Tips from the top: Jeff Penney

Jeff Penney, CEO, DLC Resources

December 4, 2013

I started in the business in Denver through a high school teacher that was putting residential irrigation systems in during the summer and he would hire high school students. I eventually went to work with him when he went full time and grew that into a large landscape construction business based in Denver, but operated in several western states. One of those being Arizona.

In 1989, I cofounded DLC Resources to focus strictly on landscape maintenance and then as DLC evolved we narrowed our focus to these larger planned communities.

In years past, during the Great Recession, all development or construction to any large degree was pretty much nonexistent in 2010 and 2011 and so what we were faced with was all the companies that were doing that landscape construction work had nothing to do so they came into our market, and by virtue of doing that, they lowered prices. That’s beginning to soften a little bit. There is some construction and development work now going on here in Phoenix – new home construction, but we’re still operating at a lower price point.

DLC ResourcesOur challenge today is to figure out how to be more successful at a lower price point. Communities are spending more money on their capital improvements, and part of that is for a couple years they didn’t spend a whole lot so now they’re playing catch up.

Given that we’re working at this fixed or semi-fixed lower price point if you will, I think our customers are sensitive to price increases.

On the other hand, something that we have coming down the road that we have to plan for is Obamacare. Given what we know now, that’s going to have a significant cost impact on us. So we are combating that, if you will, with a full on effort to improve our efficiency in our field operations. I’ve dedicated one of our vice presidents whose primary job is going to be efficiency audits and, within that, improvements in training education and process. Just essentially get to a quality product with less cost.

Water costs are going to keep increasing. They’re not going down, so water management is going to play an even more important role. Effective water management – that will be companies that can do that comprehensively/effectively – that has a lot of value with clients, and it’ll grow in value and need as time goes on and water costs go up.

Our company is an ESOP (Employee Stock Ownership Plan) company, and as a part of that, employees, after they’ve worked for the company for about a year and a half, become eligible to receive company stock, So essentially, our employees are part owners of the company. And given that, we are developing an ownership culture to drive efficiency and to drive safety, but it’s essentially getting all of our employees to think and act like an owner within the realm of responsibility that they have. So we have an overall initiative on that to continue to develop a culture of ownership with every employee.

Within the realm of our company we have a saying, I probably picked this up somewhere along the way, that it all happens in the field. And our customers are a part of the field, so everything we do supports that effort of our field operations, so with our client and with our employees. Essentially it all happens within the field and we work to drive and support that success. It doesn’t happen in the office, it doesn’t happen in the non-field. It all happens in front of the client and in the communities that we serve. We keep a real focus on that.

Micromanaging is probably the biggest mistake. In business, because you’re an owner, you’re concerned and you learn in your own way what works and what doesn’t work. But somewhere in there you can micromanage too much instead of giving others expectations, training and then allowing them to work within that and make a few mistakes.

It’s not all about revenue growth. Stay focused, do what you’re good at. That’s what we did. I guess we never had a goal of being Top 100. It didn’t really matter. What mattered was driving the bottom-line profitability and driving the sustainability of the company through clients that like you and want to keep working with you, and the same with employees. If you do those things, as a result you end up with more work and maybe someday you end up in the Top 100.