Edited by Kristin Smith-Ely
Landscape Development Inc. today is one of the largest landscape companies in California. It employs 900 people and is on target to post $100 million in revenue in 2018. Founded by Gary Horton in 1984, the company started out small, like many other businesses like it.
Horton would work at a handmade drafting table that shared a bedroom with his infant son’s bassinette. The company stayed small for the first 10 years while Horton pursued other interests in real estate and software development.
But then came the recession of 1993 to 1995 and an earthquake. Horton, who was finishing up his MBA at Loyola Marymount College, decided to change course and put all his efforts into LDI.
“I intended for this company to be unique, a standout in the industry and a great place to work and develop careers,” says Horton.
And it still is, although there was a time during the Great Recession more than a decade later that things almost took a turn for the worse. In a Q&A with Irrigation & Green Industry Editor-in-Chief Kristin Smith-Ely, Horton shares more on how the company was able to survive tough times and turn into the thriving company it is today.
Q: How did the Great Recession change your approach to the landscape business? There is no doubt the 2007 to 2012 California recession/real estate depression was the single toughest business and financial challenge I’ve ever faced. Not just the severity of the thing, but the duration of it and the unknowns associated with it. No one could say how long it might last; no one knew where the “bottom” was. One didn’t know whether to try and hold on to good assets or employees or cut them loose to keep current costs in line.
Frankly, by 2012, I was a “beaten man.” I’d had enough and was just about to hang up the trencher keys for good. I’d gotten physically and mentally sick from the prolonged stress and felt my real-world health — and perhaps even my life — was at risk.
But then, just before I pulled the ripcord, four remaining key employees pulled me aside and reassured me we could “pull this thing out” and get back ahead again. With their guarantees to stick with the company to the end, no matter what — a virtual bear hug — I felt a huge burden removed from my mind, and I was able to get back in the game.
And, because of their efforts, and the efforts of the whole remaining team at that time, we’ve emerged as a far more successful, far more diverse, and far superior company, now running at over $100 million with a great growth plan and a solid future ahead.
We’ve certainly changed our management practices. Decisions and key functions are much more distributed through a solid C-suite of corporate leadership. I am far less involved in micromanagement and find that the free time allows me to work on larger projects like acquisitions, insurance, finance and expansion.
Finally, as a tribute to the hard lessons learned from the recession, we are far more careful with money, far less leveraged, and much less extravagant than we were in our prior incarnation.
Q: How else is the company different today than when it first began? Plainly, the availability of modern technology has changed work processes. We’re using tools like On-Screen Takeoff (a construction estimating and takeoff solution for contractors and construction professionals) and gave tablet computers to every foreman, which they use for timekeeping, safety training, communication and documentation. When we first started, fax machines were just coming into use; today, everything is about email and texts.
Most important, though, is the cultural shift that took place. Showing greater respect and appreciation toward field staff is today a tremendous focus for us and a company touchstone. California is a very diverse state, and our company fully embraces the strength this modern diversity provides. We’ve also become a “veterans preferred” employer and are pleased to employ many U.S. vets throughout our organization.
Our peak prior to the Great Recession was about 1,380 employees and revenues of $93 million. Specializing in housing, we were highly battered by the recession, and by 2012, our revenue had dropped all the way to $22 million.
Today we’re at over $100 million in run rate with about 900 employees working toward our success. We are also much more diversified, with over $25 million invested in landscape maintenance. And our construction work is less centered on housing alone.
We have a large landscape architecture studio with 13 architects.
We offer landscape maintenance, construction, design/build, and SWPPP (stormwater pollution prevention plan) services. We have offices in Valencia, Corona, Canyon Country, Thousand Oaks, San Luis Obispo, Fresno and Bakersfield, California. By year’s end we will also have fully-featured offices in Las Vegas and Sacramento.
Q: What made you decide to go back to school at the Wharton School of Business? What did you think you had to gain? By 2009, I was really feeling spent from all the bad news as well as the constant staff reductions and company restructurings we did to deal with our ever-falling revenue. It seemed as though there was virtually no way out and surely no easy answers. I felt I needed a business mentality “reset.”
One night, while reading The Economist, I saw an ad for the Wharton Advanced Management Program — a five-week super-intense executive training program at the Wharton School at the University of Pennsylvania. I applied and got accepted.
That five-week course impacted my life like no other educational experience, ever — including all the years of study for my MBA and my undergraduate degree. The course work, my fellow students, the professors — all of them were simply mind-expanding.
There is no doubt that what I learned at Wharton not only helped save our company, but has time and time again benefited my life in the most expansive ways… right down to saving my daughter’s life in India…but that’s another long story! Wharton simply saved and changed my life remarkably.
Q: How has attending business school made you a better business owner? What would you tell a landscape business owner considering it? Landscapers are kind of in a tough spot.
The trade skills needed to be a good landscaper are immense: you need to know horticulture, design, fleet maintenance, salesmanship — the required dayto-day skills related to the function of the business itself are all-encompassing.
But what about managing, growing and optimizing the business itself? What of banking, finance, insurance and human resources? What of discerning potential opportunities and new directions? It’s so much for one person to know. Most landscapers learn their trade but not necessarily the information and skills to build a great financial organization.
Look, spending four years studying finance and more — an MBA is certainly not for everyone, maybe not even for most. But without good finance and business skills, your landscape company isn’t going to be able to stand out and achieve outstanding results.
So, read business books. Read about management. Read about HR issues and procedures. Study basic banking and read up on basic business finance. You need to know about business, but you don’t necessarily need to go to the long-term commitment of getting a formal business degree.
That said, the most successful landscapers I know all have business degrees. And, by the way, just look at the resumes of the leadership behind BrightView. You’ll see Wharton’s name there a number of times.
Q: What advice do you have for landscape businesses that may be struggling today or thinking of calling it quits? As we work with companies seeking to sell or be acquired we’ve noticed some common themes. While each owner has his own reasons for selling, often there’s some hidden motivation. It can be because things have “just gotten to be too much” or results haven’t been “as good as they used to be.” They get tired of the day-to-day grind that our industry can put owners through.
Some operators are “too close” to their businesses to see problems that others might spot at a distance; i.e., maintenance accounts that have gone too long without reasonable price increases; routes that have become inefficient with too much “windshield time;” clients who consume too much management time because they are difficult to please or hard to collect from or clients who demotivate your people.
Sometimes a company can gain profitability simply by cutting out or reducing these profit-stealers. Often, just cutting out the bad stuff and reorganizing assets and potential within a struggling business will right the ship.
My advice to a struggling owner would be, before he jumps ship, is, hire a good business consultant to assess the problems and see how the business could be improved. He may find he can flip his business into something simpler, easier and more profitable with less stress and friction.
Q: What issues do you see facing the industry and what do they mean for owners? Clearly, there’ll be further consolidation at the top levels, where the top two to three companies will control a huge revenue base, and the top 20 will do as much business as the combined hundreds below. We expect this to continue to grow to critical mass so they can compete with anyone in their chosen markets. As for ourselves, we’ve completed one acquisition this year and have three more lined up to complete before 2019. We see 2019 as a $120 million year for us, largely because of these acquisitions. Surely, other companies of our size and larger are making similar moves to remain relevant and leaders in their areas.
Certainly, big national accounts will be further consolidated to the very top national and regional landscape companies, effectively blocking out the smaller guys from such work.
That said, landscaping remains very much a “who you know and who your friends are” business. It’s often local, city by city, community by community. Landscape companies should work hard to differentiate themselves in their communities and gain community awareness. Public service, good causes, giving back, strong marketing and imaging — all of these will cement a company’s success in its local area, despite the presence of a giant firm like BrightView.
Local guys can give specialized service like the BrightView guys will never be able to provide, because they don’t have local owners caring about things the way that local owners do. So, opportunity will continue all along the spectrum.
Automation is plainly coming to town for landscaping. Americans have robotic vacuums now; it’s not hard to see the day coming where lawnmowers will be self-driving too. This will have a profound impact on our industry and will help ease the landscape labor crunch.
Along those lines, but in the opposite direction, is the current Administration’s efforts to stop immigration and to harass employers of immigrant workers. That situation may continue until there’s profound change in Washington.
Q: What can we expect to see from LDI in the coming years? A lot. Our top-line goal states, “By 2020, Landscape Development Inc. will be a $150 million multidisciplinary firm improving people’s living conditions and quality of life throughout the western U.S. Equally proficient in housing, resorts, urban infill, design and-construct, site management and energy services, the firm will be recognized as the top go-to for ‘making lives easier and bringing peace of mind’ to critical projects requiring top talent.”
And we’re getting there rapidly. Through acquisitions and organic growth, we’ll likely hit $120 million to $125 million by 2019.
That’s certainly in striking range of 2020. By the end of 2018, we’ll have new offices in Sacramento, in Nevada, and likely, in San Diego. We’ll have mobile operations in Texas starting in 2019.
We’ve worked hard on our business plan and the financing behind it. Now it’s a matter of executing on the details, and execution is simply the discipline of getting things done. We know what we have to do. And we’ll all work together to do it.
To be continued ….
The second part of the interview with Gary Horton will appear in the November issue of Irrigation & Green Industry. In that article, Horton will share more on the importance of developing a company culture and how that leads to employee attraction and retention.
Gary Horton is president and CEO of Landscape Development Inc, an integrated site and landscape services company based in Valencia, California. More information about the company is available at landscapedevelopment.com.