Get Green Acres Growing Again

Presiding over a growing landscape business can be an exciting time. But what happens when things suddenly turn south and overhead soars toward 40% of revenue?

Craig Kopfmann of Green Acres Landscape & Design in Monroe, CT, had a pretty good idea what he needed to do when this happened to him recently, but decided to seek the advice of a half-dozen other contractors before implementing his 2009 plan of attack.

Green Acres was a focal point of consultant Jeffrey Scott’s Leader’s Edge contractor peer group retreat in late-January (see page 10). After hours of reviewing financial statements, sales histories, organizational structure and marketing plans, the group agreed on a couple of main points:
• It’s unrealistic to think you can simply sell your way out of a downturn, especially in a poor economy.
• Getting your company headed back in the right direction requires a thorough analysis of your finances, operating systems and market—and a focused approach to making things right once again.

REVERSAL OF FORTUNE

Green Acres Landscape & Design was established in 1990 as a one-truck, one-employee landscape maintenance provider for roughly 15 residential accounts. In time Kopfmann became a Certified Landscape Professional (CLP), and his company grew by branching into design/build work.

Green Acres tipped the million-dollar mark in 2004, and by 2007 sales were topping $1.3 million. The company’s maintenance division was growing with plenty of opportunity for continued expansion. Kopfmann hired a maintenance manager (Mike Hehir) to spearhead this effort. He also bought a new truck, and had big plans for finally purchasing his own facility.

Enter the second half of 2008. “Revenues through June were in line with ’07 numbers, with design/build slightly off and maintenance up,” Kopfmann tells. “But after June the bottom fell out. Maintenance was holding its own, but my design/build sales for the summer months were down 80%.”

Installation projects were being cancelled almost as quickly as the Wall Street mess was unraveling in nearby New York City. By the end of 2008 Green Acres’ overhead burden was roughly 37% of total sales, up from roughly 19% of gross sales in 2007. In fact, the company was now spending an additional $59,000-plus on overhead with dramatically reduced sales. “I had a serious issue to deal with,” Kopfmann says.

THE ROOT OF THE PROBLEM

But for every problem there is a solution, and Kopfmann was banking on the Leader’s Edge peer group to help him find it. After studying Green Acres’ financial statements and sales histories a little further, the following key indicators were uncovered:

• Despite the company-wide sales decline, residential maintenance and snow-removal services were both up in 2008.
• On the other hand, commercial maintenance dipped around 30%, residential installs were cut in half and commercial installs dropped to a big fat zero.
• In the meantime, more money was being spent on equipment and administration.

The good news was that, from a project quality and reputation standpoint, Green Acres Landscape & Design was on a very solid foundation. The management team was very strong as well, with Kopfmann being a very beloved employer. But improvements could be made in the way of operating systems, the use of technology, more focused marketing efforts, and the effective utilization of managers, administrative personnel and an accountant.