The art of scaling
To get a leg up in the industry, a firm must be ‘uncommon’
By Mike Jiggens
Building a better landscaping business doesn’t happen on its own, nor is it solely the accomplishment of the business owner himself. It takes a well-trained team to scale a company and it begins with goal setting and strategic planning while being “uncommon.”
Mark Bradley, founder of TBG Landscape and CEO of Markham-based LMN, a landscape estimating and timekeeping software system, shared his advice for building a company with a roomful of landscape contractors attending January’s Landscape Congress in Toronto.
“If you start strategic planning on your own, you’re really not strategic planning,” he said. “Strategic planning involves everybody in the company, so you’re going to have to pull in everybody on the team.”
Even a small company with only a handful of employees requires the input of everyone, he added.
Goals must be set at the outset of the year with a focus on creating a list of desired outcomes.
“I think the more complicated part is creating strategies to make sure that those goals actually happen,” Bradley said. “It’s pretty easy to measure results and it’s pretty easy to identify where things are going good and bad if you’ve got goals.”
The difficult part, he said, is tweaking strategies and sharing them with everyone else in the company to cause meaningful change and improve the day-to-day business. The strategic planning process involves everything from the way the telephone is answered and how equipment is managed to the way staff are hired and trained.
“As owners or managers, it’s up to you to identify the strategies that are missing in your business.”
The highest return on a landscape contractor’s invested time will come from strategic planning, Bradley said.
“Things just start to operate smoother, things happen faster and your business is going to generate a lot more revenue than you can ever do on your own because other people ‘can finish your sentences.’”
What that means, he said, is that a well-trained team knows how the company operates and won’t have to ask the business owner the type of aggregate that needs to be placed under a base in a construction project or where certain materials are stored. The business owner won’t have to run around dealing with such matters. The operation will be more efficient with little or no flow interruption. The time spent training staff and creating systems for them to execute and finish the owner’s sentences will produce a return on that time investment.
“If you’re out doing the work because you’re better than them, you’re probably not really a business owner. You just own your job. Don’t try to fool yourself into thinking you’re going to scale your business up. You really have to change your mindset and believe you can build a team that can finish your sentences.”
To develop the ideal team, the owner must ensure his business is the company of choice for prospective staff. That won’t happen, however, if he pays his employees only minimum wage, Bradley said.
Paying fair wages
“We have to create a career where people can be successful, personally, if we want to be successful as business owners. So that means we have to pay fair wages. We have to have benefits. We have to have pension savings programs so that they can be successful people.”
The biggest challenge among landscape contractors is finding the right employees who wish to remain with the company after they’re hired, he said.
“If you want to scale your business, you’ve got to be fair. If you want to scale your business, you’ve got make sure that everybody who’s working for you comes up the ladder with you because you can’t get there on your own. And if you keep losing your best people every year, it’ll be a really slow crawl to the top.”
Bradley said if starting employees are hired through an apprenticeship program, their wage should be $18 to $20 per hour. A certified landscaper should be paid $35 an hour plus benefits and a pension plan, he added, while foremen should realize a six-figure income (for a large design-build and maintenance operation).
Getting the right people on board and having them stay will happen only if the company is a “well-oiled machine.” Systems must be created to allow great people to execute without much day-to-day direction. With the right people on the bus, the owner can step out of the way and allow his staff to take over.
“That really allows us to focus on what we’re best at. You may be a fantastic designer, you may be a great salesperson, or maybe you’re more of an operational person.”
The business owner’s weaknesses are the things that need systemizing the most, Bradley said, adding the better the contractor gets at systemizing and delegating duties, the sooner he’s going to be successful and the sooner his business can scale.
“You can’t scale if you’re going to try to do all this alone. We have to be good marketers because, ultimately, we’re not going to get the work that we want in this business if we’re not good at marketing.”
Establishing a good website and using social media to drive attention to a company’s landscape projects are vital, Bradley said, adding if business owners themselves aren’t experts in these fields, the work can be outsourced.
A company that’s scaling must always pursue new work.
Scaling up through sales
“I think the difference between the companies that scale up in a big way and the companies that don’t often have a lot to do with their sales process. I think the way we handle our sales process has a huge impact on our ability to scale and definitely our ability to scale profitably.”
Scaling won’t happen if the wrong type of work is sold to the wrong type of customer, he said.
The customer experience must be considered, especially when the average customer turnover rate in the landscape maintenance business is 58 per cent.
“That’s crazy. You’re replacing 58 per cent of your customers every year? That is way too high.”
Contractors may think price is the reason customers switch to other companies, but that’s really not the case, Bradley said. Customers are looking for something they’re not getting.
When enhancements are sold, the customer interprets the extras as topnotch customer service and is willing to pay for the additional services.
“The profit margin is off the charts on those services. The landscape maintenance business can be every bit as profitable as a design-build business if it’s managed properly, but it all relies on customer service. If you want to make a lot of money in landscape maintenance, ask yourself what systems are missing to drive those enhancement sales to increase the price to the keep the turnover on customers down.”
Crews are going to think and perform more efficiently when their company has created systems that eliminate flow interruptions. Bradley said the average landscape company is producing only 60 per cent of the revenue it is capable of producing, meaning 40 per cent of the time crews are either waiting or wasting time doing something that isn’t adding value to the business.
“A $600,000 company operating at 60 per cent efficiency is actually a million-dollar business. You’re just throwing $400,000 out the window with downtime and waiting. It’s shocking that we allow that to happen, but that is the way the industry operates, unfortunately.”
A company is going to need performance metrics in place if it hopes its people are to produce work in a profitable way on an ongoing basis, he said.
“These performance metrics are a lot easier to set up than most people think, but most companies don’t have them. The difference between the companies that are making the double-digit profits and the industry average at one per cent is that everybody in the company understands what the production rates are. They understand what the estimated hours are. They understand how the job went afterwards. They understand estimated versus actual.”
Bradley asked his audience to ask themselves why customers choose their business, noting systems that are missing in a company has a lot to do with a customer’s perception of his experience from the time the telephone rings to the project’s completion and through to the time the warranty period ends, or the time the renewal period comes up on a landscape maintenance contract.
“The customer experience really has everything to do with your ability to produce a profit and succeed as a business. If we can’t make sure that our customers have a great experience from first call to completion, then we’ll never be successful.”
It’s not what makes a business unique that’s important, but what makes it uncommon, Bradley said. The way a customer is greeted on the telephone is going to have a significant impact as well as how the contractor and customer meet. Sitting down with the customer at the kitchen table is a good way to get the process started before all parties go outside to look at the project site.
“When I get out of my truck, I walk up to the front door. I’m scanning the house. I want to see the roofing materials. I want to see everything, but the reason I want to get to the kitchen table is because that’s my chance to start to be uncommon.”
Bradley said the approach provides him with some valuable education about the customer.
“I understand them before I start talking. That’s where you’re going to be uncommon. The way we handle the customer is the uncommon part. It’s the things you say and the things you do.”
A contractor will be uncommon based solely on his ability to deliver the customer experience. If the contractor wishes to be uncommon and successful and sell his work for more money than the bargain landscaper, the customer experience will be the only thing that makes him uncommon and the only thing that lands him work.