Getting lean in the green industry

In the landscape business, it’s tough to sit back and enjoy the panoramic view. As skilled technicians, many owners are so focused on the end product that they lose sight of inefficiencies in operations, waste in purchasing decisions and unsystematic paperwork. But in a weak economy, raising prices to compensate for lost profits is no longer the answer. “I think everyone of us has more profits to be realized within our cost structure,” says Andy Blanchford, founder, principal and general manager of Bozeman, Mont.-based Blanchford Landscape Contractors. “It’s sitting there, we just have to get it out and we can’t get it by adding top-line dollars. We get it by managing our costs.” These landscape businesses are turning to lean solutions to cut the fat and are experiencing profits they haven’t seen in years. Blanchford pruned his overhead in half; Rich Snook of Lakeview Lawn & Landscape restructured purchasing decisions to eliminate waste; and Chris Haase of Haase Landscape pitches in to trim labor costs.

“(Lean practices) will keep you here after the recession is over,” Haase says. What’s more, it’s positioning these landscape businesses to take advantage of improving markets once they arrive.

This month, Lawn & Landscape spoke to three firms to learn how they implemented lean practices to cut costs and ride out the storm.

Mind over matter
After digging deep into every aspect of his business, Rich Snook recognized a myriad of inefficiencies. He noticed a one-person crew was being sent out in a truck built for six; employees who were getting paid for four hours were only on the job site for two and there was a lot of waiting around while workers loaded their trucks each morning.  

“We’ve been in business 30 years and had a lot of the same employees in the same positions, and we really just learned to live with our dysfunction,” says the owner and vice president of Lakeview Lawn & Landscape in Canandaigua, N.Y.

But after working with coaching firm JP Horizons and taking its “Working Smarter” training challenge, Snook turned to a lean solution four years ago. He trimmed his operations – from the morning circuit to overhead to purchasing decisions – to  increase efficiency and profits. And though it’s an ongoing process, it’s already enabled the company to be more competitive with its pricing and show current customers and prospects more value for the same price.

“The biggest challenge has been to overcome the mindset that this is the way we’ve always done it,” he says. “The idea we keep in mind is the concept of ‘Be hard on the process and soft on the people.’ We want all of our people that are loyal and dedicated to stay with us, but we also want them to continue to improve and change with us.”

Snook first reviewed each team member’s contribution. He realized the organization was top-heavy with several employees in non-revenue generating positions. So, without eliminating any personnel, he restructured the organization chart and moved the majority of these employees into positions that bring in cash.

“It was a hard transition for a lot of people, but our goal is to keep people employed and stay profitable,” Snook says. “Some people haven’t made it through; they decided it wasn’t the best fit for them.

“It’s allowed us to find some new people that have brought a lot of energy and excitement to our organization.”

He also visited equipment damage and repairs. With more than 100 employees, it was costing Lakeview tens of thousands of dollars each year.

Snook implemented a new procedure where each employee is required to sign an affidavit acknowledging the value of equipment and agreeing if something happens to it beyond normal wear and tear, that person is financially responsible. In addition, Snook took a look at purchasing decisions. First, he implemented a need-versus-want policy when it comes to buying equipment and supplies. Then, instead of allowing its vendors to charge top dollar, Snook enforced new regulations where employees are required to gather three prices before making purchasing decisions on items more than $500.

Lastly, he made several improvements in operations and production. To eliminate any waiting time during the morning circuit, workers now load their trucks on a staggered schedule the afternoon before a job. In addition, he switched to four 10-hour days, instead of five eight-hour days, which increased the time on-site and decreased travel time and fuel usage. “For us, identifying a problem and solving it as quickly as we can has been our biggest lesson learned,” Snook says. “Once we recognize inefficiency, we’ve got to move forward really quickly with it otherwise it lingers out there and festers.”

Working smarter
Andy Blanchford implemented lean solutions three years ago and is experiencing the highest profits he’s seen in the last five to six years.

“When things went sideways in the economy, this whole lean idea become less theoretical and more about this is what we have to do,” says Blanchford, the founder, principal and general manager of Blanchford Landscape Contractors. “It took the pain to get into that mindset.”

The Bozeman, Mont.-based landscape business used to operate at $1.5 million in volume with up to 40 people each year.

He’s now running with 17 people on $1 million in revenue. 

But it wasn’t always this picturesque. Inside, his office staff wasn’t utilizing software to its fullest capacity, doubling the time to complete paperwork. And outside, Blanchford’s four- to five-man crews were inefficient due to the high demand for customized jobs. Even though Blanchford was pulling in big gigs that paid top dollar, the business wasn’t profitable during its largest volume years.

Blanchford turned to lean solutions both inside and out. He replaced his two-person office staff with one employee dedicated to maximizing the software to streamline paperwork. He also eliminated all of the year-round salary positions.

“It was like a parasite on my company and it was going to eat me alive,” Blanchford says. “Part of the reason for that is the economy and part of it is the climate we live in. We have about a seven-month season.”

He then pared down his crews to two people each because he realized if they got any larger, someone had to be in charge of managing those workers. In fact, he discovered for each person more than two, it took 20 percent of a manager’s time away from the actual labor on-site. If a larger job is booked, he simply scales up by assigning another crew to the job.

Blanchford is now saving money on smaller trucks and fuel costs. He also has increased the quality of his crews with more dedicated and experienced workers and, as a result, his turnover has decreased.

In addition, Blanchford had to streamline loading equipment on the trucks due to the smaller crew size. He began storing smaller tools, such as shovels and rakes, on the trucks. At the end of the day, each crew is responsible for these tools, so the next person to use the truck can count on that equipment. He also implemented a tool-checkout system for the more expensive equipment, such as gas-powered tools, that are not stored on the truck. 

Overall, it was many small adjustments that added up to big dollars.

“I think we’re in a good place, but I think there’s a lot more we can do,” he says.

Helping hands
Chris Haase admits he was spoiled over the years. He had a guy washing his truck; another worker to wash the floors and windows; and someone else to mow the lawn at his office. But when the economy went south, he finished those tasks himself.

“It’s getting to know your business again and getting comfortable with your business. It’s you running the business and not the business running you,” says Haase, the owner and vice president of Haase Landscape in Spokane, Wash. Two years ago, Haase and his father, Clyde Haase, were forced to make abrupt changes. The duo put together a game plan and trimmed the edges from top to bottom – from limiting garbage services to decreasing fuel consumption to eliminating positions.

And in 2010, Haase Landscape managed the same volume as 2009 with half the people and experienced its most profitable year to date. 

 “Every day I find out new things: How to save money, how we’re spending money,” he says. “I’ve learned how to survive in a weak economy, I’ll tell you that.”

Because Haase eliminated positions that weren’t necessary in a weak economy, such as a receptionist, yard worker and janitor, key employees were forced to take on dual roles.

The company went from one manager for each division – construction and maintenance – to one manager for both divisions. The bookkeeper now has taken on more data-entry responsibility; the fleet manager is now responsible for loading and fueling trucks and all employees are expected to answer the phone.

Haase also streamlined operations and quality control. Employees are held accountable for routing to-and-from job sites, and the company tries to sell in areas the crews are already working.

With small improvements, Haase is seeing big results. The company’s net profit hit 10 percent last year, a number Haase has never experienced since he joined the family business in 1989, and he hopes to see it again this year. 

“We keep focused on that bottom line, and that’s your profits,” Haase says. “My goal is to see that number on the bottom grow.”

Lyndsey Frey is a freelance writer based in Cleveland.