Last time we checked in with Gabe Lobato, he was going to meet with the new property manager of his lone commercial property. Unfortunately, the property manager decided to go in another direction and find a new landscaper, leaving Lobato, who was already skeptical about commercial work, even more so now.
So, he will focus on residential work in 2019, which has been doing well. Looking back on the year, the Turnaround Tour experience didn’t go the way he imagined.
“All it does is reaffirm why I gave up pursuing this market a few years
Lobato does feel more confident about figuring out his hourly average wage (HAW). He is in the process of implementing that for his residential maintenance accounts in order to figure out the cost of jobs on a daily and weekly basis.
While he won’t hit his goal of $1 million at the end of 2018, he thinks he can hit his goal by the end of 2019. At the start of the Turnaround Tour, he wanted to sell the company in the near future, but now is reassessing that plan.
“My goal is probably in the next three to five years to be able to step aside and do something else but continue to own it and oversee it, but not be in it as much as I am at this point in time,” he says.
Harvester’s take
La Cholla’s first goal was to increase overall revenue to $1.1 million at 48 percent gross margin. While Gabe did not achieve the overall goal in revenue, we were aiming pretty high, in all fairness. Gabe started off by hiring his brother to help in the sales area; however, Gabe quickly found that this was not a good hire. He then tried a telemarketing program with very mixed results and he also scrapped that program.
La Cholla has gone back to its traditional source of leads through SEO Google searches mainly from the residential market.
Gross margins remained healthy and within the targeted goal. La Cholla also remains profitable within an acceptable range for net profit even with the added $12,000 in sales costs. Family and business do not always work out. Gabe learned that hiring his brother was not a good match and made a quick decision to change course. Once you have determined a team member is unlikely to come around in fairly short order, especially in a skill position, it’s often best to make the change, especially if they are a family member.
The company’s second goal was to add $100,000 a year in new recurring maintenance revenue, which Gabe did not achieve. He has gone back to focus on his original lead source through his website. His focus will remain in the residential market. He will be trying other lead sources through mailers and referral programs.
His third goal was to sell more than 25 percent of recurring revenue in enhancements, which he is making progress on.
Gabe is also making progress with his supervisor Michael continuing to spend the vast majority of his time writing up extra work proposals for the existing base of homes they maintain. If they follow up effectively with these proposals, they will achieve this goal.
Finally, La Cholla had a goal of growing the commercial maintenance business and shifting to 95 percent commercial in three to five years. This isn’t going to happen and Gabe’s comfort zone is in the residential market. He will continue in this market and if the right commercial or non-residential jobs come his way, he will consider them