Can you recognize the signs that indicate you’ve grown too fast or that you’ve become too big? If you recognize them early enough, there’s plenty of time to take your foot off the business accelerator and regain control of your operation. If you don’t, there is the danger that your business, not you, will end up doing the driving.
Walker owner Sid Burcham recognized the signs five years ago. “At the time, I had been in business 10 years and was getting tired of trying to keep up,” he recalls. “I was routinely staying up until 2 or 3 a.m. watching the weather channel. Most mornings I would leave before my children got up and by the time I came home, they were already in bed. It was not unusual to go two or three days without seeing them at all.”
Looking back, Burcham, who owns Terra Vista Landscapes in Wichita, Kansas, says one of the reasons he kept growing his business was to be able to pay his key employees enough money so they would stay with him. Ironically, five years ago, his best employee left anyway to start up his own business. Instead of looking for another top employee, however, Burcham decided to downsize, and has never felt better about his operation. In five years, he went from having 14 employees to having just one.
He relates, “By downsizing, I was able to focus in tight on my market niche and keep my best customers. I was also able to take better care of my equipment, including my two Walker Mowers.”
Other Signs
Green industry consultant Marty Grunder points to other signs that your business may be out of control.
“One of the first signals that you may be getting too big, too fast is an increase in the number of unhappy customers,” says Grunder, who is president of Grunder Landscaping Co. and The Winner’s Circle, both located in Miamisburg, Ohio. As he points out, a fall-off in work quality, response time, or following up on customer requests are sure signs that something is amiss.
Char Kellogg, who with husband Kim operate Grasshopper Property Maintenance in Millersburg, Ohio, agrees. “When we were starting our fifth year in business, our only real competitor sold his equipment and accounts. He notified his customers just before the season started that he was going out of business, and they started calling us. We knew the extra work was a bit of a stretch for us, but hey... we were good!”
In response to the business boom, Grasshopper Property Maintenance purchased another Walker, a new truck and a new trailer. Char says they also hired bodies rather than team members, and took on a landscape job that was far too big for them.
“We couldn’t resist the temptation to do so because it was in a highly visible location,” she remembers. “Unfortunately, the customer was a late payer, and the cash flow crunch nearly did us in. To make matters worse, it rained, and rained, and rained, and we fell further behind in all areas. The quality of our service declined. It was the only year that we broke commitments to customers. It was a very humiliating and humbling experience.”
Failure to make money can be another sign of growing too fast, Grunder notes. Burcham, for example, says that since he downsized, his profit margins have gone up substantially. In his words, “Netting 35% of $100,000 is better than netting 8% of $300,000.”
Fourteen years ago, Rich McClure & Son Landscape in Bethel, Connecticut, employed 16 people and generated $1.3 million in annual revenue. “On one Monday, we deposited $114,000,” remembers Rich McClure. “On Wednesday of that same week, our checking account was overdrawn. That was a wake-up call for us, and we decided it was time to downsize.
“We paid $75,000 in insurance that year, our equipment was constantly broken, we had to do big jobs to make it worthwhile for us, and our cash flow was killing us. For the remainder of that year, we didn’t take any new work, and the following year we reorganized. Now, with four employees, we retain 33% of our annual gross. We’re more relaxed, all of our bills are paid, and life is so much easier.”
Learning to Say No
“You can’t be everything to everybody,” Sid Burcham relates. “Over the past five years, I’ve found my niche and I stay with it.” In other words, he has learned when to say no.
Char Kellogg and her husband learned several hard but valuable lessons from their experience, as well. Among them, they now measure their workload more carefully, and try to be up front with customers about what they are and are not capable of doing. Char adds, “We even turn down business now, even though it’s still always tempting to take on too much.”
As for Rich McClure, he says, “Since downsizing, we’ve been more selective about the kind of work we do, and we’re able to charge a higherend price for our services.”
Getting and Keeping Control
Grunder mentions more warning signs. One is an increase in employee turnover rate. Employee turnover in this industry is a given. Yet, keeping it under control and keeping employees relatively satisfied is nearly a full-time job in itself, he points out. When a business grows without the systems in place to train, reward, and promote employees, these same employees will leave.
Grasshopper Property Maintenance, for example, now has a mentoring program in place for new employees, and the owners work hard at developing systems (load sheets, reporting forms, etc.) to streamline the work and increase communication, efficiency and accountability.
“Think systems, systems, systems,” says Grunder. “With them, you have a fighting chance to grow successfully. Without them, your risk of failure increases dramatically.” He provides a couple of examples. “Too many landscape contractors fail to keep good enough records to know if they’re making money in the first place. If they keep records, the challenge, then, is knowing from month to month where they stand in respect to projections rather than waiting until yearend, when making any change is too late.”
Many company owners today are afraid to tell customers that they’re in business to make money. “No matter who you are, you can’t make money if your pricing isn’t right,” Grunder emphasizes. “Pricing problems, too, become pronounced as a company grows.”
Grunder even has a system to head off customer complaints and measure the level of satisfaction with his company’s service. As he points out, “If an increase in customer complaints is one indication of a ‘growing’ problem, then, communicating with customers and heading off those complaints is part of the solution. We routinely call customers after a job and ask them to participate in a four minute survey about our service. We log the survey responses into an Excel spreadsheet and track results. If, in any area, we see a trend that indicates our service is anything but ‘exceeding expectation,’ we know we have a situation that requires some immediate attention.”
Growth and becoming a big operator isn’t for everyone. At times, however, it may appear there is no alternative. When the phone keeps ringing and customers keep asking for more services, the natural response is to buy more equipment and hire more people. But successful growth can’t occur in a vacuum. Some contractors have the management skills and systems in place to handle growth, but others may not. If you’re one of the latter, knowing the warning signs that your business is getting out of control, and acting upon them, may spare you grief and possibly help save your business.
Warning Signs
Think you’re growing too fast or getting too big? Keep an eye out for these warning signs:
- Consistently working far too many hours
- Hardly ever spending quality time with your family
- Failure to make money; profit margins are shrinking
- Sudden increase in your employee turnover rate
- Increase in number of customer complaints
Site Search
