The Moose Is On The Loose: First Look

So he and his coworker put a hitch on a BMW, bought some equipment at Sears and started going door-to-door. However, Rendzak’s experience selling real estate taught him a lesson that immediately differentiated him from the countless other start-up contractors. "We knew the importance of professionalism when you’re selling to homeowners," he related. "So we got an insurance policy for the company and we had business cards made up. We wanted to do this the right way."

The pair grossed $13,000 in their first summer, which enabled them to purchase a new pickup truck for the next year. In addition, they decided to start providing small landscape installations to accommodate the numerous requests from their residential clients. From there, the growth was steady – $27,000 in sales in 1990, $45,000 and the company’s first full-time employee in 1991 and $90,000 in 1992.

"Once we got to $120,000 in 1993, we knew growing the business further would be hard for us to do because of what we didn’t know," Rendzak explained. As a result, the company merged with a local irrigation contractor it had been subbing work to and became Coastal Landscaping in 1994.

"Our sales were $600,000 in 1994 with 15 employees as Coastal Landscaping, and that opened my eyes to the potential in this industry," Rendzak commented. "I saw this could be a real business."

Merging the two businesses gave Rendzak experience creating and running a larger company, which taught him lessons to remember. "The biggest challenge we had merging the companies was handling the employees," he pointed out. "They had a lot of fear about the deal since they had never worked together before and they didn’t know who their boss was going to be or what their roles were. We had to talk to them a lot so they saw what we were doing."

Having three owners in a business also created obstacles, and Rendzak admits that he still wonders whether the trio structured the company correctly. "We each took a different division – irrigation, maintenance or installation – and we ran it ourselves," he explained. "That means the three owners were each doing the same thing in terms of going out and producing estimates, managing their crew or crews and dealing with their customers instead of having one estimator, one operations manager and one administrator."

Plus, getting three owners to agree on strategic decisions often led to disagreements and unhappiness. "We had a two-thirds vote system where we would do something if two of the owners wanted to do it, but that didn’t always work because no one wanted to upset the others," he recalled.

As a result, Rendzak left the company at the end of 1998. "We had a three-year non-compete clause in our buy/sell agreement unless whoever left the company agreed to do so without any monetary compensation," he noted. "That’s what I did because I wanted to stay in the industry and stay in the area."

WHAT’S ON THE HORIZON? Just as Rendzak was about to take a job as an account manager with another landscape company, a developer he had a relationship with asked him to bid on a condominium complex that he was going to build the next year. "He told me that he’d give me the $100,000 contract if I had my own company, so I started The Blue Moose Landscape Co. in 1999," Rendzak commented. "Then I started from scratch again buying vehicles and getting customers."

The Blue Moose generated $222,000 in sales its first year, thanks in large part to the aforementioned condo complex. "The hardest part for our first year was being profitable since I had to finance all of our purchases," Rendzak admitted, adding that the company’s labor represented 46 percent of its total expenses. "Equipment and overtime are where you can lose money, so those areas have to be controlled."

Much of the company’s equipment expense stems from Rendzak’s decision to purchase new machinery instead of used. "That was one of the hardest decisions I had to make, but I saw the amount of equipment breakdowns and downtime we had at Coastal Landscaping, so I decided to stick with new machines," he explained. "Plus, that contributes to the professional image we want to portray."

Last year brought unexpected growth – sales jumped to $420,000 – which necessitated the additional expenditures that accompany such development. "We wanted to run two crews last year, but we decided to get a third one started, which meant buying another truck and trailer," Rendzak pointed out. Ultimately, the company fell about $45,000 short of profitability despite the growth.

"We knew we needed to start minimizing our expenses and turning a profit going into this year," he added. As a result, Rendzak’s wife, Lisa, returned to her job at a local bank, which saved the company her salary and added those administrative responsibilities to Rendzak’s plate. In order to take on more work without the capital expenses associated with equipment, the company expanded some of its crews.

"We’ve got nine full-time employees not counting me, with a four-man installation crew, a three-man maintenance crew and a two-man irrigation crew," Rendzak remarked. "We’ve got a good foreman and a big truck for the installation crew, so we added people there to get more work out of that crew, which has really helped. Plus, if we find that our costs are getting out of hand or the business slows down, we can eliminate labor costs more easily than we can get rid of a vehicle."

So far, this year looks profitable for the company. Sales are $90,000 ahead of last year’s numbers, and the company has a profit of $20,000 year-to-date vs. a loss of $40,000 at this time last year. Rendzak made a number of changes, most of which were philosophical in nature, and focused on driving profitability. "Unless absolutely necessary, we put a freeze on purchasing any new, major equipment for this year," he explained. "We also took our main employees into the books to show them where the money comes from, how easily it can be spent and how this can relate to their pay. We are hoping this will give them more respect for minimizing downtime, broken or lost tools, etc."

Rendzak also revamped his pricing approach, thanks to the help of an industry consultant. "We completely revised our estimating system, and that added 20 to 25 percent to our bids without having a negative affect on sales," he related. "It taught me how to incorporate the trucks, trailers, equipment, labor burden, administrative burden and profit into all of my bids."

Now, Rendzak is happy to deal with the issue of figuring out what to do with profit. "That profit will go toward paying for some of the debt we have, but I also want to start offering more benefits to our employees," Rendzak explained. "We offer vacation time, three paid personal days, paid holidays and a simple IRA investment plan where we match 2 percent of an employee’s gross pay if he invests in the plan, but I want to initiate a health insurance program next year as well."

Looking forward, Rendzak knows he needs to develop employees who can assume additional operational responsibility so he can scale back his 70-hour workweeks. "I’m grooming the foreman on the installation crew to be more of a crew manager next year so I’ll focus on sales and dealing with clients and he’ll get the crews set up and make sure the work gets done each day," he related. "That way I can focus on actually running the business, because when you’re in the field every day you’re not managing the business properly. You get caught up always saying, ‘Just do this,’ and you’re not watching the profitability until you run the reports at the end of the year."