Focus on standardization – that was Mike Rorie’s main advice to landscape contractors logging in to Marty Grunder’s early September Webinar titled “Interview with Mike Rorie
This means contractors should focus their business models – a strategy that worked for Rorie, who started Cincinnati, Ohio-based Ground Masters three decades ago, eschewing a full-service model to focus on commercial maintenance and growing the company to $29 million before selling it to The Brickman Group in 2006. Today, Rorie is a vice president of The Brickman Group.
Rorie gave the example of McDonalds – a comparison many in the industry have made of The Brickman Group.
“Everywhere you see the golden arches, the restaurant is the same,” he says. “They’re in similar locations, make the same food, and, in the end, make a lot of money. It’s a cookie-cutter approach, but standardizing the business model means owners don’t have to worry about day-to-day operations and can focus on what they want: Making more money.”
DEFINE YOUR MODEL. The first step is to define your business model, Rorie suggests. Are you going to compete with large, national chains? Will you focus on hardscapes and pond installations? Commercial maintenance?
“I never struggled with the intrigue you could get yourself into, relative to how large our industry is,” Rorie says. Rather, he picked a segment – commercial maintenance – and did it over and over and over again. And while some owners enjoy, and find success, running more, smaller divisions or segments, he found it more complicated and harder to get what he calls “compound leverage.”
“If you're going to perfect something, and be good at it, there's probably enough of it to do a $5, $7, $8 million business,” he says, sharing an example. "Shell Oil Co. isn't trying to do fifty things. They're doing oil.”
IN THE BEGINNING. But, when Rorie started out, he was a multiple service company. His crews were mowing grass at homes, plowing snow and cutting firewood. Then, in the early 1980s, he got into commercial maintenance. He realized, after a few years of doing both, that he couldn’t grow like he wanted if he didn’t focus. So he and his partner sold their residential business to the partner’s brother and became solely a commercial landscape company.
"It was tough in the sense that we had to replace that income,” he says. “For a couple of years, our sales didn't increase. It took a while to hit breakeven and start growing in that segment.
“We gained leverage through market share,” he adds. “I don't care what we do, let’s just do a lot of it has always been my philosophy. If we're going to be hardscapers, let’s bid every wall and paver job we can in the city and work for every landscaper in town who doesn't want to keep that work in house."
Business owners, as entrepreneurs, are very creative people, Rorie says. As such, they’re always interested in new projects and expanding their companies. But, too often, they get distracted by too many ideas and flounder. “Does that put another branch on the tree or another fork in the road?” he asks. “We’re never going to get where we want to go if we keep venturing off the main road.”
Rorie stresses the concept of critical mass – the idea that a business can earn more revenue than it spends in overhead. The faster a company can reach critical mass, the better.
He gave this example: Say a company does $100,000 in lawn applications, $50,000 in pavers, $60,000 in fountains, $200,000 in commercial maintenance, $300,000 in residential work and $70,000 in tree care. That’s $780,000 a year in revenue. But, spread out, it’s more difficult to convert that to profits.
“Who’s got all this expertise, the variety of equipment and the production expertise? You’re never going to hit critical mass in any of those categories,” he says.
By focusing on one service area, a company can standardize the equipment it buys, the prices it charges – even the employees it hires – and not spend the bulk of its revenue on overhead.
WHICH MEANS. This level of standardization means a company can start measuring itself. It removes variables from the success equation, and what’s left is a clear look at what the business is doing right, and what it’s doing wrong.
“The beauty of growth is it quickly quantifies everything for you. You can sit and plan what is required to do those things,” he says.
A company needs to know, he says, how much revenue a landscaping truck brings in. Or a paver crew, irrigation repair van or mowing rig. How much revenue does your top salesman bring in?
“Anybody in business for themselves has an ego. We want to win, we’re proud and we’re willing to do things the ordinary bear isn't necessarily. I want to see that scorecard and see winning results on it.”
Mike Rorie on …
The economy: “I miss having the business because I miss being on offense. I’m semi-retired … it’s a very defensive position to be in. Owning a business you have a lot of control and you can be very offensive in your decision making.”
His favorite business book: Michael Gerber’s The E-Myth.
The best way to get new business: Rorie targeted the properties he wanted to have, and worked hard to get in front of the decision makers at those accounts. He recommends hiring a high school or college student to compile a list of potential accounts, then pursuing it yourself or giving it to your sales team.
Networking: Find national and state associations, chambers of commerce or local business groups to network with other business owners who are smarter and older than you. “You need to get out from your small business, from your workaholic lifestyle, and you need to be involved in other aspects of business. I am not a high IQ guy. I am an experienced guy. I surround myself with people I have tremendous respect for, categorically, in all kinds of industries.”
Finding a mentor: It’s paramount. “Identifying a business you want to be like that's in your industry, to me, is just a no brainer.”
What every landscaper in America should do right now: Plan for 2010. Get a handle on your year-end numbers, and your predictions for next year. “What do I want to do in 2010 that I failed to do in 2009 that I'm not going to allow to happen again and what’s it going to require? Too many guys are willing to be day planners or week planners. There's no leverage there. You need to load your guns.”