All posts by Jeffrey Scott

green exit sign

How To Plan Your Exit From A Landscape Business

Can you plan the exit of your landscape business too early?

Not really.

The best time to plan your exit is ten years out.

The second best time is to start your planning now, with an eye to the future.

Last week, a member of my community asked me how long it would take to plan his exit? 

On a Zoom coaching call, John, my client, shared his urgency with me to get his exit plan figured out. 

He is over 50, and still young enough where he can enjoy his grandkids and free time if he starts to take it now. So, I gave him a sped up plan. He has some of his next generation of leaders in his business already, and I told him to start the transition right now. To do this he has to get the right people in the right positions and get them set up to run the day-to-day.

After he does that, he can start working on the buy/sell agreements. 

What about you? Where and how do you start to think about this?

The Who, What, When, Where, and How Much of Succession Planning

Here are some simple questions to answer for yourself, to figure out what your succession plan could look like:

Who?

Who do you want to sell your business to? Are you selling to family or non-family? Will you be selling to: 

  • A single person who you already know and trust? 
  • A team of leaders in your business? 
  • An outside buyer that will pay the highest price? 
  • If it’s an outsider, will they be a strategic buyer? An investor? Or an investor/operator who will run the business?

Gain some clarity on this now, and it will impact the steps you take when you plan your exit.

Even if you are not sure, decide who it “won’t be” and your vision will start to clarify.

When?

When do you plan to sell? Will it be:

  •  Farther than 10 years out? 
  • Or in 5+ years? 
  • Or much sooner i.e. in 1-2 years?

Knowing the timeframe will dictate what kind of actions you need to take and how quickly.

How much?

Do you have a number you “need” to earn for the business? If so, what is your business worth now?

Or are you simply trying to maximize the value? It’s good to know what your goals are for this, and how critical it is that your goals must be attained.

What is your role?

Are you looking to keep working once you bring in other owners? If so, let’s gain some clarity on what you want your role to be. And how long you want to be in that new role.

Or do you want to be totally out of the business? If so, let’s get clear on the maximum support you are willing to give the new owner.

Why are you selling?

It may seem like an obvious question, but perhaps the biggest reason that transactions fail is that the buyer is not sure what he or she will be doing after they sell. The seller feels lost, and he or she sabotages the deal.

Do you have a clear “entrance” plan for this next phase of your life?

Where do you start to plan your exit?

Start by getting the 3 C’s take care of:

  • Clean numbers that are not burdened with excessive and confusing owners perks. You can still take perks, but make sure the numbers are easy to read, and your company cash flow is clear (assuming you want to set up to sell. If you don’t, then you may not take this step).
  • Clear numbers, i.e. up to 5 years of comparable numbers. So it’s easy to read the numbers and read the trends.
  • Compelling numbers where you are showing strong trends in growth, turning assets into sales, turning sales into profits, and turning profits into cash. 

Remove yourself from the equation:

  • Show that your business is not owner-dependent.
  • Set up your sales, operations, and admin to operate without you in the day-to-day.
  • You can take it a step further like my good friend and client has done (George Tucker, Owner of LanDesign in St. Louis). He has brought in not only a COO but also a CEO to run and aggressively grow his business, so he can enjoy his role of salesperson and owner.

Address the underlying risks:

  • A company’s valuations are reduced based on the underlying risks in your business.
  • Deal with the internal risks, external risks, service-mix risks, client risks, the inherent risk of your business model. And the other types of risks that your business faces.

Get the right leadership team in place:

  • You want to stabilize your core team and make sure they will work with you through the succession, especially if you are selling to someone else. There are ways to lock them in and ensure a smooth transition.
  • If they are the ones buying the business, then, of course, this action goes to the top of the list.

Your Challenge:

It’s an existential challenge to be prepared to sell your business. It makes you face your destiny, your purpose in life, and your needs for the next phase of your life.

What if someone came along today and gave you a crazy good offer to buy your business? Would you be ready?

Remember, after they make that crazy offer, they perform their due diligence, and then they reduce their offer based on all the items they uncover. That is why my friend Frank Mariani likes to say, “always be prepared to sell”.

It’s good for you, good for your employees, and even good for your family if they had to deal with this without you. 

But where do you start while you are still running your business?

Use my list to kick-start your thinking. It’s never too early.

Jeffrey Scott and Paul Reder

Episode #160 – Building An Effective Sales Team with Paul Reder

Paul Reder is the President, CFO, and Marketing Manager of Reder Landscaping.

He owns this business along with his two brothers, Dave and Mike. He started working for the business as a teenager back in the seventies, mowing lawns and working the nursery. The big lesson they all learned from their dad, Walt Reder Sr., was to never cut any corners. That work ethic has made the difference and allowed them to keep growing and succeeding during challenging times over the years.

Reder Landscaping today is made up of 60% D/B and 40% maintenance and snow. Jeffrey and Paul discuss how he has been able to grow his sales team, and thus his company, and diversify their business mix by growing maintenance and enhancement sales. They employ up to 80 people during peak season and have a huge depth of talent.

sales team together

How To Grow Your Company With An Effective Sales Team

If you truly want to scale your lawn and landscape business, you must grow an effective sales team. 

And to do that, you must become quite good at both marketing and sales management.

Are you?

They don’t teach Sales Management at school or university – almost nowhere, really.

So, how do you learn to be a great sales manager?

Paul Reder, CEO of Reder Landscaping, knows the answer.

I have known and worked with Paul and his partners for about eight years now, and I have watched (and helped) them grow their business and business approach dramatically over the past decade.

Paul, who is a member of my community, volunteered to be interviewed for my recent podcast (coming out soon) and he shared his insights on becoming an excellent Sales Manager. 

Here are seven takeaways that we covered (plus there are more in the podcast):

1. Become an encourager. Paul realized that being a transactional manager won’t cut it. (He is also the company’s CFO, which requires analytical thinking). Paul shifted to being more of an encouraging coach and his sales team grew and flourished.

2. Use incentives to break through your own thinking. He thought it might be possible for his salespeople to hit even higher sales goals. By being creative with his incentives, he found that his salespeople made immediate improvements of $100k-200k in sales from one year to the next.

3. Data is your friend.  Paul changed his commission plan to tie into the profitability of the work as built. He had the data to back it up, so his sales team went along with the changes. Now, his salespeople and production people are tied in together.

4. High earners DON’T want ceilings. Paul discovered that he could attract the very best salespeople to his company by showing them how to earn large payouts, with no ceilings to what they can earn. The sky is the limit for the very best.

5. Salespeople like to sell. In the winter, Paul does not distract his dedicated salespeople with production (snow anyone?) and instead keeps them focused on initiatives focused on building marketing and sales. He doesn’t see a lot of snow, so it’s easy for him. Not every company can do this, but it is an interesting concept.

6. Become a marketing expert. If you want to grow your sales, you must provide the branding support and name recognition (and lead flow if you are doing residential work). Great salespeople want to work for great companies with great branding and marketing.

7. Operations must keep up. To scale your business with great salespeople you need scalable operations, which is what Paul’s two brothers, Mike and Dave, and their teams, provide. Great salespeople must believe in your operations.

Your Challenge:

It’s pretty clear if you want to scale your business, you must become a very good (if not great) sales manager.

  • Someone needs to be the sales manager in your firm; not just a note-taker, but have good analytics, bring accountability as well as support, encouragement, and sales strategy.
  • It takes personal effort and drive to learn sales management skills. Make it a personal learning goal.
  • It requires the entire company to support and stand behind your salespeople. They need to “believe” in your operations 100% and if they do they will run through walls for you.
profit margin graph

Using Gross Profit Vs Net Profit — Which Is Better To Monitor?

Imagine if you enjoyed a 65% gross margin but still had trouble achieving double-digit net profit margins.

A contracting friend of mine is in this predicament due to his overhead structure and mix of services. He does an excellent job of attracting clients and making sales; he has not scaled his operations to the point where this gross profit falls to the bottom line.

I also see the opposite happen, where a company is making double-digit profits, but their gross margin by divisions are low and could be much higher.

You need to keep an eye on both these metrics in order to drive high-profit growth.

So, why do many companies tend to overly focus on Gross Profit Margin (GPM)?

  • It’s easier to compare GPM between companies.
  • GPM contains the controllable expenses that your team can impact the most.
  • It’s relatively easy to determine GPM by sale and by service line.

Overall, your team will have the easiest time understanding GPM and will be able to positively impact GPM. Therefore, companies understandably tend to over-focus on this metric.

But, it comes with a challenge.

Gross Margins are subjective in nature.

What do I mean by that?

1. GPM are large numbers (percents) that are hard to psychologically pin down. Let’s say your goal is 57% GPM and you hit 52%. In your mind, you are off, but not by a large amount. You missed your goal by just 5 points. In percentages, you are only off by nine percent. 

I call this subjective because each manager will interpret this variance differently and many won’t understand the grave nature of that five-point drop. 

On the other hand, if you translate GPM into Net Profit, you will find that your profit dropped by five whole points. For example, if you were aiming for 10%, you are now hitting 5% Net Profit. 

That is a fifty percent drop in profits. It is easier to grasp the magnitude of this drop. This is a much more objective look at your performance.

2. Also, you may find that sales volume changed from what you originally budgeted. You may in fact hit your GPM goals, but because you miss your sales targets, your Net Profit can still be off by 50%.

For these reasons, I call GPM a subjective measurement and not the final indicator of success.

Therefore, when I work with a new client, I take ample time to look at gross margins and identify opportunities for margin improvement. I ultimately want to see the net profit and I also want the managers to see a net profit by division so we all have an objective view of how each area of the company is performing.

Your challenge:

Set up your divisions and division managers with clear net profit goals, by month, with accurate monthly reporting on how their divisions are performing.

The best managers want to do this because they want to know how well they are doing objectively. 

One of the challenges in setting this up is determining how to allocate overhead.

I have been through this exercise many times with companies in my community, trying many different methods of overhead allocation. I have found there is no “single right way” to allocate. But in the end, the different methods tend to be close. Thus, you can generally allocate by revenue and then do a double-check using “activity-based” accounting. You won’t be far off.

As an industry expert, I like to look at both the forest and the trees, the big picture and the details. If you take a balanced approach, you will have the best opportunity to maximize company profit and profitable-growth.

Jeffrey Scott and Economist Dr. Charlie Hall

Episode #159 – The Future of Landscaping With Economist Dr. Charlie Hall

Dr. Charlie Hall is THE top economist in the Green Industry. He is a passionate speaker on all things green (money and plants).

In this podcast, we discuss economic trends, the future of landscaping, the impact of the elections and the under utilized benefits of landscaping in marketing.

Having grown up in the industry, on a nursery in Western North Carolina, Dr. Hall is a professor in the Department of Horticultural Science at Texas A&M University. He has degrees in landscape design, economics and horticulture, and is the single most influential economist on our industry.

happy teeth at dentist office

What My New Dentist Can Teach You About Great Customer Service

What if your client services were truly mind-blowingly different from your competition?

My new dentist in New Orleans offers exactly such a service, and it’s one that everyone can learn from.

In 2019, my wife and I moved out of Connecticut down to New Orleans.

In many ways, we had to start life over. The hardest part was rebuilding our network of trusted service providers.

We had to find new doctors, trainers, house cleaners, barbers, accountants, mechanics (racetracks 🙂 ), landscape designers (yep), and of course — the dentist.

Normally, finding a good doctor/dentist is not easy, and going to the dentist is about as unloved as public speaking.

We luckily found a great personal trainer whose wife is a dentist.

We looked on her website (https://sweettoothdds.com) and it was very cheery and unique. So, we gave her a try.

When I went to her office, I was impressed by her thoughtful, all-inclusive approach to my health and well-being.

It’s easy to think that a dentist is a dentist is a dentist. People generalize landscape companies this way, too.

Here are three things she did that made her stand out: 

1. When I came for my appointment, we first spent time in her office, where she interviewed me on my oral history and measured the health of my gums and mouth. She then took actual photographs (along with x-rays) of my mouth from many angles. My first impression was, “Wow, this is a completely new and better way to help me feel comfortable and confident in her services.” She didn’t even clean my teeth — that was to come later.

2. Two weeks later, she invited me back (for teeth cleaning) and gave me a custom presentation on the health of my mouth, along with a PowerPoint with photos of my teeth, a score of my gum/teeth health, and upcoming problems I was likely to experience in the next years (unless I took action on addressing these issues).

3. Her sales approach was so soft-pedaled, caring, and proactive. I will be spending more money than I ever thought on my teeth, and I will be doing so in such a proactive manner that I will feel good about it too. Honestly, who feels good about their dentist?!

Here are three things YOU can do to stand out:

1. Treat your new clients with the knowledge of their “lifetime value” i.e. how much money they could spend with you over the next 5+ years if you took the time to build a broad, trusting relationship with them.

2. Onboard your new clients like you would an important, new employee. At my “CEO/COO” conference two years ago in Atlanta, Teddy Russell showed how they onboard clients with all their division leaders touching the client and the property, and how that greatly boosts their impact and sales with that client in the first year.

3. Invest time in getting to know your client after you make the sale. Normally, salespeople tend to reduce their excitement and interest in a new client after the sale is made, especially maintenance. But that is exactly the time when your clients’ excitement is starting to grow. Match their excitement with yours. Doing so will result in immediate referrals by your clients (I guarantee it) and it will allow you to create loyalty and increased sales right off that bat.

Your challenge:

Understand what your competitors are doing and develop a client onboarding process and product profile that will be completely different from your competition, and completely wow your clients!

Note: My new dentist did use a renowned dental consultant (similar to what I am– but in the landscape industry) in order to radically improve her business operations.

You don’t need to do this alone, but you do need to get all your company on board. This is not a gimmick, but a way of life.

jeffrey scott podcast with shawn edwards

Episode #158 – Building A Multi-Ownership Team With Shawn Edwards

Join Shawn Edwards, President of A+ Lawn and Landscape in Des Moines, Iowa and Jeffrey Scott for a conversation on building a highly-diversified, high-profit landscape business.

Shawn is a serial entrepreneur, likes to work hard and play hard, and has enjoyed success in multiple industries.

Shawn and his team (including 4 other minority owner/managers) have built up a unique, profitable business model, with a dedication to quality, customer service and scaling their business. They serve both residential and commercial customers with an extensive range of services which makes A+ Lawn and Landscape a dominant player in their market.

A+ Lawn and Landscape will be the host of Jeffrey’s August 2020 Summer Growth Summit

 

planted earth company picture

A Success Story in These Challenging Times

What I find most strange about this year, is how well many of my clients (lawn and landscape business owners) are doing.

Here is one story that will show you how to take adverse circumstances (lemons) and making wonderful lemonade.

This great example is from Planted Earth Landscaping, in Maryland.

Chris Vedrani, CEO and co-owner of this firm, has been a client of mine for two years. He shared the following story with me personally on our coaching call last month when we were discussing strategies for achieving 20% net profit, and building an open-book management strategy to bring his whole team on board.

Chris then shared it again during our recent Leaders Edge Peer Group meeting, where other top landscape professionals in my community come together to advance their businesses. At that point, I realized this story needed to be shared with my larger community. Here you go:  

“When all other landscape firms in our state were working their way through the pandemic, we decided to close our doors for a few weeks until we better understood the risks, and figured out how to keep our people safe. We were not forced to do this, but we knew it was the right thing to do, and our employees and clients applauded our courage to do the right thing.

A month later we opened up the doors and had to make some key decisions on how to get our work done. Our backlog had grown in our installation division, and yet our maintenance clients also were feeling anxious to have their properties opened up for the season.

So we opted to take all our landscape forces and dedicate them to our spring-clean-ups. By doing so we were able to get them done exceedingly quickly and efficiently.

After that, we shifted our Landscape forces back to their install division, borrowed our Enhancement crew (typically assigned to the Maintenance division) to assist Landscape with a concerted effort to eat away at our backlog.

Our crews from all divisions learned that sharing resources is to be encouraged, and because our jobs were organized perfectly with plants ready to go, our efficiency on these jobs was exceedingly high as well. 

We have never started the season so efficiently before, and our firm kicked off the year with record-breaking efficiency, profit, and cash flow.

And we are poised to do it again this month.

We have achieved a new normal in terms of efficiency and profitability that our past selves would be jealous of. 

We can’t wait for next year to do this all over again, but with an intentional plan.

Truly unbelievable.”

What can you learn from this?

  1. Don’t feel forced by your customers’ expectations to work inefficiently; line your work up to optimize productivity.
  2. Examine your old assumptions, and be willing to try things differently. 
  3. The old saying that you can turn lemons into lemonade is not just a cliché, but a real-world attitude to find money-making opportunities. So start looking!
  4. Your crews under different circumstances can produce more work, more efficiently than you currently assume.
  5. Build your culture focused on your employees’ health, security, and well-being, and then you can ask them to dig deep to give you more. 

Your Challenge:

Be willing to challenge the status quo within your firm. This takes vision, determination, data and a very optimistic outlook.

Examine all assumptions on how you work in order to build a more productive operation.

Do what’s best for your people, your clients, and also what’s best for your profit/loss statement. There is a win-win-win intersection that will allow your firm to achieve ”double double-digit profitability” as well as the highest levels of client and employee satisfaction.

 

Episode #157 – The Power of Peer Accountability

Is joining a peer group the right move for you? Join Jeffrey Scott and three inspirational landscape business owners, to explore the value and impact of peer groups on their business and lives.

Seneca Hull, Franz Witte Contracting, ID;  Paul Reder, Reder Landscaping, MI; and Greg Wildeboer, Whispering Pines Landscaping, ON

As long time members of Jeffrey’s community, we discuss topics related to trust, accountability, empowerment and change management. We also cover how peer group sharing and accountability can help you create a supremely stronger team and culture, better systems, stronger profitable growth, and more fun as a business owner.

We talk about some of the key decisions and important aha’s that changed the course of their business, and how they have accelerated their growth based on the wisdom of being long time members of Jeffrey’s Leader’s Edge peer groups.

 

hands on crystal ball

Seven Predictions on Where The Green Industry is Going

How confident are you in the future, in these times of change? 

It is my responsibly to bring you insight into where the landscape industry, market, and economy are headed. 

To do this, I plugged myself into many different networks. 

The biggest is within my own community of landscape professionals. It is quite active, discussing trends and opportunities. 

Plus, I am tapped into some large professional communities outside the landscape world (consulting, global finance, etc.). 

Based on current information, here are my seven predictions of Future Trends and how our industry will be shaped.

Prediction #1 – The Economy will recover within 18-24 months.

The economy is starting to make improvements, and it will bounce upward until it finally regains what it lost. Some parts of the economy will take longer, and other parts will recover much more quickly.

I believe this because:

  • The government and the Fed continue to support recovery.
  • Europe has gotten its act together and is doing an excellent job in both COVID and market support. A global effort will lift up all boats.
  • I assume we will find a vaccine by next Spring.

What does this mean to you? Because all markets have a local aspect to their economy, you still have to watch what’s going on in your region and make decisions based on your local prospects. 

Prediction #2 – The residential cocooning trend will grow stronger than ever.

We have been experiencing a cocooning trend for almost 40 years, and it will continue to grow stronger. The residential market will continue to benefit as people work from home.

There has been a large peak in many parts of the country in residential landscaping. Some of you were caught by surprise at the surge, and you are having to play your A-game to staff up and take advantage. Remote services (see below), subs and the right equipment will help you fill the gaps. 

Prediction #3 – Freelance remote services from national and global suppliers will fill local needs.

The President recently decided to stop temporary immigrant workers, and that will further shift the trend to hiring local, but in this century people can live anywhere in the world and still work for you. 

You can hire designers, accountants, receptionists, estimators, and many more roles from people living anywhere.

In my community, I am helping landscape entrepreneurs make this a reality. You should be focused on this too, and start by using freelance websites like Upwork.

By the way, by the end of the decade, I predict remotely operated equipment will become a reality!

Prediction #4 – The Pandemic will likely continue, but don’t get down about it.

It could take up to another 20 months for this virus to run its course. This is reasonable based on how pandemics work. Areas that were not initially impacted by COVID will see their time come. Don’t fret, just be prepared.

The one hopeful caveat is vaccine; my guess and hope are that we will see one by next Spring!

What should you do? 

  1. Internalize your lessons from this past round of closures, be clear on what worked well and what didn’t. 
  2. Get your operational software systems up to par and working well, so you can shift to remote work quickly and smoothly as needed. 

Prediction #5 – The government will provide additional support this year.

I believe the government will provide an additional round of support. It will not mimic what they did in the first round, but rather they will learn what worked and what didn’t and make an adjustment.

Having said that, you should operate as if that won’t happen. Do the following two things:

  1. Treat your PPP money as a loan, and not as revenue or profit or a windfall.
  2. Make sure your “operating cash flow” is positive each month and quarter, i.e. continue to find ways to upgrade your profitability and cash flow, and measure it ongoing.

Prediction #6 – More and better employees will enter the green industry.

The better companies realize they should recruit the best employees. Not the best landscape employees, but the best people, period.

How do you best take advantage of this?

  1. Create a “Values/Skills/Results” scorecard to score the people you are interviewing, to make sure you are clear on who you are looking for, and to avoid making emotional hiring decisions.
  2. Continue to gamify your company, so that the better employees will see how they can ‘win’ in your company.
  3. Implement “Train the trainer”, so you have your best people armed to do their best training. Don’t assume good people know how to train. Pick the people who are best at training, and show them how to become expert trainers. 

Prediction #7 – The companies that professionalize will own the market.

With so much professional money (e.g. private equity) entering the green industry, there is increased pressure to compete at a higher and more professional level.

It will be harder in the future for a mom-and-pop firm to compete without taking steps to operate their businesses as a professional enterprise.

You have to learn to excel in your professional management approach: numbers, metrics, team building, coaching, organizing for growth… and ultimately, in planning for a smooth exit even before you are ready to exit.

Your Challenge:

Take advantage of these trends while remaining nimble as events continue to evolve and new future trends come into view.

Discuss these trends with your team and identify the opportunities that exist now for your company to keep growing and improving during these next two years.