Our cover story this month reminded me of an email I received about a year ago around this time. A reader responded to some news about contractors reaching out to local government officials to tell them how important the H-2B program is to their businesses.
That reader was a contractor in Arizona who emailed me to say he was going to do the opposite and ask that it be stopped. From his perspective, there were plenty of employable American employees to fill positions.
I asked him what he did to attract and retain employees. He listed some items we’ve covered here before like referral bonuses, networking with local colleges, incentives and ongoing training.
He also pointed out that he doesn’t focus on profit maximization. Profits, yes; maximization, no.
He said he read an article about the need for an alternative to the profit-focus of business. He continued, “Well, this is that alternative: Providing job security and economic stability that, in turn, promote family and community health.
“This eliminates any need for ‘guest workers,’ which arises when companies focus on profit maximization and view those who work for them as interchangeable.”
I found the premise of profit maximization to be an interesting point that other business owners may argue, but that’s a topic for a different day.
One point I did disagree with is the perspective that companies using guest worker programs view employees as interchangeable. Some companies request the same H-2B workers every year.
In the case of our cover story subject, M.J. Design Associates in Columbus, owners Molly and Joel John were willing to invest in helping those workers obtain green cards because of how much they appreciate their hard work and loyalty. That’s the exact opposite of interchangeable employees.
Each owner is putting their best foot (and dollar) forward to keep their employees.
In fact, the reader and M.J. Design Associates have something major in common – they both are willing to invest in their quality employees to retain them.
Each owner is putting their best foot (and dollar) forward to keep their employees.
Let me know at the email above if you have any unique incentives or ways of investing in your employees. We are always looking to share great ideas to help the industry. – Brian Horn
From software to robotic mowers, learn how four landscape contractors are using technological advancements in the industry to better their companies. The presenters will explain how they trained themselves on new technologies and implemented them into their businesses, and the challenges they faced along the way. Visit bit.ly/ImplementingTechVC for more information.
It’s that time again! Don’t miss your chance to be featured on our list of the top 100 landscape companies. Head to bit.ly/2019LLTop100 to fill out the survey. Submissions are due Friday, Feb. 1.
What do you think?
We love hearing from you. Head to lawnandlandscape.com to weigh in on our latest poll and find out what others in the industry are thinking.
Photo by Kate Spirgen
On the road again
On Instagram, we like to highlight the events we attend and the places we travel. Last month we spent some time in Maryland getting to know one of our 2019 Turnaround Tour winners.
On Twitter
Did your area get heavy snowfall? Tweet a photo of your snow and ice fleet to us @lawnlandscape
Travels with Jim follows Jim Huston around the country as he visits with landscapers and helps them understand their numbers to make smarter decisions.
2019 is upon us with all of its promises and challenges. It wasn’t that long ago that we shared the same sentiments about 2018. Did 2018 end the way that you had hoped a mere 12 months ago? Or was it a disappointment? If it was a disappointment, when in the course of the year did you realize that it was so? Was it a surprise at the very end or did you see it coming? And if you saw it coming, what did you do about it, if anything?
I’ll bet that you probably did nothing. You did nothing not because you didn’t want to, but because you didn’t know what to do or how to do it. You simply did not have the tools or know-how to address the situation. That’s the problem. Many green industry entrepreneurs have neither the tools nor the know-how to run and direct their businesses effectively.
The little picture.
To run a business effectively, a contractor has to be somewhat schizophrenic. You have to think constantly and simultaneously about the big picture as well as the little picture. You can’t focus on just one. If you do, you’ll get in trouble and wrapped up in minutia spinning your wheels.
First, you have to benchmark the little picture. By this, I mean that you have to ensure that every crew and/or service technician is producing a minimal amount of profitable revenue per day. You as an entrepreneur need to ensure that every crew or technician is achieving these pre-planned benchmarks. If they aren’t, you need to investigate and find out why.
I teach all of my clients how to calculate and monitor these little-picture revenue and profit benchmarks. Once they have them, their (and their managers) primary jobs are to ensure that every day is a winner for everyone. For instance, let’s say that a lawn care technician’s daily revenue goal is $1,000. If the season is seven months long, each technician should produce a minimum of $150,000 in revenue per year.
7 months x 22 work-days per month = 154 workdays
154 workdays x $1,000 = $154,000
Subtract out 3 or 4 holidays and your benchmark goal is $150,000
The big picture.
This brings us to the big picture. It isn’t enough to have daily revenue and profit goals. You have to keep your annual end-game strategy in mind.
I prepare an annual budget for my clients at the beginning of each year. We benchmark the entire company and calculate costs and revenues for each division. These calculations are based upon each company’s historical data and/or national benchmarks that I’ve developed over the last 30-plus years.
Once these big and little picture calculations are in place, a green industry entrepreneur has the tools to price his or her work accurately and monitor everyone’s progress throughout the year. You should monitor this data on a weekly, monthly and quarterly basis.
How it works in the field.
Bill was a lawn fertilization entrepreneur in Oklahoma with annual revenue just over $100,000. We determined that he needed to bill between $900 and $1,000 per day for each technician. His season was roughly 200 days long. A technician at full capacity should generate approximately $180,000 per season. Bill expected to grow his company to $150,000 in 2018. However, he knew that he couldn’t pursue new sales while doing all of the applications and the office work. If he was on track toward the end of 2018, he planned to hire a technician. This would allow him to grow his company’s revenue to $250,000-plus in 2019.
An irrigation company in New Jersey had four service technicians billing 1,500 man-hours each per year for a total of 6,000 man-hours per year.
Upon analysis of its hourly service rate, we found that it was $20 per man-hour too low. The owner thought that raising his rate $20 per man-hour in one year was too high of an increase and he’d lose lots of customers. He raised his rate $10 per man-hour which added $60,000 to his bottom line the next year. Not one single customer complained so he raised his rate an additional $15 the next year.
Running a successful business is both art and science. You have to master both aspects. One successful entrepreneur refers to this as “The Art of the Deal.” If you want to be more successful in 2019, learn the science behind your numbers. Benchmark both the little picture and the big one in your business. Remember, if you ignore the science in your business, the art that remains may not be a very pretty picture at the end of the year.
Jim Huston runs J.R. Huston Consulting, a green industry consulting firm.
Getting recruiting right is the most important job CEOs have. Hiring top talent, hiring quickly and nurturing and maintaining a pipeline of qualified candidates in a hyper-competitive market requires forward-thinking companies to go back to school.
According to the Bureau of Labor Statistics, U.S. businesses were operating with a record 6.6 million unfilled jobs as of last spring. Across corporate America, hiring teams are stretched and open positions are going unfilled. In the landscape industry, the battle to win top talent, with high-performing companies all competing for the same A-players, is even greater.
At one of our recent peer group universities, landscape owners were challenged to use their critical and creative thinking skills to solve this problem. One way was to look at the problem backwards – to drop old assumptions about why college recruiting may not have worked in the past, and to think about shaking up hiring practices to get different results.
In particular, there is a competitive advantage in creating shared value through internships and “high-touch” relationship-building as a means to develop closer connections between schools and landscape company hiring teams.
So, how does creating shared value work? Start with these 2019 action plan ideas:
Focus on student organizations at targeted schools – supporting and sponsoring clubs and activities in person, and actively engaging through student social media channels.
Maintain meaningful relationships with faculty and influencers.
Host events for students at your business or at industry-wide student career days.
Volunteer to teach classes, speak to groups and meet student leaders.
Take a personal interest in students’ values, their career/life goals and workplace wish lists.
Create an intern program that offers a training ground for them and a talent incubator for you.
In other words, top performing students are one of your most important stakeholder groups. Like all customers seeking the best of the best, they can afford to be picky. Create a list of the reasons why your firm is a great career home, focus on what’s important and what matters to them, and be sure you can deliver the goods.
This means making a good impression. For interns, a well-thought out, well-managed and structured training experience will show them all aspects of your company, business and philanthropy, and the role your firm plays in your community. When online review programs can make or break hotel and restaurant reputations, negative experiences posted online can sink a well-intentioned but poorly executed program strategy. Interns are great PR and brand ambassadors. Encourage your marketing and HR teams to work together. A great experience will net new hire conversion rates and generate positive word-of-mouth back on campus.
As for new graduates, transition them into your business through a wide lens. Make sure you communicate why field experience is valuable, what they can learn from it as part of their overall career trajectory and why it pays off in understanding your business overall. Make sure that onboarding is thorough, varied and mentored. Check in regularly to see how it is going and make sure they know you care about them and their progress.
Once you have a graduate new hire, take him/her with you on future campus visits to reinforce your link to the campus community. If this sounds like it will take years, it will. If you are not willing to commit to long-term investment in college relationship building, you may as well not do it because it will not work. There are too many good companies ahead of you.
As tough as it is out there, there is some good news.
Privately-held, family-owned landscape businesses offer graduating students a number of upsides. If you focus on leveraging the advantages of your firm – values, product quality, flexibility, innovation and close-knit teams – you’ll improve your odds of competing for and wining candidates’ hearts and minds. While larger competitors with deeper pockets can often offer more opportunity, they are not for everyone.
Bruce Wilson is principal of green industry consulting firm Bruce Wilson & Company.
Cream of the Crop features a rotating panel from the Harvest Group, a landscape business consulting company.
Whether you plan to harvest the fruits of your hard-earned labor in 2019 or in another five years, use your New Year’s energy to start working on your plan for best results. Start with a reference point for your company’s value today, identify actions to add value to your company going forward and explore your options for transitioning the business. This time next year, you will be glad you did.
First, get a market valuation for your company as it stands today. You will gain a “ballpark” number for the company’s value if sold in today’s market. (Not to be confused with a business appraisal, which can be used for legal reasons). The report includes assumptions used to make the valuation and will indicate areas to focus on to increase the company’s value.
Second, how healthy is your company? Are you optimizing your company’s potential? Growing too fast or too slowly? Potential buyers for your company will use the same factors as you do to evaluate the company. These can include:
positive trends in sales, net income and margins over a period of years
quality of clients and long-term retention
leadership bench-strength
quality of employees, culture and training
business location, fleet and equipment
market size and potential
What’s your “grade” on these? Which ones should be improved? Ideally, have a third party give you some honest feedback. In my experience, most owners think their companies are stronger than they really are. Independent surveys and/or a trusted adviser can give you an assessment of your strengths and weaknesses with an eye to improvement. It’s better to know now so you can get to work on key issues.
Measure your performance on an ongoing basis. Smart companies create a dashboard to measure key performance indicators (KPIs) and make necessary adjustments. KPIs will include financial measures as well as input from HR, client satisfaction surveys and operations.
Third, determine what your options are for transition. Do you want to transition to a family member or insider, or sell to a third party? Have you planned for after the sale? How much money will you actually receive from the sale? Pre- or post-tax? Or do you plan to strip out as much cash as possible and liquidate at the end of some time period?
All of these are valid options and will have aspects that can be managed for best results. Each will require some exploration with your adviser.
Having a plan will give you peace of mind as you move ahead.
The best time to plan for the transition of your business is well before you want to take action.
Make a plan in 2019 for stronger, healthier business results toward your “harvest” of maximum value for your hard work.
Alison Hoffman leads acquisitions for the Harvest Group. She is a former senior vice president of operations at a NYSE company.
