Gaining an edge

In July 2008, John Rennels almost missed payroll. He had just paid off his $37,000 long-term debt, and was still running his growing business on a cash basis despite its size. “I didn’t have a handle on my expenses,” admits the owner of A Plus Lawn and Landscape in Lawrenceburg, Ky. When he came scathingly close to not being able to pay his team, “I realized there was a big problem,” he says. “I had to figure out what I was doing or not doing and get it fixed.”

Rennels says the incident was “self-inflicted” because he had not mapped out expenses and was making decisions on whether or not there was money in the bank. “I was still working in the field at that time, putting in 80-plus hours a week, and I think a lot of business owners find themselves in that role – no time to take a look at what is going on,” he says. “Then you end up making snap decisions.”

Fortunately, some accounts rolled in just in time for Rennels to cut paychecks – but that close call was out of his comfort zone. “It was enough to scare me to pay attention and learn,” he says.

That’s when Rennels joined a peer group called The Leaders Edge, led by consultant Jeffrey Scott. Rennels had been in business since 2003, grown the organization from maintenance to include lawn care and design/build services, and hired several employees. And he had taken a green industry accounting class a few years prior – when he realized he was actually paying 40 percent of his clients to maintain their properties. (Switching them to monthly flat-fee payments fixed the problem, and no one got upset.)

Over the years, he had been working to fine-tune his business practices, but work in the field continued to draw him away from number crunching. But 2008 was a wake-up call for Rennels, he says. And joining The Leaders Edge has made all the difference for his business. “We have been very blessed to grow every year since we have been in business,” he says. “But now, it’s more on purpose than an accident, I guess.”

Total exposure. Rennels was a bit apprehensive when he attended his first meeting of The Leaders Edge. He was one of the smallest companies in the group in terms of revenue. “I was worried that I might be looked down upon, as in, what do I have to offer?” he says. He quickly found out this was not the case. A Plus Lawn and Landscaping was ahead of the game in the marketing and advertising department, but the company financials were straggling behind. This didn’t surprise Rennels.

Rennels’ Leaders Edge group includes about 10 companies that take turns meeting at each others’ businesses twice a year, and they gather via phone conference two times each year. There are a number of mentor groups in The Leaders Edge program. In between, “team” meetings with a few companies are held via phone to work out problems one member company may be experiencing. And the group members are constantly checking in with each other as they meet target goals throughout the year. Jeffrey Scott is facilitator.

By taking turns meeting at different companies’ facilities, members gain an intimate understanding of each operation. Those meetings generally last several days, with one full day dedicated to the host company, and the other days split among the group as members review progress, discuss business issues and set goals.

Right away, Rennels and his peers assembled standardized financials so they could easily compare numbers. “If I see that one company is paying 8 percent less for insurance than we are, I can investigate…are we getting a bad deal?” Rennels says. This is an example of how standardized reporting illuminates numbers for the entire group.

“Getting our financials straightened out and into a format where I can get feedback has been huge,” Rennels says. “It’s a situation where you get totally naked with these people – not literally, but figuratively. Everyone’s information is totally exposed.”

Developing the team. After the meeting, Rennels instituted rapid improvement plans, where key employees who want more responsibility in the company set one-, three- and five-year goals. “A lot of times, employees just sit back and expect things to happen instead of taking an active part in making them happen,” Rennels says.

He adds that as an owner, he was not doing anything to show them a path. And that has changed dramatically. “You have to train employees so they understand, ‘For you to grow, the company has to grow,’” he says. “We have to actively create opportunities for people – it doesn’t just happen by accident.”

Rennels adds that in this economy, everyone must be a salesperson every day. “I’m trying to teach that ownership thinking of if you want extra you have to do extra,” he says.

Mainly, three key employees are involved in the rapid improvement plans. These are workers not currently in management who would like to be in leadership roles.

Based on those goals, Rennels is reviewing the company’s numbers and what it will take to push those employees into manager roles.

Ultimately, the business will need to do more volume. So, if a lawn care client’s average annual contract is $400, how many clients must be added net year to achieve a goal? And if 250 lawns must be added, how will this happen?

“We are rolling back those numbers and figuring out what we need to do to get where they want to go, and coming up with an advertising and marketing plan, looking at internal practices and seeing if there is anything we can do different,” Rennels says.

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