Now that the busy spring is over, our Turnaround Tour winners have settled into the season and are getting a grasp on their numbers, managing workloads and getting rid of overhead. As The Harvesters, Bill Arman and Ed Laflamme, continue to work with them, they are seeing some good progress, but a lot of room for improvement.
Wade’s Lawn Service: Back to basics.
Last time we checked in:
Wade’s Lawn Service revamped their sales strategy and brought their fleet up to standards. They also ironed out some hiring issues by paying a few dollars more an hour, which has worked with recruitment and retention. The company also over-hired at the start of the season knowing there would be turnover, and co-owner Deborah Wade says they have enough workers and are happy with the staff.
“The amount we are paying them, they are fine and working here,” she says.
Wade’s must get back to basics when it comes to figuring out gross margins, and how much revenue is coming from maintenance and how much is coming from enhancements.
Deborah has hung a whiteboard in her office with all their employees’ names written on it. The board will also have the hours someone worked in maintenance and enhancements and is a straightforward way to keep track of how much time a worker spent in each area.
The workers will write the hours they spent on maintenance work and on enhancement work on their route sheets. Deborah can collect those and then transfer that information to the whiteboard.
“It’s going to help us see where we can tweak some things,” she says. “It’s going to help us get better systems in place as far as labor hours and who needs to be where and doing what. It’s just making sure we have people in the right box.”
Bill and Ed’s take:
Ed and Bill think the Wades are making money on jobs but no one is sure because there is no system to track it on a detailed scale. The whiteboard is a good place to start to find out where revenue and profits are produced. Once a daily revenue number can be established, then a more accurate budget can be built.
“We’re going to track them daily, and then weekly,” Bill says. “Then we’re going to get that weekly into a month. Then we are going to get the month into what we call the mini budget. Then we can have a trajectory to see where we are going with the financials both revenue and gross margins. That’s all we care about is revenue and gross margin.”
Bill and Ed would also like to change the way Wade’s bills for mowing. Instead of charging per mow and billing at the end of the month, they want to figure out how many mows they do in a season for a customer, and average that out on a monthly payment schedule. For example, if a company mows 30 times a year and charges $75 a mow, they can multiply those two numbers and then that by seven (if it’s a seven-month season), which would come out to about $321 a month.
“We are trying to get them to charge that at the beginning of the month, rather than wait until the end of the month, for cash flow,” Bill says. “That’s a big step for these guys and their customers.”
Vineland Landscaping: Identity crisis
Last time we checked in:
Vineland Landscaping was working on improving accounts receivable, and have moved some clients to pre-billed contracts so they will pay for maintenance services before they are performed, similar to what Ed and Bill want Wade’s to do. They also hired a virtual assistant as a friendly reminder for clients to pay. At 30 days, the client gets an email and at 60 days they get a call. The company discovered customers aren’t annoyed, but more embarrassed they haven’t paid yet, says Will Gruccio, president.
“We were always of the mindset that we don’t want to harass people because no one likes that,” he says. “At the end of the day, people are actually happy about it, which is really interesting, because I did not think that would be the case.”
Gruccio alerted close customers ahead of time that they would be contacted via email as a reminder so they weren’t offended. Over all, he was happy with the change.
“It still is a problem, but it’s better than where we were. I won’t think that it’s fully corrected until next year, but we’re in a better place,” he says.
Two major problems arose recently, the first of which was taking on too much work. Gruccio says he wouldn’t have been able to get the equipment or employees soon enough to maintain the quality of work Vineland wants to deliver.
One idea floating around was dropping some subcontract work Vineland was doing. But that may have meant damaging their reputation with the company they were working with. So instead of dropping the subcontracted work, they did something they never have before and subbed out maintenance work.
“We came up with the solution of subcontracting to a sub that we’re very close with and who understood the quality we have to have,” Gruccio says. “It’s a smaller, local company, and they’ve been wanting to work together, maybe at some point even have a partnership.”
While construction helps keep maintenance afloat, Gruccio and his partner D’Orazio need to decide if they want to keep it long term. Gruccio is passionate about maintenance while D’Orazio is passionate about construction work.
“The difference is in maintenance, theoretically, it’s systemized,” Gruccio says. “The business runs itself once you get it to a certain point, which we’re not at, but I can see how it can become systematic. In construction, it’s impossible to become systematic, because you constantly have material orders. You constantly have issues on jobs.”
But construction work is profitable for Vineland and it’s actually supporting the maintenance work while the duo improves their accounts receivable.
They’ve asked Bill and Ed to find a company they can visit to see how a construction and maintenance company should work.
“My partner is in charge of operations and we’re not as efficient as we should be,” Gruccio says. “He takes responsibility for that. I mean, he’s doing a great job, but we want to see what we can change to get where we need to be. For me, I want to see what a larger company what it looks like from their CEO’s perspective.”
Bill and Ed’s take:
Ed says Vineland panicked a bit in dealing with the “100 days of Hell” and the new work they booked. Ed describes the 100 days of Hell as the start of the season to the Fourth of July, when work settles down. Subbing out the work took place of possibly buying new equipment, which they may have only needed temporarily.
“You can’t just go run out and buys trucks for $50,000,” Ed says. “You only need it for six weeks. Go rent trucks”
After getting through the 100 days of Hell, Ed and Bill received the phone call about possibly dropping construction.
The Harvesters try to drive people to recurring revenue, which is why they admit they don’t like construction. “We are guilty of that,” Bill says. “We’ll always sort of pooh-pooh construction because we’ve seen them go way up and we’ve seen them go crash into the ground.”
But Vineland is making money off construction, and enough money to support the maintenance division, so Bill and Ed recommended Vineland continue doing it. And once the construction job is done, Vineland is doing a good job of getting the maintenance work on the job.
“If you are just doing construction for construction and there is no line to long-range maintenance, then it better be making you money,” Bill says. “Otherwise you are just wasting energy.”
Freedom Lawn & Landscapes: Making progress
Last time we checked in:
Heather and Jeremy Dirksen updated their fleet and replaced old non-profitable clients with new profitable ones. Overall, things were going well and Freedom Lawn & Landscapes continues to make good progress.
Heather and Jeremy Dirksen are operating Freedom on a big piece of land with a big shop, a small garage and a cabin that was about 1,200 square feet that they were using for an office. Since they didn’t need that much space, they moved their office to the garage, and have rented the cabin out saving about $1,500 a month.
“It was way more for what we needed for an office, but for its location, and for the garage that we got and the big shop, it was a good price,” Heather says.
Freedom also had a safety inspection performed after hearing how it helped a company that had a fatality.
“They were able to go back and show that he had done an inspection, they passed the inspection, and that they had done everything within their power to train the employees to prevent accidents like that that happened,” Heather says.
But it’s not all sunshine at Freedom – one of their oldest spray trucks broke down and Jeremy isn’t confident it’d be worth the cost to fix it, which means they may have to purchase another one.
“We haven’t decided a number. I mean, if it’s a couple grand, we might fix it, but if it’s any more than that, we probably won’t,” he says.
Bill and Ed’s take:
The company is in a great spot and heading in the right direction, but Bill and Ed would like to see Jeremy continue to delegate field work so he can work on bigger picture items.
“The problem is he gets swallowed up by it and it takes all his time up,” Ed says. “As he grows, he has to grow out of that. Then I’d like to see him run the operational part of it, but not be required to work in it. By next year he should be there.”