Imagine a rowboat with just one oar. The harder you pull on the oar, the more you go around in circles. You don’t move forward and the scenery never changes. For the last 20 years, that was the story of Dave Rykbost and his landscape business, Dave’s Landscape Company, located near Boston, Massachusetts. Being the frugal New England Yankee that he is, Dave’s motto was, “If it’s not getting done right, I’ll do it myself.”
I remember sitting in his office during one winter snow storm. His dozen or so plow truck crews were short a driver or two. The storm was getting ahead of everyone and irate customers were bombarding the office telephone with some pretty colorful expletives. It was so bad that I thought the phone was going to melt.
Instead of staying in the office, taking calls and managing damage control, Dave decided to jump in a plow truck and join the fray. Like an orchestra without a conductor, no one was coordinating the crews. The chaos worsened and the telephone calls intensified.
How it works in the real world
More than 15 years ago, I wrote on these pages about an infamous 2004 fishing trip to Moosehead Lake, Maine, that I took with Dave and Mark Pendergast, a landscape contractor from Maine. In that article, I wrote about how Dave needed to build an effective middle management team. He never really did so and for the last 20 years, company growth and profits had been stagnant.
I’ve heard it from entrepreneurs that they get stuck at a certain amount of revenue and can’t seem to get beyond it. Dave was stuck at the $3 million mark. In last month’s article, I explained the five management levels that an entrepreneur goes through as he or she builds a company from zero to $5 million in revenue. A business owner has to reinvent his or her job description at each of the five levels. An individual has to transition from being a hands-on business owner working in the field to a manager of managers. Most people cannot do so. That’s why so few of green industry companies reach the $5 million revenue level.
Essentially, one grows a company to the level of their incompetence. You could call it the point of diminishing returns where growth causes more problems than profits. It’s like playing a sport at various levels. A baseball player may be great at the Little League, PONY league or even Minor League levels but they just don’t have the skill set to get to the Major Leagues. The solution may be more training, better coaching, more experience and so forth. Or it might be that the player in question might have reached, for whatever reason, the peak of his or her ability.
Dave hired and paired up with an old friend, Tom Hodsdon. Tom had previously owned landscape and irrigation companies and was familiar with Dave’s Landscape Company. Tom has lots of energy plus degrees in business administration and computer information systems. He’s also developed effective systems for running a green industry company. Dave and Tom formed a great team. While Tom is a visionary (big picture guy) who develops strategies, and builds teams to implement them; Dave provides strategic guidance along the way.
First, they replaced members of the management team with individuals who were receptive to new technology and positive changes.
Second, they created a paperless office, redefined the administrative function, began billing twice a month and simplified the chart of accounts.
Third, they developed an asset management strategy with set roll-over periods to replace trucks and equipment before they need extensive repairs. Fourth, outdated or underutilized assets were sold. And last, they developed an aggressive recruiting strategy and grew the production staff by 50%.
Did it work?
After many years of mediocre net profits, last year Dave’s Landscape Company had a 16% net profit margin. If you include assets that were sold, the net profit margin reached 20%. Accounts receivable have decreased considerably and morale (especially for Dave) has increased considerably. I’d say that the changes implemented worked quite well. Dave was smart enough to realize that his landscape company was stuck in the doldrums.
After many unsuccessful attempts to remedy the problem, it was the vision and energy of another entrepreneur that provided the impetus and momentum to get Dave and his landscape company unstuck.
Getting unstuck is usually accomplished by embracing new outside ideas, infusing oneself with external energy and thinking outside of the box. Like the rowboat with just one oar, going it alone is usually a recipe for going in circles. And chasing one’s tail does not make for being a successful green industry entrepreneur.
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