Got Growing Pains?
As a business develops, growing pains are inevitable. In fact, to actually grow a business, a landscape business owner needs more than technical landscape knowledge. “You need to know business,” stresses Ken Thomas, who spent his career building a landscape design/build business and who now operates Envisor Consulting to help others build their landscape companies. He presented four key growing pains landscape contractors experience and how they can overcome them during his Aug. 10 talk, “Start Clean Finish Clean” at the National Association of Landscape Professionals’ DBI Symposium.
No. 1: Be a business person, not a technician
As a young landscaper, Thomas attended a conference and found that the older landscape business owners there weren’t talking about how to grade soil or plant flowers, but rather about profit and loss statements, return on investment, gross profit margins, “and other things I didn’t really think about at that time,” he recalls. “I realized that morning that if I was ever going to achieve my life and business career goals, I was going to have spend less time focusing on being a great landscape technician and more time on being a great landscape business person.”
Thomas cited “The E Myth: Why Most Businesses Don’t Work and What To Do About It” by Michael Gerber as a particularly influential book for him. He also hired consultants, and learned from those experienced on the business side of the industry to build his business.
No. 2: Start clean, finish clean
When the landscape construction business is good, it’s really good—getting to build great projects, making clients happy, winning awards, making good money. “But when it’s bad, it’s horrid!” he adds, pointing out some of the challenges: having to constantly sell new jobs, dealing with spikes and lulls in business, the need for expensive equipment and craftsmen to get jobs done.
As a result, Thomas came up with the “Start Clean, Finish Clean” approach—a series of processes he adopted in his business for overcoming these types of challenges.
Businesses go through a life cycle that’s very similar to that experienced by people: start-up, growth, adolescence, maturity, succession or decline. “But unlike with people, it doesn’t happen naturally for businesses; you have to do it intentionally,” he explains.
The goal for those seeking to grow their companies is to reach maturity. “That is what people envision and dream about when things run smoothly,” Thomas says. “But you have to go through adolescence first; you just don’t want to stay there long.”
In business, that awkward adolescent stage is the same it is with people. “You’re not small anymore, but you’re not quite grown-up; you’ve got a lot of pimples and problems,” he says.
A landscape contractor can tell if his or her business is in adolescence if “you have more work but you aren’t making any more money, people are running around every day like their hair’s on fire, you’re afraid of getting any more work because you don’t know how you’ll do it, and you actually do work that you never bill for but you never actually realize that you never billed for it,” Thomas describes. “Basically, it’s chaos.”
This prompted a discussion from many landscape company owners at the event, who lamented that they often felt their businesses were stuck in the adolescent stage. “Unfortunately, I’ve seen companies that have been in adolescence for 20 years,” Thomas says. “And even very large companies can be in adolescence, which means a lot of bad things can happen.”
No. 3: Good systems create predictable outcomes
Oftentimes, the way businesses choose to respond to adolescent chaos is to hire more people. “But you can’t hire your way out of chaos—you need processes,” Thomas says, stressing that “good systems create predictable outcomes.” That means figuring out how to do one job the right way, and then doing every job the right way, “like an assembly line,” he says.
Every design/build job has six steps, or “buckets,” says Thomas: sell, design, estimate, sold, work-in-progress, job done. “If you can take all of your tasks and dump them into one of these buckets, that would be a good way to start the organizational process,” he advises.
Another important step is to build the right team. One thing Thomas realized growing his own business was that as the company owner he had to “get off of the sales cycle.” “If you are the one constantly out selling, you’re not going to have time to work on developing business processes,” Thomas says. Rather, the business owner needs to orchestrate and hire a specialized sales person or team.
A company also needs a standardized estimating tool that everyone uses. “Most of the profit on a given job is made before you ever get there through sound estimating and pricing,” Thomas explains. “For every plant you put in the ground, for every item you produce, there should be a labor-hour that is associated with that task. And if you do the estimating right, it should give production everything they need to budget the hours and get the job set up and produced. And it should also give accounting everything they need to set the job up once it’s sold and be able to track costs against it and provide a job cost report in the end.”
The good news is that actually building jobs is one of the easiest parts of the landscape construction business – once that side of the business is set up properly. He provided some examples of processes—or company protocol—that have proven successful. “We believe that operations owns the schedule—not sales,” he says. “In other words, the person selling the job shouldn’t be setting timeframes, completion dates, etc.—that needs to be done by the department that will be doing the work. Conversely, if a client wants to make a change during construction, that should be sent back to the sales department, which has the expertise to determine what the difference in cost will be.”
No. 4: Avoid trying to do too much
One pitfall for many businesses is trying to do too much. “You have to define your menu—what you do,” advises Thomas. “That means determining what jobs to perform versus subcontract. If you can’t keep a crew busy year-round, subcontracting that service makes sense. If you do sub work out, because the subcontractor represents you, you need to give them not only the details of the project but also a description of how you expect them to act on the jobsite. I also tell clients when I’m going to sub out an aspect of a project with the explanation that the subcontractor can do that particular work faster and cheaper than I can.”
When creating processes for your company, including a process for managing success is also important—whether that’s in terms of customer satisfaction, profitability, etc., Thomas says. He showed off a very thick binder of the processes and systems he created for his own business in order to make the point that this is not easy or quick work.
“It can take years to get a company organized and through adolescence,” Thomas says. “While each company’s processes might look a little different, the desired outcome for every business is roughly the same: extremely satisfied customers, happy employees and profitable jobs.”