Ignoring the Fork in the Road

Focus on standardization – that was Mike Rorie’s main advice to landscape contractors logging in to Marty Grunder’s early September Webinar titled “Interview with Mike Rorie.”

This  means contractors should focus their business models – a strategy that worked for Rorie, who started Cincinnati-based Ground Masters three decades ago, eschewing a full-service model to focus on commercial maintenance and growing the company to $29 million before selling it to The Brickman Group in 2006. Today, Rorie is a vice president of The Brickman Group.

Rorie gave the example of McDonalds – a comparison many in the industry have made of The Brickman Group. Everywhere you see the golden arches, the restaurant is the same. They’re in similar locations, make the same food, and, in the end, make a lot of money. It’s a cookie-cutter approach, but standardizing the business model means owners don’t have to worry about day-to-day operations and can focus on what they want: Making more money.

Define your Model
The first step is to define your business model, Rorie suggests. Are you going to compete with large, national chains? Will you focus on hardscapes and pond installations? Commercial maintenance?

“I never struggled with the intrigue you could get yourself into, relative to how large our industry is,” Rorie says. Rather, he picked a segment – commercial maintenance – and did it over and over and over again. And while some owners enjoy, and find success, running more, smaller divisions or segments, he found it harder to get what he calls “compound leverage.”

“If you’re going to perfect something and be good at it, there’s probably enough of it to do a $5, $7, $8 million business,” he says, sharing an example. “Shell Oil Co. isn’t trying to do 50 things. They’re doing oil.”

In the Beginning
But, when Rorie started out, he was a multiple service company. His crews were mowing grass at homes, plowing snow and cutting firewood. Then, in the early 1980s, he got into commercial maintenance. He realized, after a few years of doing both, that he couldn’t grow like he wanted if he didn’t focus. So he sold the residential business and became solely a commercial landscape company.

“It was tough in the sense that we had to replace that income,” he says. “For a couple of years, our sales didn’t increase. It took a while to hit breakeven and start growing in that segment.

“We gained leverage through market share,” he adds. “‘I don’t care what we do, let’s just do a lot of it,’ has always been my philosophy. If we’re going to be hardscapers, let’s bid every wall and paver job we can in the city and work for every landscaper in town who doesn’t want to keep that work in house.”

Business owners are very creative people, Rorie says, and are interested in new projects and expanding their companies. But, too often, they get distracted by too many ideas and flounder. “Does that put another branch on the tree or another fork in the road?” he asks. “We’re never going to get where we want to go if we keep venturing off the main road.”

Rorie stresses the concept of critical mass – the idea that a business can earn more revenue than it spends in overhead. The faster a company can reach critical mass, the better.

Say a company does $800,000 in revenue, but it’s spread out over eight segments. It’s more difficult to convert that total revenue to profits.

“Who’s got ... the variety of equipment and the production expertise?” he asks. “You’re never going to hit critical mass in any of those categories.”

By focusing on one service area, a company can standardize the equipment it buys, the prices it charges – even the employees it hires – and not spend the bulk of its revenue on overhead.

Which Means?
Companies need to know, Rorie says, how much revenue a landscaping truck or a paver crew or an irrigation repair van or a salesman brings in. “Anybody in business for themselves has an ego – we want to win, we’re proud and we’re willing to do things the ordinary bear isn’t,” he says. “I want to see that scorecard and see winning results on it.”

The author is associate editor of Lawn & Landscape. Reach him at cbowen@gie.net.
 

Learn more about Rorie’s tips on networking, planning for next year and what book you should read at www.lawnandlandscape.com/webextras.