area, but referrals ensure that potential clients know Hawkins Landscaping will spend more time on the little details.
“That way we didn’t have to bid it out,” Hawkins Jr. says. “That’s worked out pretty good, and we’ve got a couple others like that in the works.”
Now they’re working through creating a mini budget and identifying 200 possible clients over time. Hawkins Jr. says it’s been a while since they’ve looked at the bigger problems like pricing out new materials properly because usually, with so much going on, they just buy the first ones they find right at last minute.
“That’s one of my problems. You get busy, and we stay busy year-round, so we don’t watch our numbers as good as we can,” Hawkins Jr. says. “Traditionally, when we first started, we would work on equipment, but as the business evolved, we ran out of that time. Now we might be even busier over the winters than in the spring.”
Harvesters’ take.
It’s been a year of very little snow for the Hawkins team, but that has allowed them to work more on the company than in it. In a good snow year there is plenty of cash coming in for the spring, but this is not happening this season, so it’s been all hands on deck selling work and working on the urgent items in their playbook.
As of this writing, they are in full production with cleanups beginning and design build work underway. At this point, they have a solid backlog of work priced at our 50% gross margin goal. We talked about morphing over into more commercial maintenance work but this has been slow, in that they prefer to be selective in the accounts they go after. They are working with Harvester Ed’s Be 2@200 Campaign, which should bear fruit later in the year. One thing for sure: They don’t want to do any HOAs.
From a financial standpoint, Kristi Hawkins is working on setting up the Harvest Mini Budget so she will be able to see at a click, what the gross margins are each month, for each department. This will really help (in real time) in making sure their estimating, pricing and efficiency is on track. Carol Hawkins is working on their field-to-office paper flow to better track the work. She is also reviewing what was purchased last year to see if there is a way to be more strategic and save money. D2 an D3, that’s father and son, are working to improve their proposal process to be sure their estimates are more accurate.
So, all in all it looks like a good start and we will monitor their progress along the way.
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