May 1 2004 12:00 AM

A recipe for success

No matter how skilled you are at creating a product, marketing that product, or providing a service, if you want to succeed in business you must have good management skills.

But what exactly does that entail? People in the know, and by that, we mean people who have successful businesses and who experience growing profits every year, understand that a complexity lurks in that obvious phrase. A business can be managed well, or it can be managed poorly. Plans and goals can be set, or a company may be content with making it up and shooting from the hip as they go along. A company could be complacent with profits, or it could have a genuine hunger to improve gains year after year. Are the employees cared for, thus giving them reason to care for the company? What about liability insurance and other legal issues? Suddenly, managing a business is more than an obvious act a company undertakes; it is a process that composes a companys lifeline. The business end of your business is more important than you may think.
By any measure, this year will be one of the most important in the 37-year history year of KEI (Kajawa Enterprises Inc.), a full-service four seasons grounds management company in Cudahy, Wisconsin. KEI reorganized, moved into a new building, and is still working the bugs out of a new software system.
A lot is at stake and even Ron Kajawa, the companys chairman of the board, conceded that making all those big changes at once could have led to serious problems. "It had the potential to be one big Molotov cocktail," Kajawa recalled with a laugh. "If changes dont seem to be going right for a company, it can be tough to get employees to adjust."
Kajawa conceded that during the transition, the company experienced " a few glitches here and there," causing " heartburn and consternation for its management." But he added, "As time goes by, the changes seem to be working."
The companys approach to management has been the key, Kajawa revealed. "Once your business has a well-thought out plan in place, it needs to give itself time to make it work," he explained. "Along the way, you need to communicate to your staff what you are doing, and why in the long run it will benefit them."
KEIs experience with change shows how difficult it can be to manage a lawn care contracting business. To succeed, managers, whether they are responsible for a few workers or several hundred, have to develop the skills needed to handle a number of activities, including planning, budgeting, marketing and relations with employees and customers. The blunt truth is that if contractors dont focus on the management of business, their costs can get out of line and the profits will go down the drain.
"Im amazed at the number of companies in our industry that still try to operate without a budget," said Tom Davis, president of Bozzuto Landscape Company in Laurel, Maryland. "How can you plan anything if you dont know what the costs will be?"
Thats an important question. To find answers, we talked with several successful contractors and management experts to learn how they should manage the key areas of their businesses. Here is some sage advice that can help you be more successful.

Managing Outside the Box

Kevin McClaren, the owner of U.S. Lawns of Mongomery (Maryland), likes to be different. So when he bought the franchise six years ago, McClaren decided to do something for his employees that would make his company stand out to our industry: offer an employee benefits program thats hard to beat.
When his H2B workers want to return home after the season is over, McClaren pays their bus fare or air fare, whether they going to Mexico or Honduras and whether it costs $200 or $800. When the workers return for the next season, they can look forward to free housing, even though furnishing the apartments costs McClaren between $12,000 and $15,000 annually.
"We are growing, so this spring we brought in fifteen new workers," McClaren recalled. "The first thing the workers did when they arrived was to call their friends at the other lawn care businesses in the area to brag about the benefits. Sure its costing us money, but in the long run we are retaining a dedicated and loyal group of employees."
Its hard not to be loyal to a company that counts the time when an employee is laid off as service time. If, for example, an employee works from March to December, but is then laid off in January and February and comes back to work in March, its still a full year of employment by McClarens calculation. That means these employees get to keep their sick days and paid holidays and are still eligible for profit sharing.
There are other "perks" but you get the picture. "Its cheaper to retain an employee than it is to train a new one," McClaren emphasized.
So how much does it cost McClaren to play Mr. Nice Boss? "We figure it ads about $1.75 to $ $2 to a workers hourly salary," he revealed. "Sure, it costs us a couple of percentage points in profit, but in the long term we are investing in ourselves.

Companies have an idea about what they want to accomplish during the year, but all of our sources said its impossible to be successful without having a long-term strategic plan in place. The timeline of such a plan can vary from three to five, or even ten years, but it must be realistic in its objectives and expectations.
Developing a strategic plan involves three steps, according to Davis: establish the plan, get your employees to buy into it, and communicate its content and objectives continually. "Dont keep company employees in the dark, and once its in place, dont put it in your desk drawer and forget about it," Davis advised.
The key managers at Gachina Landscape Management in Menlo Park, California, meet annually to review their companys strategic plan. "Our growth can change and so can the economy and our opportunities," explained John Gachina, the company president. "The strategic plan needs to be looked at periodically."
Preparing the budget can be as tough as figuring out where your company will be in a year. How many of us figured right that the cost of gasoline would go sky high this year? Thats why the budget shouldnt be set in stone. For Bozzuto Landscape Company, the budget is done at the beginning of the fiscal year on April 1; but in July, that is, the end of the first quarter, its revised again.
KEI also reviews its budget. "Controlling your fixed expenses and capital outlays is the key to making your budget work," Kajawa said.

Four Tips for Handling Phone Sales and Messages

1. Ensure your message is a commercial for your business by addressing one pain the customer may have and one gain you can offer
2. Speak at a cadence that makes your message easy to understand
3. Tell the caller the approximate time you will return the call (e.g. within two hours this evening)
4. Dont dally; get back to the caller as quickly as possible

Source: Linda Hanson, Certified Management Consultant, LLH Enterprises

Managing employees is not difficult, say sources, if you treat them with respect and are honest with them. Surprisingly, most of our sources dont rely on the H2B program, but they do have employees, many of them Latinos, who have been with them for twenty to thirty years. "Today, the children of employees who started 30 years ago have joined their parents and are working for us," said Donna Vignocchi, vice president of ILT Vignocchi Inc., in Wauconda, Wisconsin, which was founded in 1969, and employs more than 200 workers.
For ILT Vignocchi Inc., treating employees with respect means helping them reach their potential. The company provides low-cost loans for employees, and grants annual stipends of $2500 to help them attend continuing education courses of their choice.
Like the other companies weve profiled, ILT Vignocchi offers profit housing, health insurance and other company benefits. Bozzuto Landscape Company has what it calls a "Seven Year Club." "We put 25 percent of the corporate profits in a pool, and employees who have seven years (with our company) split it," Davis explained. "Its a way of investing in our future."
Gachinas employees receive company benefits after six months on the job. "We want to retain workers with potential," Gachina explained. "We are growing each year, and need to keep our team strong."
When employees face some kind of serious problem or trauma - divorce, drug dependency, alcoholism, a sick childeven bad teeth - try to help. Gachina gave one employee an interest-free loan of $5000 to get his teeth fixed. "He paid us back, but the important thing is that we showed him and other employees that we can be as loyal to them as we hope they are to us," Gachina said. "At every opportunity we try to foster a family atmosphere."
If your company cant provide interest-free loans, health insurance, or profit sharing, it can still do a number of useful things to improve management-employee relations. For example, it can offer awards, picnics, or Christmas dinner, and buy donuts for breakfast or pizza for lunch.
Communication, respect and integrity are sweet sounding words successful contractors use to describe whats important in dealing with customers. Make those words a part of your corporate vocabulary and customers will stick to you like money does to Warren Buffet.
"We have a ninety percent retention rate," said James D. Reeve, president and CEO of the Maryland-based Chapel Valley Landscape Company, which employs about 460. "Our policy is to treat the customers property like our own. We instill that mindset in our employees."
Do you know what kind of customer your company wants to reach? "Unless you are a giant in the industry, a contractor cant be all things to all customers," said Bryant Jernigan, owner of U.S. Lawns of Memphis (Tennessee), which has nine full-time employees. "Once youve checked out the potential clients and have decided to do business with them, its a matter of understanding their needs."
Do that by constantly interacting and following up with your customers. Assign one of your employees to be the contact person for your clients. Jernigan gives his clients a checklist to complete, and then rides the property with them to "get a sense of their expectations."
Its important, too, to educate the customer. "Determine the customers knowledge base; that is, find out what he knows about our industry and what other landscape contractors have told him in the past," Reeve advised. "Once youve identified his expectations, tell him whats realistic and whats not. Customers will appreciate your candor."
Kevin McClaren, owner of U.S. Lawns of Montgomery Valley (Maryland), who has been landscaping since 1991, added, "My experience has shown that it takes at least seven to nine interactions with a customer before he begins to trust you."
Once you have the customer on board, follow up, follow up, and follow up. Ive never employed a lawn contractor who called me after he finished the job and asked: How was the service?" said Linda Hanson, a certified management consultant who advised an irrigation distributorship in Dallas, Texas, for several years. "Once the job is finished, its important to keep the customer close to you."
And dont hesitate to do something additional for the customer if he asks after the job is finished. "Normally, we dont charge the first time that happens, but if the customer wants us to do it on a regular basis, we will try to negotiate a change in our contract," Kajawa explained.
When marketing your company, remember that integrity is the key to success. "Communicate something false about your company or presenting an image that doesnt match your corporate culture wont work," Vignocchi said.
Little things can affect the image of your company, as well as the profit and loss statement. For instance, check out the condition of your trucks, the appearance of your employees, and even where they eat their lunch while on the job.
But there is no one correct way to market your company. Direct mail, "cold calling" on the telephone, door hangings, advertising in the yellow pages, sending out an email newsletter, putting up a slick website, joining trade associations like Associated Landscape Contractors of America (ALCA) may work fine for some but not for others.
Yet as Hanson emphasized, "Be aggressive and be consistent. And as Reeve added, "Its important to be visible. We like to sponsor charities and local community events."
Managing well involves getting all of your legal ducks in order. This means having enough liability insurance (at least $2 million), staying on top of workers compensation claims and ADA (American Disability Act) issues and handling overtime pay correctly. In the post 9-11 world, its important that an employees paperwork be in order. "Dont hire an employee if you suspect something is not right," Vignocchi advised.
For a growing contracting business, it often seems that the day doesnt have enough hours to get everything done. Thats where Tom Davis believes technology can help. All members of his management teams use a variety of what he says are "time-saving management tools," from Palm Pilots to lap tops to devices employing Blackberry technology. "Using state-of-the-art technology has freed up time that we can use to see our customers more often," Davis revealed.
So there you have it - management tips from some successful companies in our industry. Its now up to you to take the advice and see what will work for your company. Go for it!

May, 2004