Husband-and-wife team Jeremy and Heather Dirksen run a $500,000 lawn care company in Yukon, Oklahoma. They are growing and working very hard, but don’t know how to pay themselves and are not seeing a financial return on their sweat equity at Freedom Lawn & Landscapes.
In their application for the Turnaround Tour, Heather and Jeremy said they wanted to double their 2015 gross revenue ($336,000) in the next year, manage their cash flow better, and ultimately do more selling and less production work in the field. After meeting with consultants Bill Arman and Ed Laflamme, issues immediately became clear.
“We were just operating day-to-day, and not looking forward too much. Working with Bill and Ed you can take a step back and look at everything. They tell you step-by-step, ‘This is what needs to be done, but this is most important,’” Heather says. “(We want) systems in place for everything we do, cleaning up the operations and working as a more lean company than what we were. We’ve already started making so much headway.”
Some of that headway includes a decision to get rid of a half dozen residential accounts and two large commercial accounts that aren’t profitable. It will mean a loss of about $100,000, but help them realize a higher gross profit margin in the coming years.
Arman and Laflamme recommend first an investment in equipment, specifically trucks, so the Dirksens can look as good as the jobs they’re doing.
“They’re afraid to spend money because they’re not making money,” Laflamme says. “I get that, but then what happens is it gets to a point … and starts to cost more than if you buy new stuff. We’re encouraging them to fix the stuff that needs to be fixed – get the trucks painted and get them consistent. Maybe invest in one truck. You have to look good, you know?”
Arman says Freedom needs to reevaluate its margins on each job individually and improve its estimating so it only works on profitable accounts.
“The margins aren’t enough to sustain a business. They had three or four jobs that were upside down,” he says. “If we don’t have enough gross margin we can’t even feed the bear.”
As Freedom eliminates unprofitable work, Arman and Laflamme both recommend more commercial work to balance out the business, but they disagree on how far to take it.
“Bill is pretty much a 90 percent commercial guy, and I’m more a 75 percent commercial guy, but they’ve been doing mainly residential and feel comfortable there,” Laflamme says. “Commercial is out of their comfort zone. My idea is: Let’s go after both and see what happens. It won’t hurt.”
