Considering a Start-Up? Consider This

Almost everyone who works for someone else has, at one time or another, thought about going into business for himself. You think about how great it would be to be your own boss, to have more flexibility, more control, more free time.

“It never happens like that,” says long-time green industry business consultant Frank Ross with a knowing chuckle. “Running your own business is a 24/7 commitment.”

That was horticulturist John Beckett’s experience. He left The Morton Arboretum after 10 years as a horticulturist to start his own business in DuPage County, Ill., in 1998. “By the fifth or sixth year, it had become more difficult, more of a hassle than what I thought it might be,” he says.

“There were more things to deal with – not just employees, but all the things that go into running a business. I would end up doing the business on evenings and weekends,” he continues. “It was taking tremendous amounts of my time.”

In June 2003, Beckett had the opportunity to join American Gardens as a horticulturist/project manager. He took it.

Like many people who start their own businesses, Beckett was well-versed in how to do the actual work or product what he was offering. According to the Small Busienss Administration (SBA), technical skills are one of four essential elements of operating a successful business. The other three are: creating a practical business plan with a solid foundation, having the dedication and willingness to sacrifice to reach your goal; and mastering a basic knowledge of management, finance, record keeping and market analysis.

“The horticultural aspects were my strong point,” Beckett says. “I had to learn the business end of things. As the business started to grow, I had to learn more and more about business.”

Ross, of Ross-Payne & Associates, Barrington, Ill., has his own list of keys to success. “If you don’t have mastery of these fundamentals, you’re going to increase the odds you won’t see your 10th anniversary,” he says.

The first key is what Ross calls saleability. “You’ve got to know who your clients are, how to reach them and then provide the goods and services they want to buy,” he explains. “It’s all about understanding who your market is – and making them understand who you are.”

Ross further encourages new business owners to keep clients in as small a geographic area as possible. “It saves windshield time not only for your crews, but for you, your designers, your supervisors and anyone else who’s going out to check jobs,” he explains. “It make everybody more efficient.”

Beckett says he had that part covered. He used his expertise pruning shrubs and small tress as a niche, adding landscape design and installation and some maintenacnce work for existing customers. He cross-sold his design and pruning customers, and limited his business to the western suburbs. Because he’d developed his business on a part-time basis before leaving the arboretum, he already had a customer base and a source of referrals. “I felt I was able to provide the kind of services that seemed to be somewhat lacking in the industry,” he explains.

The second fundamental Ross sees as being essential to success is “be on top of your game. You’ve got to know the latest technology in your field – whether it’s equipment, the newest chemicals, the latest construction techniques or the top new maintenance techniques,” he says.

Leadership is the third key element on Ross’s list. “You’ve got to be the Pied Piper. You have to encourage people to work harder, to do it for you and to do it for wages that make some people say, ‘How in the world can someone live off that?’” he notes.

Leadership per se wasn’t a problem for Beckett. It was finding people to lead that proved troublesome. I had a difficult time finding qualified people,” he recalls. Although he hired seasonal help, “I did almost everything myself because I didn’t have an employee I could just hand things off to,” he says.

By 2003, Beckett realized he’d reached a turning point. “I had to make some decisions about whether to develop the business and develop key employees to help me or find a job working somewhere else.”

As a “financial guy,” Ross spends much of his time helping clients with the fourth key element, the financial aspect of the business.

“You’ve got to keep score,” he says. “That includes constantly looking at how jobs are estimated, how they’re priced, tracking jobs to see if you produced them for what you sold them for, identifying what your overhead is, knowing where you’re making a profit and why.”

Developing a good budget is critical, according to Ross. “You’re flying blind if you don’t do a budget,” he asserts. “A budget is a dress rehearsal. Opening night is the year you’re about to begin and a budget lets you try it all on paper to see if it works,” he explains. “You need to know before you begin whether it’s going to work because making changes I midstream gets to be extremely expensive.”

Part of budgeting includes knowing what you’ll spend and when. “You an spend a company into a hole in the first quarter and never recover,” he warns.

For starters, the SBA recommends determining your operating expenses for one month. The SBA’s list of expenses to consider includes your living costs, employee wages, rent, advertising, supplies, utilities, insurance, taxes, maintenance, delivery/transportation and miscellaneous. The organization recommends having enough money to cover three months of operating expenses before opening your doors.

Knowing what your expenses will be is an important part of the process. Managing your cash flow is another essential element. “Cash is the fuel that drives a business,” Ross notes. “Managing cash flow is as critical as pricing.”

The SBA’s Web site points out htat making sales or completeing projects isnt’ the same as getting income. The omney for those jobs still has to be collected, which could take as long as 90 days. In the meantime, you’ve got materials to buy, employees to pay, and operating expenses like phone, gas and insurance to cover.

“Strange as it sounds, companies don’t go out of business because they’re not making money. They go out of business because they can’t pay their bills,” Ross says. “If you start missing payments, people line up at your door. They stop supplying you with materials. Employees stop coming to work if you miss a payroll.”

Beckett found his ability to handle the financial end of his business grew with experience. “After the first year or so, I was able to do more accurate budgeting,” he explains. “Since those early years, I’ve read more on budgeting and pricing. I never got to the level of budgeting that some people do. Eventually, I got a little more comfortable, but I never really felt like I had a handle on that aspect of things,” he adds.

“It’s a lot more difficult to learn and do the business aspect of things if that’s not something that’s been a part of your life and experience,” continues Beckett, who has a Bachelor’s degree in ornamental horticulture from the University of Illinois at Urbana.

When Beckett was considering turning his side jobs into a full-time business, he notes that he sought advice from other successful contractors in the field.

In addition to seeking the advice of successful contractors, there are a number of other sources of help and information for those contemplating starting a business. The SBA offers written materials, training and education courses, counseling services and financial program. You can find this information on the Web site www.sba.gov or by calling 800/U-ASK-SBA (800/827-5722). The Service Corps of Retired Executives (SCORE) also offers free counseling, workshops and seminars, including free online counseling. Its Web site is www.score.org.

According to the SBA, thousands of small businesses are started each year. Ross says only on in 10 make it to their 10th anniversary. “The statistics, particularly in the service industry, are pretty heinous,” he notes.

Running his own business taught Beckett a lot, he says. “I learned things about myself. I developed ways to do things I needed to do and I developed a lot of personal skills,” he says.

“Having my own business gave me more of an appreciation of what it takes to keep things going and all the demands that come with it,” he explains.

“I don’t regret starting my own business,” he adds. “Even though it got to be more stressful than I thought it would be, I still enjoyed doing it. I just felt it was time to get away from it. I found an opportunity I felt was going to work out for me, but if I hadn’t found this opportunity, I probably would have continued my bysiness.”

This article, written by Patrice Peltier, ran in the February 2004 issue of The Landscape Contractor, a publication of the Illinois Landscape Contractors Association. Visit www.ilca.net/publications.html for more information.