LESSONS LEARNED: Back on Track

As if losing $80,000 a year wasn’t enough, the tree care division of Richard Bare’s $4-million company, Arbor-Nomics Turf, fell on even harder times when a series of workers’ compensation claims threatened to bankrupt the business he’s owned since 1980. The trouble started when an injured employee disobeyed instructions to avoid physical activity and only supervise jobs.

The employee didn’t follow orders and was seriously injured a second time. After the incident, Arbor-Nomics’ insurance provider dropped the Norcross, Ga.-based company from its plan, forcing Bare to find new coverage. Unfortunately for Bare, the accidents meant more than simply finding a new insurance company. “They said not only are you going to have the tree service in this high-risk category, but they were going to pull the turf side into it, which was a multimillion-dollar service, and it was going to bankrupt it,” Bare says.

Bare had to act fast. So in July of 2003, he sold the $1-million tree care business to the division’s manager and salvaged the turf side of the company. Since then, Bare, 57, says he’s learned some tough lessons about business expansion and employee management.

What are you doing now to protect your business in the future in case this were to happen again? We’re being very careful about what new businesses we get into, if any. I think with entrepreneurs like myself you have to accept the fact that life is going to be kind of boring. You have to find outside interests to keep you occupied. I also think it’s very important to seek mentoring from people who have been in business for a long time. And you have to listen to them because a lot of the guys who were mentoring me told me that in no uncertain terms do you want to go into the tree service. It’s a completely different ballgame, and I ignored them and did it anyway.

If you had to do it all over again, is there anything you would have done differently with the tree care business to make it successful? I would have been more hands-on. I think when starting something like a tree service the owner has to be involved. And when you get too old, you don’t feel like going out and being in the field. And it’s maybe not even being too old – I think you become spoiled. You’d rather pay somebody to do it, but when you pay somebody to do it, it’s rare that it will be done the way you would do it.

So with the turf side of the business remaining, are you now more hands-on than before? I think when I was away nurturing the tree service along, there were a lot of things falling apart on the turfgrass side with me not being around. For instance, we got away from doing background checks and credit checks when we hire employees. And when I got back here, I was wondering how could that happen? But people forget, they hurry and they need somebody, so they grab them. If I were involved with it, because I realize the risk, I would have done more planning. It takes teams to run things, and when the attention of one of those teams is diverted away, that team is going to suffer.

So are you getting out in the field more now than before? Yes. I’m more hands-on. Our turfgrass building is in a separate location, so I wasn’t going over there that much, and now I’m going over there all of the time – checking on things, making personnel changes and such. I’ve even had employees say, ‘Welcome back. We really missed you.’

Have you implemented any type of safety policies since the incident with the last employee? Yes, for instance, we had about a $50,000 fine from OSHA, and then we got an attorney who got it reduced down to about $8,000. Now, every employee we hire has mandatory state training on a forklift. So we are now much more aware of things like OSHA and other agencies like that and what they can do to you. So I think it’s changed our view toward safety issues for the turfgrass side.

How do you handle injured employees now? Do you allow them near the worksite? We had a lot of guys on the tree side, especially, and they were getting injured because they wanted to be like a He-Man. They didn’t say anything and weeks would go by before they let us know they badly hurt their back and that they practically can’t walk. And we weren’t that religious about getting after them about that, but now we’re very adamant that if you’re injured, we need to know about it immediately. So we’ve tightened down on that because we’ve had some workers’ compensation claims where we lost the hearing because we didn’t know what was going on. And it’s a culture that’s created at the company. If you have a laissez-faire attitude toward workers’ compensation accidents, your guys will make it even worse by not letting you know what’s going on. But if you take a real tough stance about it, then they don’t want to cover it up.

I understand that you have diversified into different businesses outside of the landscape industry. You’ve said it’s better to expand your current services than to be “multifaceted.” Why do you think it’s important to stay focused on the landscape business? You just don’t know what you’re doing in another business. Today, if you go into another business, there’s some guy over there with a high I.Q. and excellent business savvy on how to run that particular business, and you’re going to have to compete with him. Your expertise is in turf and chemicals and tree and shrub maintenance, and you may not know anything about running lawn mowers and doing commercial maintenance, and these businesses have changed so much over the years that you couldn’t have kept up with it. It takes a very unusual individual to be able to branch out and to get into other phases of the green industry.

Several years ago you said you flirted with bankruptcy and that one of the lessons you learned from that experience was to not chase after the big accounts. Does that still hold true? We have a couple of large accounts, but we are a multimillion-dollar firm, and if they were to cancel us, we wouldn’t notice it that much. But let’s say we got a contract that was $1 million a year, I wouldn’t take it because they say you shouldn’t take on accounts that are more than 10 percent of your gross sales. So if you’re doing $3 million, you don’t want an account that’s more than $300,000 a year because once you build up your overhead to handle that business, when they cancel, you’re out that money. It isn’t even canceling so much, but what if they go bankrupt and they can’t pay their bill and they owe you $100,000? That’s the problem that people get into – they don’t have that cash coming in and they’re finished. I love having residential accounts because if Mrs. Smith cancels, yeah I’m unhappy, but I’m out $250 a year, and I’m not going to even notice it. Our cancellation rate is about 5 percent, and we hardly notice it.

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Now that you’ve sold the tree care business, what are your long-term goals for the company? If we keep growing at 15 percent a year in the next 10 years we’ll be at $11 million. If somebody offered me a decent amount of money, I’m sure I’d have to look at selling the business, too. My dad always said that when you have a company like this with almost 9,000 clients, if you sell it and you’re not real careful with your investments, you can lose everything. But if you have that clientele and you keep making them happy and you’re making a nice salary, sometimes you’re better off keeping the business and keeping the clientele.