Troy Hall understands ambition and the desire to be the biggest. When he founded Hall’s Horticulture Design in 1994, he was confident that his ambition and an intense customer service focus would be enough to eventually ensure his company’s position among the elite landscape firms in the Charlotte, N.C., market. He didn’t anticipate, however, the extent of the challenges associated with running a growing landscape company.
Hall’s Horticulture Design |
323 Old Hebron Road |
Hall’s Horticulture Design began with one truck, one man, $6,000 and a vision. "I knew that I needed a maintenance base of clients because that’s where the cash flow comes from to keep you operating," Hall related. "But the idea all along was that I didn’t want to have to depend on anyone else to do work for us, so we wanted to be a design/build/maintain company."
After four months, Hall hired his first employee, Will Sutterlin, who is his partner today. "Will and I mowed together for six to nine months, and then we hired someone to mow for me so I could focus on landscape work," Hall noted.
As the landscape work grew, Sutterlin joined Hall in that area of the business so Hall could move on to irrigation. The company grew this way for its first three years, adding irrigation, hardscapes and lawn care to its service menu.
At the same time, Hall focused on customer service. "We got a lot of jobs early on when people called us because their previous contractor didn’t show up," Hall recalled, adding that he calls customers any time he know he is going to be at least 10 minutes late for an appointment. "We tell maintenance customers they will see us within a two-hour timeframe on a certain day unless it rains, in which case they will see us the next day. They like knowing they can count on us like that."
Hall’s commitment to running the business the right way also included an educational emphasis - becoming a registered business contractor and a certified plant professional in the state of North Carolina, earning a pesticide applicator’s license and attending a series of training opportunities in irrigation and landscape design. "I didn’t feel like I was knowledgeable enough to compete with the bigger companies when I started out, so that’s what we had to do," Hall said.
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THE BURDEN OF BIG. By the end of 1997 the company had established the requisite divisions to call itself a full-service firm. At that point, Hall believed, the company was poised to take on the proverbial ‘big boys’ in Charlotte and enter the commercial market.
"Our first few years we were all residential, and I thought we were missing the boat," he explained. "We had consolidated all of our business with one bank that gave us a credit line and an equipment line, the economy was good, so we got into commercial work with some big projects."
Sales doubled for the year, employee count climbed to 26 and the company surpassed the $1-million mark. Breaking into the commercial arena wasn’t particularly challenging for the company since its first commercial jobs came from residential customers who also owned or managed corporate properties. But Hall quickly learned that the differences between residential and commercial customers are significant.
"The growth was a nightmare," he admitted. "We had to hire people, but we didn’t have a training program because we didn’t know we needed one. The quality of work deteriorated, and I had no idea of the amount of red tape we were getting into with general contractors. We didn’t get paid for six to nine months on some jobs."
These large, commercial jobs created more challenges than Hall expected. "I thought we could do commercial work, and I wanted to bang heads with the big boys," he acknowledged. "We got out there and did the work, but I bid the jobs too low because I didn’t know what we were getting into."
Today, Hall looks back upon this experience and appreciates it. "We got through the year, and it helped us identify what type of customer we want," he related. "We are a high-end residential/low-end commercial design/build/maintain firm. We want customers who understand what it costs to install a landscape."
In addition, Hall learned how the company needed to improve. For starters, he had to develop systems, including a procedures manual. "The idea is to make the employees self sufficient," he commented. "They always ask me, ‘What should I do with this?’ or ‘How should I handle that?’ When I’m not here, they get stumped because they don’t know how to do things. I’ve tried to put everything down on paper so the company would work fine tomorrow if I wasn’t here."
Hall also had to develop some systems, such as pricing. "One of the most important things we’ve done has been establishing a consistent pricing structure," he noted, adding that the company’s estimates are computer-generated through an Excel program. "Now we can tag the unit costs for any plant or service on any estimate. We also know that we will work 45 hours a week with 16 or 17 laborers, and we need to recover $16.71 in overhead per man-hour in order to break even. Everything starts there."
Along with formalizing his pricing, Hall created an annual budget for the company. "Pricing and a budget go hand-in-hand," he explained. "But having a budget doesn’t mean saying you’ll do $20,000 a month in irrigation for the year. We spent a lot of time doing this so we really know what we can expect to do for each service in each month, and we measure our results against that."
By producing a budget based on historical performance, Hall realized the company was losing money from Dec. 15 to Feb. 15 every year because it tried to complete installations during this time. "There are too many weather variables at that time that hurt our profitability, so we cut back on our people at that time of year and just keep providing our core maintenance services, and this saves us thousands of dollars a week in labor."
Looking at past numbers also helped Hall identify a hidden demon in the company’s financial performance. "I was so sales driven that I didn’t realize we were getting killed with the overtime," he warned. "We kept going after more and more work and cramming it into the same crews because we didn’t want to buy more trucks. But we weren’t pricing our work with overtime in mind."
As a result, employees were working 20 hours of overtime a week, which meant paying nearly two dozen employees for an additional 30 hours on top of their regular pay. "Now I know I need to match the dollars per-hour that we’re taking in with what we’re spending," Hall commented. "If we’ve already got four crews doing all they can in a week, taking on another job doesn’t make sense unless that customer is going to pay for the overtime."
GROWING THE RIGHT WAY. After peaking at nearly $1.1 million in annual sales in 1998, the company had sales of $988,000 in 1999 and $1 million last year, which was fine with Hall because the company did so with six fewer employees and nearly tripled its net profit. "Now we go after net profit through better management, training, safety and so on," he explained. Today, about 75 percent of the company’s sales comes from residential customers as the it continues doing some commercial installation work for two general contractors that provide referrals on highly profitable residential renovation work.
Meanwhile, Hall is redefining his role in the organization as he learns to manage his managers instead of doing the work for them. "I have to commit to these individuals and trust them to make mistakes and learn for themselves," he pointed out, adding that he just hired the company’s first designer/salesperson to assist him with those tasks. "Early this year, I was still doing accounting, budgets, sales, designs, payroll and getting the crews going in the morning. I’ve been micromanaging, and that has hindered us."
This transition challenges Hall daily. "I have to sit back and listen to various conversations without saying anything even if I think I have an idea that is better than whatever they’re talking about," he related. "I keep reiterating the importance of this trust to myself."
The author is Editor of Lawn & Landscape magazine.
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