Acres Group focuses on hiring "self starters" and has a lower employee turnover rate than other similar-size firms.
Photos courtesy of Acres Group.
Like any other president of a landscaping company these days, James Schwantz, CEO of the Acres Group in Wauconda, Ill., is facing lots of challenges.
How does one poise a company emerging from a long recession? What is the best response to the Affordable Health Care Act? Is it time to acquire another company? Where does he want the company to be when he leaves it to the next generation in the Schwantz family?
President: Jim Schwantz
Headquarters: Wauconda, Ill., with satellite locations in Plainfield and Roselle
Markets: Chicago and its suburbs
Services: Landscape maintenance, landscape installation, design/build and snow removal
To be certain, over the years he has amassed the skills necessary to meet those challenges. Since 1983, when Schwantz started Acres Group from his garage and home, the company has experienced measured growth. Within a year of its start he had added four uniformed employees. Then came the development of company policies and procedures. Today, the company has about 700 employees. They work at three facilities and at two nurseries.
The Acres Group services townhouse associations that range from 40 units to several hundred, and it typically takes care of all of the associations' seasonal property needs, from lawn maintenance to snow removal. Of course, in serving the Chicago, northern Illinois market, snow and ice management is almost a given.
On its website, the company points out that in providing its snow and ice management services, it deploys more personnel and equipment than the city of Chicago does during weather occurrences. Snow services are sold three different ways: a seasonal contract for an agreed-upon price for the winter; a per-push basis of $1,000 each time the company plows; or an hourly basis.
"If you mix that up right, you're going to get through the winter OK," says Schwantz. "We're a landscaping business first and a snow-plowing business second. We just want to get through the winter, keep our customers happy and not go out of business."
The winter income pays for the 100 salaried employees retained during the winter as well as other business costs.
Since 1998, Acres Group has acquired eight companies, including one decorative paving firm.
Each acquisition was underscored by a strategy for increased market share, geographic expansion for faster customer response, more employees and/or more equipment. Its first acquisition of the R. Glass Landscape Company in 1998 doubled the company's staff, equipment and vehicle fleet, added more acreage and resulted in Acres Group becoming the largest independent landscape contractor in northern Illinois.
The Acres Group services townhouse associations that range from 40 units to several hundred units. It offers a full menu of seasonal property needs, everything from lawn maintenance to snow.
When you're buying a company, there are a couple of things you look at, he says. This includes a company with a strong staff or a company that is deeply rooted within a particular market location.
"Over the last four or five years, which is what I call the time when the world fell apart, the main reason for buying a company is we wanted their customers, and staffing was not as big of an issue, but today it is," says Schwantz.
"We strategically looked at competitors that we had a market share we wanted to stay in," he says. "We've not done it to expand our market. We've just stayed within our own market we've been in to enhance that."
When he buys a company, Schwantz retains about 30 percent of its staff, including the management.
"In a lot of cases, that's a very delicate situation," he says. "Not everybody likes the feeling of being bought."
The Acres Group is a diversified company that serves the Chicago region from three different facilities. Its experienced design/build division can handle big jobs.
How does he merge two different company cultures?
"First, you have to start with something that is at least close," he says. "You can't have two cultures that are too far apart. We've had our share of 'oops' moments there. We are looking for cultures that are similar to us. Then it's a lot of conversation and in some cases involves a signing bonus."
Schwantz is aware it takes more work to maintain market share in today's competitive, post-recession environment.
"We focus on doing what we say we're going to do and we do it at a fair price," he says. "It's a very competitive, tough industry today, although it's getting a little bit better."
His staff of 700 is what differentiates his company from others, Schwantz says. "We have a very low turnover of staff. We have people who have been here 20 years plus. They care about the customer's yard like it's their own backyard. I'm really lucky to have those kinds of people."
The turnover among the hourly employees is about 30 percent against the industry average of 50 percent, Schwantz says. The highest turnover occurs within the first 60 to 90 days.
Schwantz loves workers that he describes as self-starter, employees "you don't have to poke and prod and tell them what to do every minute of the day. We can go with some young kids out of school but they've got to be wanting to learn and do the job."
Acres Group employs about 175 H2B seasonal immigrant guest workers. "That program certainly has issues," Schwantz says. "We've got some concerns for the upcoming year. It possibly won't work for labor itself, but it will continue to work under the wage reviews that they're laying for foremen."
Like all companies with more than 50 employees, the Acres Group is carefully reviewing how the Affordable Health Care Act will affect it.
The company actively advertises and recruits to find good employees. It also offers bonuses to existing employees who refer and bring other employees that make it through the first week, typically the toughest week for new hires.
Acres Group maintains thousands of pieces of equipment and hundreds of tractors and trucks. Not only does the company service the equipment in-house to ASE-certified standards, but also has five traveling service trucks to make on-site equipment repairs and minimize production downtime.
The company is brand loyal to its equipment, favoring Toro because it is a national brand that has stood behind its product very well, Schwantz notes Also, working with a single manufacturer reduces the need to stock a bewildering array of different maintenance and replacement parts.
"As we bought some companies we wound up with a few different kinds of equipment, and we had opportunities to try them out. In most cases we've replaced that equipment with Toro equipment."
Of his four children, two work in the company and will run the company at some point.
The family succession process began years ago when Schwantz insisted both of his sons involved in Acres Group spend one week working in each of its 26 departments, including taking over for the company receptionist. But the time hasn't come yet to make the change. Schwantz continues to love the work and he doesn't plan on leaving the company anytime soon.
Navigating the AHCA
Health insurance is now the company's biggest challenge. Schwantz says the Affordable Health Care Act (AHCA) has become a moving target.
"This is changing very quickly and it's a very difficult situation. So that is our massive challenge."
To account for increases in healthcare expenditures due to the AHCA, more than a year ago Acres Group put a clause in its contracts indicating prices are subject to change due to government regulations.
"We've had very little pushback from it, but we could need 5 or 6 percent more to cover Obamacare," says Schwantz. "We're trying to protect ourselves and protect our customers by doing that."
Schwantz believes implementation of the AHCA has the potential to affect the future of the industry. With 50 employees being the "trigger point" for health care provisions, Schwantz predicts the industry will see the end of the "mega-company" in the landscape industry.
"Most companies would stop growing at the 50-employee or $4 million-in-revenue mark," he says. "I can't say if it's good or bad. There are an awful lot of companies in our industry that operate on a volume basis and continue to grow. If you are capped at a 50-employee size, you are no longer in the volume business, but you are in the profit business. It could really change the dynamics of the industry."
As for now, Schwantz continues to look for any opportunity to help his company continue to be successful.
"I don't see us much outside the Chicago market," he says. "We want to still be in this market, doing what we do best."
"We're a very fortunate company in that we came up from a one-truck operation to what it is today," he adds.
Carol Brzozowski is a freelance writer and a member of the Society of Environmental Journalists who lives and works in Coral Springs, Fla. Contact her at firstname.lastname@example.org.