I don’t have marketing and I don’t have a website. Merchants is almost 100 percent municipality. I’m the largest provider of city landscape maintenance in Southern California.
I graduated from college with a degree in economics and I wanted to start a company, so I started TropiCal, an interiorscape company.
None of my businesses were anything near what I have today. They were all in the $3-4 million dollar range maybe. This took off far greater than my expectations.
I was playing in a golf tournament, and one of the guys in the tournament was the vice president of this company I’d never heard of in my life, Merchants Building Maintenance. At the end of the day he says “You’ve gotta get together with the Haas family. They’ve always wanted a landscape maintenance company.” So I say, “OK.”
So we had lunch, and a week later we end up partnering up with them. They found me.
It was really luck. I had never heard of them. If I wasn’t playing golf with that guy it never would have happened.
About 10 years ago, I got one municipal landscape contract and it was like $1 million a year. So that kinda got exciting.
Our average contract now is about $300,000 to $400,000 a year. Nobody really specializes in it besides Merchants – everybody dabbles in it, but it’s a very unique marketplace. To be successful, you have to create your entire culture around service and municipalities, which is very difficult.
It’s very capital-intensive. You start a $100,000-a-year job, you’re gonna have to buy seven trucks, spend $100,000, $200,000 on that equipment. You have to be prepared to take a little risk up front and have the capitalization to start a job like that.
Make it your mission to be the best service provider in your marketplace. Stay profitable enough to capitalize your growth.
The biggest thing is managing the contract. Normally, if you’re doing a bunch of commercial retail centers, you might see the client once a month. My people see their client three times a day, every day. There’s three to four city inspectors and their entire job is watching my company.
In the city of Irvine, I take care of the entire park system – 32 soccer fields. We prep 42 baseball infields every single day. It’s massive. We probably empty 700 trashcans seven days a week.
The scheduling and the management of all those crews is totally different than putting four guys in a truck and having them do five industrial buildings a day for a week.
What I have here is me, two regional managers, and then I have branch managers and branches throughout Southern California. It’s very lean. To take care of the city, I might have 30 people in there, one geographic area, but it’s one client. So I have one area manager per contract. So it makes the management a little easier than 80 different sites all over the place.
The market is expanding rapidly because cities are outsourcing all their services to save on pension and benefit costs. It’s exploding. I probably bid at least five contracts a month, year round. Year round – there’s no seasonal low. We project our growth this year to exceed 20 percent.
Another thing with cities is you don’t have the collection issue – you don’t have the receivable problem. The same check comes the same day every month year round.
Always make the right decision. It might not be the best decision for you or the best outcome but you know what the right one is. Make it and simplify your life.
Explore the November 2014 Issue
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