How three LM150 firms are becoming more profitable by being more productive.
“Doing more with less” has been a mantra among successful landscape company operators since the Great Recession. To some, it may feel like a cliché by now, but it’s not to companies who’ve seen their bottom lines improve.
At least three firms on this year’s LM150 list have good stories to tell about how they’ve made gains in productivity and, in turn, profitability.
For David Minor, CEO of The Landscape Partners, No. 149 on the LM150 list, the best advice is never to be satisfied with the level of profitability.
“A lot of people are at the assumption that they’ve maximized their bottom line, and they don’t roll up their sleeves and look for a little bit more here and there,” he says.
He is one to dole out tips on this topic. The Landscape Partners, based in Fort Worth, Texas, saw its revenue increase just 2 percent in 2014, but its net income was up more than 35 percent year over year.
So, where should other companies start? Minor recommends beginning with the biggest two areas of the operation: labor and materials.
Looking at labor
Analyzing labor costs has been an increasing focus over the past few years at C. Caramanico & Sons, which ranks No. 129. The company implemented a productivity reporting system in its maintenance division with good results, and it began working the reports into its construction division this year, says Bill Caramanico, secretary/treasurer of the Upland, Pa.-based firm.
The company, which last year entered its fourth generation of family ownership, historically has been construction-heavy, but it will be 50/50 construction/maintenance this year. The productivity reports should help company leaders better identify which jobs are most profitable.
“We’d like to back off on the construction side and be more selective on what jobs fit us better,” he says. “The productivity reports have helped us track our hours as we go, so we can see how we’re getting close to our budgeted hours.”
Before using this system, which consultant Frank Ross helped set up, “the guys didn’t know what the hours were.”
“We were tracking hours, but we weren’t doing it properly,” Caramanico says. “We weren’t looking at it every week. The reports force us to look at them every week and ask, ‘If we’re going over, why? If we’re under, why?’”
Caramanico says the reports are helpful for the management team, but the last piece of the puzzle is getting the information out to the crews. For his company, adding a full-time, bilingual production manager has been a big help.
“He’s been really great to work directly with the crews, equipment and schedule,” he says. “We didn’t have that before.”
Minor, too, emphasizes the importance of labor budgets and communicating the status from top to bottom.
“We’re very goal-oriented,” he says, noting field staff have daily production goals and are eligible for a bonus every two weeks if they meet those goals. “When you’re that way and you’re keeping those goals in front of people on a regular basis, it’s pushing them to improve.”
For Minor, improving production comes down to “talking about it a lot” so everyone understands it’s a priority.
“We’ve challenged the people on the maintenance side to work a little more efficiently,” he said. “We reduced the budgeted hours but increased their bonuses, and that worked out well.”
Caramanico expects to see even more efficiency later this year when the company changes from timesheets to time-tracking software that will send data from employees’ smartphones into QuickBooks.
Material-tracking
Visionscapes streamlined production over the past seven years, first due to the economic downturn and now due to regulations. In fact, the Tucker, Ga.-based firm, No. 135 on the list, generated 30 percent more revenue in 2014 than in 2013 with the same number of employees.
“When there’s a glut of business, everybody tends to be a little sloppy,” says Frank Coleman, president. “When there’s not, you’re forced to work smarter, and that’s what we’ve had to do.”
Specifically, what’s strapping Visionscapes is the “Obamacare” provision that requires businesses with 50 or more full-time-equivalent employees to provide health insurance employees or pay a fee. Coleman says he feels like he’s being forced to stay under 50 employees because of the large costs associated with insurance. He estimates he’d have to double his revenue to be able to provide insurance and remain profitable.
Prerecession, Visionscapes had more than 100 employees and reached nearly $12 million in revenue. It dropped down to half of that for a few years, and now is back to nearly $10 million—staying under 50 employees.
Coleman expects to be flat in 2015. “There’s plenty to bid, but it goes in waves,” he says. “This is our 30th year, and it’s harder than it’s ever been.”
Regardless, these obstacles have prompted Visionscapes to become more disciplined and have upped the level of accountability throughout the company.
“The team sat down, looked at what we’d been doing and how we could improve things,” Coleman says. The result was nearly reinventing how the company did installation. For example, it became an “equipment-centered” company.
“Proper equipment helps speed up the projects,” he says.
One example is in material transport. The company added a fleet of nursery carts to use with its utility vehicles to cut down on the number of trips needed to carry shrubs and other materials on job sites. Visionscapes also invested in new, compact telehandlers to be more efficient when installing the large-scale construction projects it’s known for.
It’s all part of a strategy to touch materials only once, Coleman says. As much as possible, Visionscapes has its materials direct shipped rather than keeping items in a holding area.
“When we order trees, the holes have already been dug, they come off the truck and go into the hole instead of going into a holding area, re-picking it up and shuffling it into another area to be planted,” he says. “You can’t always do that, but we maximize doing that as much as possible.”
Other changes Visionscapes has made include an updgraded software program with a purchase order system, which helps track project billing; a central control system for managing irrigation accounts; and a switch from hand takeoffs for estimating to on-screen takeoffs.
“We were old school a little longer there,” Coleman says. This move has allowed the company to keep its estimating department to two people. He estimates similar sized companies have three or four staff estimators.
Drawing the line
All these efforts are about being a bottom-line focused company.
“I’ve seen so many companies through the years that just don’t focus on the bottom line,” says Minor, who is making his “second go-around” in the landscape industry. He sold his previous company to TruGreen’s landscape division in the late 1990s. “You might be making 5 percent on a big top line, but I’d rather make 12 percent to 15 percent on half or a third as much business. There’s a saying I throw out to our president: ‘The bottom line is the bottom line.’”
Quick tips
“
Watch your labor hours, especially the indirect time loading and unloading every a.m./p.m., as those can cost you dearly
if not managed.”
—
Shawn Stomp,
vice president of finance/CFO, Heads Up Landscape Contractors, No. 76
Artwork: iStock.com/hh5800/bluebird13; Photos: The Landscape Partners; Visionscapes; C. Caramanico & Sons
