The Monday after the GIE+EXPO and LANDSCAPES is always an interesting day. Your feet are still hurting a little bit after walking the 500,000 square feet of exhibits and 20 acres of outdoor area, but there’s a sense of relief that all the preparation to get the most out of the show was worth it.
For those of you who attend the trade show and educational event in Louisville at the end of October, you know what I’m talking about. For those who don’t, what are you waiting for?
That Monday is also a great time to write a column because everything is still fresh in my head.
No surprise, lack of quality labor was the No. 1 topic for most people I talked to. Everyone is looking for a solution, especially in the maintenance world. Even paying more isn’t working, which you can read more about it in our 2018 Benchmarking Your Business report.
Then again, maybe you aren’t paying enough because you aren’t charging enough. I heard about one contractor who provides both commercial and residential services, and raised his maintenance hourly charge from $45 to $48 at the beginning of this year.
A few months later, he bumped it up to $55. Then, last month, he raised it to $65. Yep, that’s $20 in less than a year. And he didn’t receive one cancellation. His thinking is with higher prices, he can pay more, which would mean a more skilled labor pool. It’ll be interesting to see how it works.
Speaking of labor, the vibe I got was the robots will be solving all of your hiring and retention problems in the near future. OK, that’s a bit of an exaggeration, but I heard more about robotic mowers at this year’s show than in previous years (and we write about the trend).
One contractor I spoke with had a manufacturer offer to install the hardware and lend him a mower for free to try out at their location. He took the offer and liked it so much that he is going to buy 15 of them and see how they work in his business. If they do, who knows how many he’ll buy.
It seemed that software and technology companies in general were better represented this year. There were more of them and bigger booth space for the ones in attendance.
Oh, and if there is a trend in your market we’re missing, or you want to add to one I mentioned above, please shoot me an email at the address above. I look forward to hearing from you. Now, I’m going to look for a bucket of ice for my feet. – Brian Horn
KENT, Ohio – The Davey Tree Expert Company has appointed Brigitte Orrick to director of recruiting and employee development.
Orrick joins Davey from the Tree Care Industry Association, where she was the workforce development director. Prior to TCIA, Orrick was the Dean of Trade, Industry, and Apprenticeships at Nicolet College. With more than 15 years in the industry, Orrick brings experience in the collegiate and professional affiliate market spaces.
“To keep pace with Davey’s growth and service delivery expectations, we have committed to providing a premier recruiting and employee development function,” said Greg Ina, executive vice president of The Davey Institute and employee development. “More than ever, it is increasingly important that we also positively influence employee retention and reduce turnover through aggressive engagement and development strategies. Brigitte’s expansive network, experience
Orrick holds a bachelor’s degree in forest resource management from West Virginia University and a master’s degree in forestry and wood products from Virginia Tech. She is a graduate of The Chair Academy and Leadership Pikes Peak.
Real Green partners with Serent Capital
The private equity firm is focused on investing in high-growth technology and services businesses.
WALLED LAKE, Mich. – Real Green, a global software company, has entered a partnership with Serent Capital, a San Francisco-based private equity firm focused on investing in high-growth technology and services businesses.
Real Green’s solution provides an operational management and marketing service solution for businesses ranging from small startups to international franchise operations.
The platform provides an integrated and automated solution to enriching and extracting customer and marketing data. Real Green started with the lawn care industry and expanded to industries such as pest control and real estate.
“Since inception, Real Green has focused on one thing – improving lawn care companies’ and other service providers’ ability to manage their backend system and serve their customers,” said Joe Kucik, founder and CEO of Real Green. “Real Green was the first to develop software to aid in managing and growing a lawn care business, a concept that started a service-industry software revolution. Our Service Assistant, Mobile Live, Route Assistant, and Real Green Payments products are leading examples of how we help our customers to do more and scale.”
“We have spent several years looking for the right platform investment in the field service industry. Real Green is the leader in software and marketing services for lawn care companies, and we are tremendously impressed by the business Joe and his team have built.
“This success is demonstrated by stellar customer satisfaction, strong growth, and high retention rates,” said Lance Fenton,
Real Green will add three independent directors to their board of directors, starting with Romir Bosu. He has extensive experience working with high-growth software businesses and implementing payment processing capabilities through his work at Nadavon Capital Partners.
Bosu was formerly a board member at PayLease, a payments company serving the apartment rental market, and serves as on the board of Club Speed, Capsilon, and is the Lead Director for another
Atlantic Water Gardens acquired by OASE Living Water
OASE, based in Germany, hopes the deal will help the company dive into the North American market.
Headquartered in Hörstel, Germany, OASE provides water gardening products. The terms of the transaction were not disclosed.
Atlantic Water Gardens has a 30-year history of supplying professional grade water feature products to landscape contractors through distribution channels in the U.S., Canada
“We have been collaborating with European landscapers for years and see an opportunity to build on this experience with professional contractors in the North American market,” said OASE CEO Thorsten Muck. “We are excited about this expansion as it gives us the opportunity to work with the highly respected and talented team at Atlantic. Their product range and expertise will enhance our ability to serve an even broader range of customers
“Joining forces with OASE will provide excellent channels to deliver our state-of-the-art water features to landscapers beyond North America. What’s more, OASE’s wide range of premium water gardening equipment is highly complementary to Atlantic’s systems and projects,” said Jeff Weemhoff, the president of Atlantic Water Gardens.
“We look forward to providing OASE’s cutting edge, German-engineered technology to our clientele,” he said. “Together, we will create the most innovative and comprehensive water gardening business in North America.
“Whether the beginning hobbyist or the professional landscaper – by reaching out to a more diverse base of water garden enthusiasts, our goal is to transform and inspire the North American water gardening industry.”
GPS Insight names new CEO
Gary Fitzgerald will replace founder Rob Donat.
SCOTTSDALE, Ariz. – GPS Insight has promoted Gary Fitzgerald to
Fitzgerald joined GPS Insight in 2016, from GE, where he served as an enterprise architect for 10 years.
Fitzgerald served as vice president of technology for almost two years and led the company’s product development efforts, technical teams, and security practice.
“This is a pivotal time for the telematics industry with many intriguing technologies hitting the market,” Fitzgerald said. “We believe that camera systems, 5G cellular technology, and mesh networks will be a significant part of the next generation of fleet management. We are confident that our product will be a market leader, driving innovation across the industry. Our continued growth is a testament to Rob’s leadership and the talented team the company has assembled.”
In his new capacity, Holder will take a more active role in financial planning and analysis. Walker has been with GPS Insight since 2010 and leads the company’s sales efforts.
“Jason and Wayne have been invaluable assets to GPS Insight since joining the company,” Donat said.
“I’ve worked closely with both Wayne and Jason over the past couple years and remain impressed with their dedication to our customers and fellow team members,” Fitzgerald said. “In their new expanded roles, both Jason and Wayne are perfectly positioned to provide leadership during the next phase of growth at GPS Insight.”
TurfMutt to sponsor television series
"Ready, Set, Pet" will air on the CW network and focus on families preparing their outdoor spaces for a newly adopted pet.
ALEXANDRIA, Va.– The Outdoor Power Equipment Institute’s (OPEI) environmental education and stewardship program, TurfMutt, is sponsoring a new television program, Ready Set, Pet.
Hosted by Phil Torres and co-produced by Hearst Originals, Ready, Set, Pet educates and informs teens and their families about pet adoption, responsible pet ownership and the importance of a green space for pets.
In each episode, Torres guides a family through the pet adoption process after a careful look at their unique situation to help them make an informed decision in finding the right pet for their lifestyle.
While the family visits local shelters and rescues, experts revitalize their outdoor space to make a safe and eco-friendly home for their new pet. Ready, Set, Pet teaches viewers that thoughtful preparation is key when learning to care for an animal's needs.
"Ready, Set, Pet" airs on Saturday mornings on the CW Network.
The show will teach viewers to carefully prepare their green spaces for an animal’s needs.
Included in each episode are TurfMutt tips on the importance of our yards and managed landscapes to families, pets and the environment.
Through the TurfMutt program, Lucky, the real-life rescue dog behind the TurfMutt cartoon character, is “
In conjunction with its education partner Scholastic, the youth education program educates children in grades K-5 and their families on the importance of caring for these important green spaces.
TurfMutt sponsored a TurfMutt Adoption Event, “MUTT MADNESS,” in partnership with the Kentucky Humane Society (KHS), in Freedom Hall at the Kentucky Exposition Center during GIE+EXPO.
A crew from English Garden Care in Rancho Cordova, California, was servicing a client’s property, just like always. A competing landscaper pulled up, waved one of the guys aside, and offered to pay them more per hour, but only if the whole crew came to his company.
The crew did not take the competitor’s offer.
“Convincing them to stay isn’t that difficult,” says Robert Munn, president of the 15-year-old company, which employs about 60 people and pays its workers at least $15 per hour. That’s up 17 percent from last year, when the typical hourly labor rate at his company was $13.
Munn explains to his people that if they leave, they have to start from scratch at the other company. They’ll wait 90 days to get benefits, if the company even offers them. “Maybe you make $1 more, but take into consideration the benefits you’ve worked for here,” he tells them. And they get it.
If laborers ask for more money, hedging the competing offer for a raise, Munn reminds them of the review process. “We’ll discuss your salary at that point,” he says.
Upping pay on a whim to keep a few workers is a slippery slope. “If you start giving in, it sends a bad signal to your workforce,” says Jim Huston, a green industry management consultant at J.R Huston Consulting. He’s also the author of a series of books related to pricing and benchmarking.
Labor is so tough now that wages are higher than ever, the pool of available qualified workers smaller than ever, and owners are perhaps more frustrated than ever. Huston says of the competition in the industry, “I don’t think we’ve ever seen it this bad.”
Karl Schottler, president of Paramount Landscape in Kansas City, Kansas, took a photo of his team the day of a training rodeo, organized because the company had on-boarded many new employees to fill gaps after its H-2B workers fell through.
“Yesterday, I looked at the picture, and with the exception of permanent staff, only four out of 20 seasonal workers in the picture are still here,” he says.
Schottler says his people have been approached by competitors while fueling up at the gas station. “At lunchtime, there are competitors that camp out there and try to hire employees, and we warn our people about that,” he says. “We let them know, ‘They might offer to pay you more, but as soon as they can get someone else at a lower wage, they’ll let you go.’
“It’s not a stable workforce by any means,” he says.
Labor market dynamics
When the unemployment rate is hovering right over 2 percent, filling service industry positions is a challenge. The simple law of supply and demand drives up the labor rate. During the past two years, owners report that hourly pay has climbed to a level they never expected to offer before. But they do now – because if you want good people, you’ve got to pay for it.
Kerry Hasegawa, president of MGT Landscaping in Littleton, Colorado, has 48 employees and pays an average of $16 to $17 per hour, up from about $12 to $13 a few years ago. “It’s increasingly difficult to find people because if someone is unhappy with his wage, he can pretty much find a dollar more an hour anywhere that afternoon,” he says.
Schottler adds, “I usually have to pay guys $16 per hour just to get them in a truck, and some of them don’t last a week.” His hourly wage is approaching double what it was six years ago.
Greg Strong, owner of Strong Landscape in Salt Lake City, Utah, says his market is an anomaly, mainly because of the region’s DIY culture and frugal nature. People want to pay Walmart prices for services, he says. So, that pushes pricing down, making it harder to pay more for labor. Strong goes in at $15 per hour minimum, and he’s only looking for people with one to three years of experience in the industry. A couple years ago, that labor rate would have been closer to $12 per hour, Strong says.
“We usually tend to pay $1 to $2 more than other landscaping companies, so that is a motivator,” he says, adding that he demands more, so is willing to pay more. For skilled labor, such as landscape installers who specialize in pavers, he will pay significantly more – upward of $22 to $24 an hour.
“The landscapers who can install irrigation systems, landscape walls, work the equipment, set grade – you can’t find that guy sitting at a Starbucks,” Strong says. “Our only work pool is amongst each other’s work pools. We have a limited amount of workforce in the landscape industry.”
In California, the mandatory minimum wage by 2022 will be $15 per hour. But as soon as mandatory increases began in 2017 (then $10.50), many workers adopted the higher rate as the new normal and began demanding it of employers. Munn says most service industry employers in his area are already paying $15, or much more. And, “as long as there is a shortage of workers and a demand, our labor rates are going to continue to rise,” he says.
Drew Keenum operates Rainbow Lawn Care and Landscaping in Alabama, where minimum wage is $7.50 and he pays $10 per hour. “It’s not hard to find people who want a job, but it is hard to find people who want to work,” he says.
Keenum is competing with manufacturing. With Honda facilities nearby and other Tier 2 suppliers, along with Goodyear Tire & Rubber, people can get paid more on the line than they would at McDonald’s or mowing in the heat. “Then, take into account people on government subsidies who can make as much money sitting at home as working, so where’s the motivation to work?” he says.
Beyond the paycheck
Cash in the pocket is the biggest incentive, Hasegawa says – more important to most hourly workers than getting a few vacation days or sick pay. Money talks.
Still, offering a professional environment, career path and benefits can provide the type of stable employment that some workers seek. That’s the goal at Smith & Enright Landscaping in Selina, California, says business manager Selena Herrin.
The company introduced a wellness benefit of $400 per year for employees who stay longer than three months. That money can be used toward doctor appointments, medications and glasses. Employees simply bring in a receipt and are reimbursed by the company. “We tell them they can use the benefit for anything that makes them feel safe and healthy,” Herrin says. The company once reimbursed a crewperson for new work boots.
Smith & Enright also added two paid sick days to the state’s mandatory three paid sick days. And, after three months of employment, workers qualify for six paid holidays. “I don’t know if this draws people into our doors, but we are trying to create stability and a good work culture – something they can count on,” Herrin says.
Strong also instituted sick and personal time off days this year. “Some larger companies in our area offer health insurance and paid sick days, so that is why we are offering those types of incentives,” he says. “For every year you stay, you acquire more time off.”
At Paramount Landscape, Schottler makes sure people know the potential career path if they commit to the company. “We also let them know what kind of training jobs require,” he says. “We make sure they understand our vision so they understand we are on this journey together, and why they are doing what they do each day.”
Keenum is considering implementing a creative pay incentive for workers that mimics how mechanics are compensated: getting paid commission for every job. “My goal is to incentive employees to work fast but I won’t pay if the employee has to go back to do the job because it wasn’t done right the first time,” he says. “The thought is to make employees more efficient, and if a worker has five days to complete a schedule but finishes it in four days, they can get an extra day off without losing pay.”
Companies report they could grow 30 to 50 percent more in sales if they had the people to do the work. Strong says, “Last year, we could have easily done 40 percent more business if we had the labor force.” Though, he adds, “This makes us more profitable because while I can’t do the job that’s in demand, no one else can either – so it creates a supply and demand for services.”
Huston says one contractor in Idaho raised construction prices per hour from $45 to $65 in the last year. The key is to raise prices to keep up with labor so that you don’t lose out on profit margin.
Schottler, like many, says keeping up with contract pricing so it aligns with labor rate hikes has been difficult. “Every year, we get another wage increase, so every contract we have out there is a little less profitable,” he says.
Munn increases customer prices 3 to 5 percent each year, and he’s consistent about this hike. “I know exactly where I need to be every year to pay for my employees and to grow, so every year I give price increases to our clients,” he says. “In order to keep up with the pace of payroll, you have to raise prices. There’s no way around it and you have to increase your prices on products as well.”
If you don’t raise prices gradually, year after year, you’ll wind up in a hole and could be forced to institute a price hike that customers can’t swallow, he says. “If you wait to raise prices until you realize how depleted you are, and then you have to increase them 15 percent, you’ll never win that battle – customers will definitely go out to bid,” Munn says.
Jim Webb, president of Valley Landscape Service, Jackson, Wyoming, will raise prices by 8 percent this coming spring. “I sucked it up this year,” he says. “What I usually do in situations this year is, I offer the same prices for existing clients, and as I pick up new work, I raise my pricing structure on those. But, next year, it’s an 8 percent increase across the board. And, I’ll probably only lose less than 1 percent of my client base.”
Munn adds that loyal clients who value your services will stick with you even if the prices increase slightly.
As for what’s ahead, hourly wages are expected to continue hiking, Huston says. “The thing is, we have a phenomenal economy right now,” he says. “But the tragedy is, we can’t fully take advantage of it because what it’s doing is driving up labor rates and supply-and-demand.”
You assume great risk. You provide jobs that support others’ families. You can’t remember the last time you only worked a 40-hour week. As an owner, you deserve to get paid at least what you’d make as an employee at another landscape company. Don’t you?
“We take a lot of risks every day as owners, and to not pay yourself regularly is a mistake,” says Karl Schottler, who started Kansas City, Kansas-based Paramount Landscape in 2000.
Schottler figures his salary based on a budget he sets every year. “You’ve got to know your numbers and manage your budget in order to make (the salaries) happen,” he says. If the company outperforms the budget, he can offer salaried employees more while giving his own salary an appropriate hike, along with doling out bonuses to the workers who helped reach the goals.
Greg Strong, president of Strong Landscape in Salt Lake City, Utah, takes a modest salary that has fluctuated in the last several years, as he carries out a goal to reduce his debt to income ratio. “I’ve been taking less salary to get us in a stronger financial position,” he says. But, he can take dividends to supplement the salary, and these draws are determined between him and his CPA.
Kerry Hasegawa, president of MGT Landscaping in Littleton, Colorado, agrees. “Work closely with your CPA,” he says, adding that his salary is enough to support his family, and he’ll take monthly distributions.
“Treat yourself as if you are an employee,” says Jim Huston, green industry management consultant, J.R. Huston Consulting. “Many owners don’t take a regular paycheck and they think that their salary is what’s left over after all the bills are paid – and that is not the case. Owners should build into their budget a regular salary for themselves and be sure they get a regular paycheck.”
Calculating the right salary
There isn’t a set percentage of sales that an owner should earmark as their salary, Huston says. “But as the company grows, you should do better than what you would make somewhere else as a worker,” he says.
Overall, salaries (owner and office personnel) should be half of your overhead, Huston says. Overhead should be 25 percent of sales. So, 12 percent (half of overhead) of sales should be allotted for salaries. This does not include laborers – we’re talking administrative positions, including bookkeepers and owners.
One mistake owners often make, especially during recession times or slow periods in a business, is holding on to salaried staff when sales does not support their pay. “Owners hesitate to get rid of people because maybe it took them a long time to build a team, to train them, and they don’t want to lose that,” Huston says. “But you have to.”
Also, because entrepreneurs tend to be positive, they figure the down time won’t last long, Huston says. “They figure, ‘I can hold on – I don’t have to let my people go.’” But this mindset can quickly backfire. “It drains them of capital,” Huston says.
As an owner, your salary must stay in place because it’s fair that you are compensated as an employee. But be sure that sales can fully support the rest of salaried positions – and that those salaries do not exceed 12 percent of sales, which is half of your overhead. “This is a good benchmark to keep in mind,” Huston says.
When Drew Keenum first started Rainbow Lawn Care and Landscaping in Alabama, he paid himself an hourly rate. “But I stopped that because sometimes it felt like I wasn’t taking enough from the business, and sometimes I was taking too much,” he says.
Keenum says, “If you’re not paying yourself, then it’s hard to keep a healthy business,” he says.
Keenum’s operation is under $100,000 now, and he focuses on paying bills first and covering operational costs. He has two part-time employees who help out. Whatever is left over is his. “Sometimes it’s good, and sometimes it’s not so good, but the income has to be there for the business to sustain,” he says.
Today, Keenum tries to pay himself about 20 to 25 percent of gross profit.
“I figure a good salary is $40 per hour so I pay myself $80,000 a year – and my CPA says it’s perfect.” Jim Webb, president of Valley Landscape Service
Benchmarking your salary
There are industry resources to help business owners determine where to start a salary, Schottler says. He turned to the National Association of Landscape Professionals, which provides various operating cost studies offering salary ranges owners should draw to maintain a healthy business.
Jim Webb figures his salary based on 2,000 hours of work per year, which is 50, 40-hour weeks. “This is how I base all the guys’ salaries, and how I explain their pay to them,” says Webb, president of Valley Landscape Service in Jackson Wyoming. “I figure a good salary is $40 per hour, so I pay myself $80,000 a year – and my CPA says it’s perfect.”
Webb also takes a SEP IRA contribution of 3 percent, based on the $80,000 salary, and he takes distributions from the company profit.
Not sure where your salary should stand? Huston breaks down a realistic budget for a $1-million a realistic budget for a $1-million company this way: “An owner could afford to pay him or herself $1,000 per week,” Huston says.
The average base salary for a landscape business owner is $97,000 to $106,000, according to Glassdoor. The average small business owner salary (all businesses) in the United States is $72,169, with additional compensation of $5,165 in bonuses, $20,234 in profit sharing and $8,400 in commission, according to PayScale. Lawn & Landscape magazine’s 2018 Benchmarking Your Business report showed the average landscape owner salary is $75,000.
Huston says, based on profitability, an owner can take a higher or lower salary. So, a $1-million business should have $100,000 left in profit after the bills and owner’s salary are paid (pre-tax). If net profit is less than 10 percent, you’ll take a salary hit.
Remember, your business is not a personal piggy bank. Budget your lifestyle so it aligns with your salary vs. taking funds from business.
“Set a salary,” Huston says. “Get yourself on a steady budget by paying yourself weekly. This enforces discipline.”