Downturn to domination

In 2007, “everything was collapsing,” says Rudy Larsen, CEO of Lawn Butler in Centerville, Utah, of the economy. But while talking to potential customers, they beefed about getting landscape guys to call them back or deliver bids. They told him, “We can’t get anyone to do what they said they were going to do.”

Larsen thought, “I can do that.”

“There were enough landscape companies out there that were not concerned about taking care of their customers,” he says, jumping ahead to today and his $18-million firm, which has grown an average of 57% every year during the last decade.

Larsen started his business that year with his wife, Jena. Then, Larsen was fresh out of high school and determined to grow his mowing side gig into a legitimate, profitable business.

Larsen maxed out credit cards, purposely broke a bank covenant, barely made payroll and questioned whether he should be in this business. He hired the wrong people, completed jobs that weren’t profitable and stayed up worrying if he would make payroll. In other words, his experience is “like any true entrepreneurial story” in many ways, he says.

But he focused. And, he refocused, recognizing that “the single push on the flywheel” that his favorite author Jim Collins writes about in Good to Great, was adopting a guiding principle – this idea of a family culture. Certainly, labor keeps most owners in the landscape industry up at night. But for Larsen, his concern is about “making sure people are happy.”

“I don’t want people to feel left out or like they are not important,” he says. “If I lose my people, I lose my business.”

Here is how he grew Lawn Butler to be attractive enough to sell and continue to grow.

“We weren’t making any money. We didn’t know our pricing structure, we didn’t know how to bid. But I had a desire to take care of customers, so we were growing.” Rudy Larsen, CEO of Lawn Butler

The first five years.

“We weren’t making any money,” Larsen says. “We didn’t know our pricing structure, we didn’t know how to bid. But I had a desire to take care of customers, so we were growing.”

Larsen can count a good 15 times when Lawn Butler should have gone out of business.

He kept driving.

He kept thinking, too.

“I said to myself, ‘I’m going to make the decision right now to never consider quitting, ever again,'” he says. “That was a moment of ‘passing through,’ and once I passed through, I never went through that again. I was determined to make my business work and to stop worrying about whether I should or shouldn’t.”

This was 2010, and the business was only three years old. The moment changed Larsen’s mindset. With a full-boar attitude, Lawn Butler grew from $30,000 in 2007 to $2.5 million in 2012.

Getting there was a grind. The company began to dig into its bidding process and finetune pricing. In 2009, Larsen’s wife who was working as a dental hygienist and doing the books off-hours – came into the business full-time to focus on production processes. She also began focusing on team-building.

Jena says, “Rudy is good at the big picture and the vision, and I’m good at the details of how to make his vision happen."

Organizing field labor and keeping an eye on expenses positioned Lawn Butler to support its growing customer base. The team had grown to about 20 with five trucks in the fleet by 2011 when Dario Benitez joined the company. He had been working as a junior accountant and ran into his high school friend – Larsen – only to learn his buddy was still in the landscaping business. “I told him I was contemplating a career change and he told me about his business and the opportunity,” Benitez says.

At Lawn Butler, there is a formal Culture of Family philosophy, and though it wasn’t written down in a core values format at that time, Larsen had been operating that way since the beginning. It was just in a more casual way. “Rudy painted this picture and shared the goals he had for the business, and knowing him, I trusted that. Whenever he says he will do something, he accomplishes it. So, that is why I made the leap,” Benitez recalls.

Benitez came on board as operations manager and soon evolved into an account manager role, focused on sales as Lawn Butler aimed to increase its commercial maintenance business.

Today, Benitez manages a team of 12 account managers and two estimators as vice president of sales. And, Lawn Butler is primarily commercial maintenance, servicing retail sites, HOAs, commercial offices and industrial facilities. In ramp-up mode, Larsen recognized how much capital his business required to keep up with growth.

“Free cash flow is a great way to grow, and a lot of businesses do that,” he says. “There are plenty of articles out there about, ‘Why I never took out a truck loan,’ or ‘Why I have no debt.’ It’s slower and safer to grow with cash. But I can’t go slow. I can’t.”

The second five years.

Larsen wanted to grow fast. “I wanted to build something timely,” he says. He and Jena considered bringing on a minority investor, but losing control of the business was a concern. “A lot of investors have a horizon,” he says. “They want to invest for five years, and after that, they want to sell and get their money back. You might be able to pick your first investor, but you likely will not be able to pick the second one. You may hate their guts, but you’re stuck.”

With private equity or an outside investor, “You share the risk – but you share the returns,” Larsen says.

“We think we can do this on our own,” the Larsens concluded.

Well, that is – they could do it with the bank. Deciding that cash-only was too slow and an outside investor would be too overbearing, the only reasonable third option was debt.

“Debt is an accelerator – for better and for worse,” Larsen says. “We had to get good at managing the business and growing our company because with debt, you’re on the hook. You have to perform and deliver.”

Lawn Butler did just that.

Larsen describes the company’s financial approach as “offensive,” so banks never had to ask him to provide statements or stay compliant. “We approached the banks and negotiated lines of credit – and we approached them with the perspective that we wanted to continue to grow,” Larsen says.

Larsen fine-tuned Lawn Butler’s financial best practices, committing to detailed month-end reporting and meetings with managers to discuss performance. “Our average growth over the last 10 years has been 57%, so we had to produce 57% more working capital every year and service that debt,” he explains, adding that, “if you don’t know where you are financially, how can you make good decisions when it comes to debt?”

There was a point when Lawn Butler broke a debt covenant. “And, we were the first ones to tell the bank we broke it,” Larsen says. The company purchased a bunch of equipment from a different bank than the one that held its existing credit lines. “So, we had two banks,” he continues. “We went to the second bank and said, ‘We are going to break this covenant for about 90 days. Here are our projections. Here is what we are doing. We want you to know we are in total control of the situation and we are making a good decision.’”

“Every one of our processes has been developed because we learned the hard way. We started the business from nothing, and whenever we encountered a roadblock, we solved it by creating a process to bypass that situation.” Jena Larsen, Lawn Butler co-founder

Within 90 days, Lawn Butler went from breaking that covenant to dropping its debt to far below the required 3-to-1 ratio. After taking on the second loan, the company’s debt ratio was 5-to-1, higher than allowed. Post-90 days, its debt ratio was 1.8-to-1. The company had cut its debt to one-third of the total requirement.

Businesses need to think of debt as a responsibility to generate income, he says. “We weren’t just adding debt, we could service it with our customers because we understood that every customer generates X dollars, and every bit of debt is Y,” Larsen says. “(When) we increased our customer base, the X would outweigh the Y and we would be compliant.”

To further manage processes, Lawn Butler adopted Enterprise Resource Planning (ERP) software. “We started tracking everything so we could review production data and performance numbers,” Larsen says.

Jena adds, “Every one of our processes has been developed because we learned the hard way. We started the business from nothing, and whenever we encountered a roadblock, we solved it by creating a process to bypass that situation.”

Larsen calls this five-year period of time in the business, “the years when we started making money."

Meanwhile, people were always central to Lawn Butler’s operation – and just as the company evolved its financial and production processes, it also paid close attention to how people were given opportunities to thrive.

As Vice President of Operations Clayton Phillips, who joined the team in 2011, describes: “Because we are like a family, we can be more open and direct with each other. As managers, we focus on a ‘sandwich system,’ which is to compliment something they are doing well, address the issues we need to talk about, and remind them we support them and want to see them succeed.”

Developing Culture of Family is a work in progress. “We always have to adapt and make changes as we grow,” Phillips says.

All about people.

The biggest change Larsen names is Lawn Butler’s intentional focus on people and doing what’s right for the team – even if that means doing things that would make a typical HR manager cringe.

Case in point: Lawn Butler does not have a PTO policy and never has.

“Our policy is, you take the time you need for your family and we expect you to show up and work and create a successful company – to do your part and carry your weight,” Larsen says. “And if you don’t, you won’t work here.”

To determine whether employees are “carrying their weight,” each crew member and manager is assigned a production goal that is measured monthly, quarterly and annually through the ERP system. If a team member is not meeting his or her goal, a manager will hold a meeting to find out what’s going on. “Sometimes, they have a good reason why – and we ask, ‘How can we help?’” Larsen says.

You’ll always have people who abuse freedom. Lawn Butler has a “slow, managed exit process” in those cases, where the company gives a team member who is underperforming a few chances to meet goals. Because production goals are based on specific job production times that have been tested and tweaked, they are realistic.

By managing performance and giving people the time they need when they need it, Larsen says 90% of the time team members make the right decisions on their own. “You empower people when you say, ‘I trust you to make the right decision.’”

Operating in Utah, where winters can demand long hours through the night for snow and ice removal, Larsen also expects that employees will give to the company. “We expect you to work with the company if we need you and it’s snowing at 2 a.m.,” Larsen says. “But when you need that same courtesy when it comes to time off, we will be there for you as well.”

Another key component of Lawn Butler’s Culture of Family philosophy is treating employees the same as customers. Twice a year, the company gives customers gifts like calendars or mugs, pens. “We decided we were going to buy the same things for our employees – our team is just as important as our customers,” Larsen says.

Every year, Lawn Butler hosts a family barbecue, a company swim party and multiple team-building events – axe-throwing, going to the movies, etc. Employees look forward to the annual holiday party. “These little things quantify into something much bigger,” Larsen says. “We hope it shows people we care about them – we genuinely care about them.”

This culture goes a long way toward attracting labor in a tough market. Specifically, Lawn Butler shows invested, hard-working individuals who are H-2B workers or interested in a work visa that the company cares by sponsoring their journey toward citizenship. It costs about $10,000 per permanent resident card. They move to the U.S. with their families and essentially take a loan from Lawn Butler to pay back some of the initial housing and setup expenses over time.

“It’s a long-term investment,” Larsen says of this project and recruiting, in general.

The last three years.

Just as wise debt is a growth accelerator for Lawn Butler, so is smart technology. After starting Smart Rain in 2012, an irrigation platform to help scale the company’s remote irrigation management business, Larsen began exploring other tech options.

Recently, Lawn Butler introduced a custom-built mobile app. It tracks photos and infield work, progress on jobs and prevents “time theft.” Previously, the company relied on paper time sheets that crewmembers filled out. The pay-per-day sheet had a significant human error risk, though. If an employee forgot to fill it out, he or she would not get paid. In addition, there was a risk to the business, too, if a team member wasn’t completely accurate since Lawn Butler is so focused on managing production time.

“When we implemented the mobile tracking app, we figured our guys would hate it, but they came back and said, ‘We like the app better!’” Larsen says. “I asked, ‘Why?’ They said, ‘We don’t have to spend time filling out paper day sheets.’ And, they are getting paid like clockwork because the recording is happening like clockwork.”

As for in-field technology, Lawn Butler invested $100,000 in a pilot robotics program and hired a dedicated employee to manage it. The company has a few commercial-grade mowers that also perform sidewalk clearing in winter. So far, customers are receptive.

“Everything we have figured from a dollar-savings perspective tells us this makes sense, and we are always looking at ways to reduce production times,” Larsen says. “We are looking at how we might be able to replace an individual for a task like mowing and use that person for another aspect of the business that generates more profit.”

All the hard worked paid off for the Larsens and their employees and has set the company up for even more growth. In April of 2020, Lawn Butler was acquired by Outworx Group, a facility services management company that’s part of the New York-based Mill Point Capital portfolio. Larsen will still be involved with Lawn Butler and has no plans of leaving anytime soon.

“I plan to stay engaged in helping them grow my company and their company into a successful industry leader,” he says. “I chose to partner with them because I felt at the time, and still do, that together we are much better than we are apart. We can do more and accomplish more in a shorter time then we could apart.”