Ready for 2019

When LaMont Hess and Kimberly Rowe joined the Turnaround Tour, they hoped to build Outdoor Expressions PA to the level of success it had before they bought it in July of 2017 – a $3 million company. While the couple made improvements in 2018, the year didn’t go as planned. But that’s not souring Hess for 2019.

That’s because he has $100,000 worth of new work booked next year. And because his crews weren’t at full capacity, he will only have to bring on a couple of part-time employees to fill in the gaps. They can hit the ground running in 2019 with a better outlook for 2020.

Hess says a main lesson he took away from the project was knowing the cost of his jobs. He also learned the value of budgeting for new equipment. “I bought used stuff and I think new is probably the best way to go if you can get it financed,” he says. “You have to watch when you buy used stuff because I have a mower that's done nothing but cost me money.”

Even though 2018 fell short of expectations, Hess is confident they will hit their revenue goals in a few years.

“I wouldn’t doubt that we’ll make somewhere near a million two to three years from now,” he says. “We'll be close to where I wanted to be this year, next year and if we're on track for that, I should definitely do the same thing the following year. I bet at least another $100,000 above that. I've got good connections now.”

Harvester’s Take

LaMont and his wife Kimberly found out just how difficult operating a landscape business can be, even though they’re seasoned business veterans. They experienced Murphy’s Law throughout 2018. What could go wrong did go wrong. They had equipment, vehicle, people, customer and, to cap it all off, weather problems. This year proved to be one of the rainiest seasons in Pennsylvania’s history. Just in the month of August it rained 42 inches.

Because of the obstacles the company faced, Kimberly took an outside job to support the family, which turned out to be a very wise move. In the meantime, LaMont persevered, working through and solving one problem at a time.

Most of the problems LaMont faced were inherited from the company he purchased. Although this company had enjoyed a good reputation, they were experiencing a severe decline in sales. Many of the jobs were underpriced, the equipment and trucks were old and in need of repairs and the employees were not up to par.

Despite these problems, LaMont finished the season and did quite well.

His overall sales goal was to go from $200,000 with a 48 percent gross margin to $375,000 but only reached $240,000 with a 40 percent GM. Why? He dropped unprofitable jobs and lost weeks of work because of the rain.

He essentially reach his second goal of moving $100,000 of reoccurring revenue to $260,000 in that most all his work is now contracted maintenance work.

As for his crew, his goal was to hire one new capable crew leader with a solid driver’s license. He did that and also hired two additional crew members to finish up the season with six good people.

His last goal was to have no lost time accidents. However, he did have one accident that had to be reported where worker’s compensation was used.

As for next year, he has multiple new contracts that were priced right and he’s positioned to possibly double sales. Despite his problems, he did an amazing job and his cool head and tenacity in dealing with problems should be applauded.

Tiffany Tucker and Michael Mould were operating at a record-breaking pace when Hurricane Michael hit Panama City, Florida, putting a halt to the jobs New Visions was working on. For-profit work turned to helping neighbors, friends and family clear debris.

“It was more or less checking on the elderly and widowed and just making sure everyone was OK,” Mould says. “Then, after that, just finding what type of service they need so we can assist them in that.”

As of late October, Tucker says operations are getting back to normal, and the company is on pace to close 2018 around $850,000.

A big win for the company in 2018 was finding a manager for the maintenance side of the division, allowing Mould more time to sell instead of working in the field. He also implemented a quality control system to grade projects, since the high number of jobs the company performed meant some work didn’t live up to Mould’s expectations.

“Every aspect of doing business has changed,” Mould says. “We knew we were doing OK last year but we just didn't know how and where it was coming from. We couldn't put our finger on it. So being able to break it all down and start over and put in the work in the beginning as far as building the structure and becoming a business instead of just people offering the service and knowing the business – you can't put a price on that.”

Mould and Tucker would like to hit $1.5 million by the end of 2019 and possibly add chemical lawn care.

“We definitely want to be able to bring that in house instead of subcontracting the fertilization,” he says.

Harvester’s take

Michael and Tiffany were growing at too rapid of a pace entering 2018, so it’s no surprise they surpassed their goal of $600,000 and will land at $850,000 to end 2018. But they fell short of the goal of 48-50 percent gross margin, only making 45 percent gross margin. They beat their revenue goal because Michael is a great salesperson and they are currently in a great market. The gross margin suffered because they had so many new people and inefficiencies.

Their second goal was getting Michael out of the field and having him focus on selling. A while ago, Michael assisted another landscaper with a flat tire and kept in touch, letting him know the door was always open to come to New Visions. Eventually he came over in a foreman role, but had the qualities for an account manager role for maintenance clients, which he is now in. You should always be recruiting and keep in the mind that the next person you meet can be your next star employee.

Michael and Tiffany also wanted to develop vision, mission, and core values statements and success behaviors. After taking some time to discuss with each other what they wanted to represent as a company, they were able to develop those core components. Vision, mission and core values are must-haves for any company to have a successful culture. Employees also need to learn these so they have an idea of how they should operate when they leave for jobsites every morning.

Finally, the duo needed to have an established maintenance agreement signed by customers, which they did develop. This agreement is important because it details what they are doing for their customers as well as what the charges are. And if they want to sell the company one day, owners are not going to buy a company without contracts or agreement.

Last time we checked in with Gabe Lobato, he was going to meet with the new property manager of his lone commercial property. Unfortunately, the property manager decided to go in another direction and find a new landscaper, leaving Lobato, who was already skeptical about commercial work, even more so now.

So, he will focus on residential work in 2019, which has been doing well. Looking back on the year, the Turnaround Tour experience didn’t go the way he imagined.

“All it does is reaffirm why I gave up pursuing this market a few years back, because the whole situation (with commercial work) is that clients prefer their own vendors and you just really don’t have much opportunities unless you are already in with them,” he says.

Lobato does feel more confident about figuring out his hourly average wage (HAW). He is in the process of implementing that for his residential maintenance accounts in order to figure out the cost of jobs on a daily and weekly basis.

While he won’t hit his goal of $1 million at the end of 2018, he thinks he can hit his goal by the end of 2019. At the start of the Turnaround Tour, he wanted to sell the company in the near future, but now is reassessing that plan.

“My goal is probably in the next three to five years to be able to step aside and do something else but continue to own it and oversee it, but not be in it as much as I am at this point in time,” he says.

Harvester’s take

La Cholla’s first goal was to increase overall revenue to $1.1 million at 48 percent gross margin. While Gabe did not achieve the overall goal in revenue, we were aiming pretty high, in all fairness. Gabe started off by hiring his brother to help in the sales area; however, Gabe quickly found that this was not a good hire. He then tried a telemarketing program with very mixed results and he also scrapped that program.

La Cholla has gone back to its traditional source of leads through SEO Google searches mainly from the residential market.

Gross margins remained healthy and within the targeted goal. La Cholla also remains profitable within an acceptable range for net profit even with the added $12,000 in sales costs. Family and business do not always work out. Gabe learned that hiring his brother was not a good match and made a quick decision to change course. Once you have determined a team member is unlikely to come around in fairly short order, especially in a skill position, it’s often best to make the change, especially if they are a family member.

The company’s second goal was to add $100,000 a year in new recurring maintenance revenue, which Gabe did not achieve. He has gone back to focus on his original lead source through his website. His focus will remain in the residential market. He will be trying other lead sources through mailers and referral programs.

His third goal was to sell more than 25 percent of recurring revenue in enhancements, which he is making progress on.

Gabe is also making progress with his supervisor Michael continuing to spend the vast majority of his time writing up extra work proposals for the existing base of homes they maintain. If they follow up effectively with these proposals, they will achieve this goal.

Finally, La Cholla had a goal of growing the commercial maintenance business and shifting to 95 percent commercial in three to five years. This isn’t going to happen and Gabe’s comfort zone is in the residential market. He will continue in this market and if the right commercial or non-residential jobs come his way, he will consider them.

Change is often very hard to embrace. If a company is going to embrace a change, it must start from the leader. If the leader does not have the buy in and make the commitment, change is even more difficult. Breaking into a new market was not in the cards for La Cholla at this time.