Imagine a football team where the owner, in order to save money, was also the head coach, the offensive coordinator, the defensive coordinator, the special teams coach, the equipment manager and the head groundskeeper. On any given Sunday morning, you’d find him mowing and striping the field. Now, consider green industry entrepreneurs. My personal (anecdotal) statistics tell me the following:
- About 2% of all green industry companies grow to $5 million or more in annual revenue.
- Approximately 12% make it to $1 million or more.
- Roughly 75% of all green industry companies have an annual revenue of $500,000 or less.
The question that I’ve wrestled with for almost 40 years of working with green industry companies is, “What systems, people and processes need to be in place for a company to grow through these various levels?” Here’s my analysis:
How it works in the real world
Level 1: A new business owner usually starts out running a small two-or three-person install crew, or a four-or five-person maintenance crew, while actually working in the field. He or she sells the work, directly works with and manages field labor, runs the office and does the accounting. This size operation usually generates about $300,000 in annual sales.
Level 2: To get to the next level of $500,000 to $600,000 in annual sales, an owner has to hire crew leaders to run the crews. He or she should also hire (at a minimum) a part-time office assistant. This allows the entrepreneur to sell and manage more work. At this level, the owner is managing an office person and two to three crew leaders.
Level 3: To achieve $1 million in annual sales, an owner usually needs a full-time office manager who runs the office and does the bookkeeping. Additional crew leaders are also hired and put into place. It’s at this level that the owner begins to hire and lead managers who, in turn, manage crew leaders who manage the field labor that performs the jobs.
Level 4: Once competent managers are put into place for all divisions, it’s time to “put-the-pedal-to-the-metal,” so to speak. This will get a company to about the $4 million mark. Of course, administrative staff need to be added as well. It’s at this level that the owner needs to master working with managers for the field, office, marketing and so forth.
Level 5: To get to Level 5 — the 2% level — an entrepreneur needs to solidify his or her management team and make some key additions to it. It’s around Level 4 that a company should start thinking about hiring a controller. This should be someone with a strong accounting and information technology (IT) background. The other important hire to consider at Level 4 is a human resources (HR) professional.
Once a green industry company reaches Level 5, its structure can vary dramatically. Since about 98% of all green industry companies fall below this category, I’ll focus on them.
The mindset of a Green Industry entrepreneur (CEO)
Green industry entrepreneurs (I’ll call them CEOs) within a capitalistic framework think very much alike. First, they constantly think in terms of threats and opportunities. What opportunities might they pursue in order to increase their wealth? And what situations might jeopardize such pursuits and/or might threaten their existing accumulated wealth? Once an opportunity is decided upon, next the CEO needs to build a team as described above to pursue it. Simultaneously (and as the team grows), the CEO has to implement systems to direct and control the chaos. Otherwise, the organization will be like a raging river above flood stage — totally out of control. In addition to all of this, it’s important that the CEO networks like crazy and builds an external team to include an attorney, CPA, suppliers, vendors, financial experts and so forth.
To grow through these levels, whether the goal is to reach Level 5 or not, the CEO has to think a certain way. An effective green industry CEO has to be somewhat schizophrenic, so to speak. He or she has to constantly be thinking strategically (the big picture) while building a team and the systems to handle all of the minutia and chaos (the little picture). Most people cannot handle this amount of craziness and chaos. This is also one of the reasons why so few green industry companies make it to Level 5 and beyond.
Conclusion
As you enter 2023 and pursue the opportunities while considering the threats (recession, labor issues, health issues, to name a few) that it might bring your way, ask yourselves these questions: What jobs do you need to delegate to a competent manager or field person? What team members do you need to hire and put in place? What systems does your team need to perform their jobs more efficiently?
If you and your team are going to flourish and have a winning season in 2023, it’s important that you think about how you think — or more importantly — how you don’t think.
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