SuperScapes crews have nothing to do with zero-turn mowers, edgers or routine grass-cutting visits to customer accounts. At this 100-percent design/build firm in Wilmington, North Carolina, the bulk of the business is new construction installations for a couple of national builders.
“Even in the worst of times, those guys still build,” says Dane Milligan, president. Most design/build firms pick up some maintenance for the recurring revenue.
“Honestly, I used to do maintenance and I never had my heart broken so much,” Milligan says. “We felt like we gave so much energy and effort to maintain a property and no one was ever happy. I’d walk the properties, and they’d look good. Then we’d get an email or phone call at 9 p.m. about one weed in a bed.”
The only maintenance SuperScapes performs is on some model homes. Milligan intends to keep the business this way, diversifying with the installation services: hardscape, retaining walls, irrigation systems, site solutions and grading.
SuperScapes employs 22 people and did $2.5 million last year. The company is growing, on pace to break $3 million in 2017. The new construction market shows no sign of slowing down, Milligan says, noting that the last few years have been particularly strong.
Most of SuperScapes’ installation business is focused on new construction – some national companies including D.R. Horton and Pulte, along with a range of “semi-custom” builders that deliver higher profit margins.
“It’s a good balance for us because we get stability with installation from the national builders, and our semi-custom builds are very profitable,” Milligan says.
You have to spend money to make money. That’s the reality with materials-intensive work where cash outlay for plants, soil, hardscape materials, irrigation parts and more requires an investment before invoicing. Milligan learned the hard way with a significant commercial installation job back in 2010 that he estimated at a tight margin to win the bid.
“We ended up getting paid only a portion of that,” he says.
Materials were acquired, but, not only was the pay slow, it never came in to compensate for the job. Milligan notes that since this time, North Carolina has put regulations in place to protect contractors more so than ever. As long as lien waivers are properly filed, regulations now put vendors ahead in the lien process.
If a developer is not paying on time or in full, those vendors are compensated for materials first. While they must still collect for their labor, the contractors benefit because they aren’t responsible for materials costs.
“We went back to residential installation jobs where I could get paid every week or couple of weeks, so the cash flow was fine,” Milligan says. The business has mostly stayed away from commercial after that experience.
What Milligan ultimately learned is that any way he can streamline the business is beneficial for cash flow. He’s focused on volume purchasing to save time and money on materials, capturing unbillable hours by reducing wasteful shop time, improving routing and automating as much of the business as possible.
Materials matter: Projects are designed a couple months in advance using software that allows Milligan to do accurate field take-offs from the office without wasting man-hours in the field. Because of the advance planning, materials for several jobs can be purchased in bulk to save cost.
“We save a percentage, and we can load the truck with materials on site and we don’t have to wait on materials to finish jobs.”
Shop time: With 20-plus employees on installation job sites daily, the gathering of materials and equipment at the shop could seriously eat up billable hours. Staggering the start of the workday helps. Five foremen arrive 30 minutes early to load trucks.
Better routing: Even without any maintenance business, routing is still crucial.
“It’s different than maintenance or lawn care, but we try to have two or three houses ready to install in the same neighborhood at the same time so we can eliminate windshield time,” Milligan says.
He analyzed the numbers and figured out that by doing the same exact jobs on one street vs. driving across town, he can save $6,000 to $8,000. “That’s the difference in sales if jobs are lined up right,” he says. (This includes materials being on hand.)
Automating the business: Software has helped SuperScapes save time by doing measurements and designs in the office rather than eating up hours in the field. But what you put into these software programs dictates how effective they are.
Milligan says he took a good look at the bottom line, overhead, materials – and warranty costs. “We figured out our break-even point and we know how efficient we need to be to hit our profit margin,” he says.
The team is focused on hitting a certain dollar amount per crew, per week. Linking crew efficiency to dollars helps them understand how their production fits into the success of the company.