Grow Your Landscape Business Exponentially
Justin White, CEO of K&D Landscaping, took over the family business in 2015. Since then he’s grown the company from $2m to $10m in 2021. He says vision and culture are what have helped bring him and his company success.
Vision means having a purpose and a strategic plan for the future. Justin’s ten-year goal for K&D is to have 300 employees and $30 million in revenue per year by 2030. He worked with a business coach to break the ten-year plan into five-year, three-year, and one-year objectives to help him reach $30m. K&D also breaks down its one-year plan into quarterly goals.
Culture is the vehicle for creating buy-in for the company’s vision. K&D Landscaping has built its culture by investing in its employees, which includes 401k, competitive pay, training, and promoting from within, along with other benefits. He says it’s important that supervisors buy into the company’s vision and are equipped with the tools to communicate its vision with their teams.
Justin says the best two things he ever did to help grow his company was investing in a business coach and hiring a full-time HR manager. A business coach can help landscaping executives identify their weaknesses and double down on their strengths. HR managers are one of the main agents of promoting culture. Justin highly recommends that any landscape company with 20+ employees invest in HR as soon as possible.
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FULL TRANSCRIPT:
Ty Deemer:
All right, everyone. Welcome back to Green Industry Perspectives. I’m your host, Ty Deemer. I’m on the marketing team here at SingleOps. We’ve got a great episode for you today. We’re going to have Justin White on the show. Justin is the CEO at K&D Landscaping, has a ton of experience in the space. We’re really excited about the episode we have for you. Justin, welcome.
Justin White:
Well, thanks, Ty. It’s a great pleasure to be here with you today.
Ty Deemer:
Yeah. Absolutely. Justin and I are on opposite ends of the country right now. I’m in Atlanta, Georgia. He’s out in California. Justin, we always like to start off every episode with a similar question to provide immediate value to the audience. It’s pretty straightforward. In your experience as CEO of K&D Landscaping, what do you feel like are the top two to three trends or things that have helped make you and your company successful over the years?
Justin White:
I love diving right into it. First off, I think it’s vision and culture. For us, having a clear vision of where we’re going, which means having a ten-year target, a five-year target, a three-year target, and a one-year target, and ideally, you break that one-year target down into quarterly targets, and you bring your team along with you to that journey. That target, also, that vision also includes what your culture looks like, including core values. What’s your core purpose or mission statement? So your team knows where they’re going, and they can come along that journey with you. So I think, for me, that’s number one. You have to have a vision of where you’re going.
Justin White:
Second, for me, personally, what I really enjoy is having a hunger for knowledge, so being hungry to learn more, whether that comes from an entry-level tradesman that you have in your company or that comes from a mentor or business coach, or possibly from a supplier vendor partner. You can find knowledge all over the industry. But, for me, it’s just staying open-minded to any kind of opportunity.
Justin White:
Number three is going to be, for me, recently, it’s been shifting my focus from building a business and going after sales, to building people and helping those people accomplish your vision. So it’s shifting that focus away from, as we scale, and we’ll get into the background and our company size in a minute, but as we scale the company, it’s really shifting as a CEO from sales and client focus to your internal team, and building leaders within the industry who can take over estimating sales, project management, et cetera.
Ty Deemer:
Yeah. That’s really cool, too. I think that it kind of coincides with what you were talking about, sharing that vision as well, because to be able to communicate and shift to build people, they need to be aligned with the vision that you have for the company. Whether it’s the targets you’re hitting or it’s the core values, all those kind of work together. We’ll dive into them a little later on.
Ty Deemer:
You mentioned your background. We always like guests on the show to share with the audience just who they are, not only in terms of the company and the services you offer, the size of the business, and the journey, but also personally, how you got involved at the job. I think the origin stories are always super interesting and provide some awesome context for the show. So tell us a little bit about you, and then how K&D Landscaping came to be, and then talk us through the journey today.
Justin White:
Yeah. We’ll try to keep this concise and quick because there’s a lot to unpack in that question. First off, K&D is my family’s company. My parents founded K&D Landscaping in 1986. I was born in 1989, so I literally was born into the business, grew up on the job site, and took over as CEO in 2015. That’s just big picture. I was always around it. But going back, let’s back up to high school for a minute. In high school, my vision was definitely to not work for the family business. It was I don’t want to do what my dad does and push lawnmowers and build retaining walls. That just seemed like hard work. I mean [inaudible 00:04:17] for a 16-year-old high school kid. I was like, “There’s got to be a better way to make a living.”
Justin White:
I saw my friends getting jobs and learned about the industries and opportunities. I had a huge desire to get into business and business management, but I knew that it’s not something you can just walk into. My plan was to go to college, get an engineering degree, and decide what I’m going to do from there. But what happened is 2008 happened right about the same time I graduated, and our company tanked. We went from doing almost two million in sales to dropping down to about a million in sales. My dad needed my help in the business.
Justin White:
Before that, I worked during the summer, so I knew what landscaping was, and I knew how hard it was. But after graduating high school, or right in that time, I started working full time for my pops, and it was an immediate love for the business. I loved to take a blank slate backyard and create a beautiful landscape out of that. The clients were so happy at the end of the day. The relationships we built with the clients were pretty powerful, and I quickly saw that there’s an opportunity here within my family’s business to accomplish my business management goals while benefiting my family.
Justin White:
I have a younger brother and a younger sister. As the years went by, we all started getting involved with the company. My cousin who lived with us at the time, this is 18-19 years old, about 2010, she got involved with the business as well, and it really was this family opportunity. I saw this opportunity to build our business to be bigger [inaudible 00:06:05] and cousins an opportunity to participate, make a good living, and give my parents an exit.
Justin White:
So we started building up. That’s when we really started to grow the business and grow the operation. We grew the operation from about 1.5 to two million in 2015, to 10 million today. That journey over the last five years has been pretty incredible. We’ve added over 100 employees in the last five years, and we’ve grown to a point where the momentum is really starting to take over. So that’s kind of how we got here today. That’s the big picture overview. There’s a lot of stuff along the way, but that’s basically our history.
Ty Deemer:
Yeah. I love that, too. It’s interesting because when you talk about family businesses, there’s often this dynamic where everyone kind of goes through it, I feel like, where they’re like, “Eh, do I really want to be in that? Do I really want to do it?” And for you to enter into it in such an interesting time in the world, a tough time for a lot of people, that had to be probably … Talk to me through what that was like for you, because I imagine you weren’t expecting to go and do it, and then you’re in it, and you’re in it with a family business, where there’s so many moving parts, and there’s relationships internally, externally. What are some of the memories you have from the early days of that?
Justin White:
Yeah. I’ll just go back to 2008, 2009, 2010. Those three years were really difficult. But it was weird because we ran the business out of the ranch. We had a four-acre ranch, not a huge ranch, but big enough where we had a yard and an office. But it was still on the same property as our house. We all operated in a very close family unit, where we had dinner at home. But it was still kind of part of the business.
Justin White:
There was just constant business talk, whether it was around the dinner table or in the mornings. It was just all business all the time. Honestly, it was exhausting at times. But also, there’s obviously a lot of passion there, through my dad, my brother, and I. My mom, of course. Our whole family. It was just a family business, and we were trying to figure out how do we get through this recession? Line of credit’s tapped out. We’re not sure how to make payroll some weeks. I distinctly remember driving around to client houses, picking up checks for $2,000 so we can pay our guys on Friday. All day Thursday we’re picking up checks and depositing them in the bank because money was so tight. So it really taught me how to manage that really closely.
Justin White:
But some of the challenges with family is that it just doesn’t stop. Whether it’s around the dinner table or it’s at Thanksgiving or Christmas, the business conversations continue. You really have to make a conscious effort to put a line in the sand to say, “Hey, we’re not going to talk about business tonight. We’re going to enjoy the company of our family.” That’s definitely one of the biggest challenges that we’ve ran into.
Ty Deemer:
Yeah. That makes complete sense. I bet that’s something that a lot of people in your shoes deal with. As we kind of talk through some of the more topical conversations we’re going to have today, give the audience a little bit, a frame of reference for where K&D is today. What services do you all offer? How big is the service area? Maybe employee count size, revenue, just to give people an idea of you’ve been in the family business for a long time. Where are you all today?
Justin White:
Yeah. I think this story [inaudible 00:10:01] or if it was seen in your second generation, maybe you’re not a business owner yet, and your parents own a landscaping company, and you’re thinking about taking it over, I think this message will really resonate with you.
Justin White:
Going back to 2015, my parents had a divorce. My mom decided that she wanted to move out of state and get bought out of the company. This came as a big surprise, but it also came as an opportunity for my brother and I and my sister to buy into the company. In 2015, we transferred ownership and bought my mom out with a five-year buyout plan that we financed through the bank, so it really wasn’t a cash impact on the business. And I was appointed CEO. My dad obviously was in kind of a weird headspace at that point, after 30-plus years of marriage, so he kind of had to take a little bit of a sabbatical. And myself, my cousin Jessica, and my brother really headed up the day-to-day operations.
Justin White:
It was about a million and a half dollars at that point. We really focused on vision, and we put together a roadmap. The goal right now that we’ve had since 2015 is to achieve 300 employees by 2030. Another metric is 30 million by 2030, and we’re right on target for that. Today we have 110 employees. We’re spread out over five different departments. Our first department is going to be our commercial installation. It’s primarily prevailing work, prevailing wages, public works installations, large scale. A million dollars and up is our ideal client for that department.
Justin White:
Our second department is residential installation, custom design build, really nice high-end backyards. We’re basically in a 50-mile range of the Silicon Valley here, so we get a lot of executives from the tech companies that move to our area, which they love to spend money on their backyards, which is awesome. And then our third department is going to be our commercial maintenance department. We do not do residential maintenance anymore other than a few select clients. Our primary focus is commercial maintenance, HOAs, hospitals, private resorts, private schools, so on and so forth. Typically, large campuses.
Justin White:
Our next department, our fourth department, is our enhancement department. That primarily services our maintenance department, does upsells for those properties. They also take on special projects like cleanups and fire prevention, work like that. Our fifth department, which is brand new, we just launched this department this year, and we’re picking up a lot of momentum, is our water management department. Our water management department is focused on reducing our clients’ water bills to save them money, specifically during this drought period in California.
Justin White:
So those are our five departments. In total, we’re going to do about 12 million in sales this year, with, like I said, about 100 employees. We’re currently operating out of one location. We’re looking to add satellite branches, but right now it’s all under one location at a headquarters here in Watsonville, California. That has definitely created some challenges with space as we continue to scale. But that’s the big overview of our company. We’re a very diverse company, and the structure of the company, I think, is very important when you get to this size, to have the right people as department leads for each department.
Ty Deemer:
Yeah. That’s an incredible journey. I’m sure we’ll talk through later in the show, we’ll kind of give people the frame of reference for how you’ve grown that much since 2015. I think it’s kind of a good segue to circle back to one of those earlier threads that you talked about that have led to your company’s success. And that’s vision, to have a vision for where you want to be, employee count, revenue, all of those things. It’s probably unique to a lot of people to have it planned that far out in advance. So I’d love for you to share, what did it look like for you and your brother and your cousin to sit down and say, “This is what we want to accomplish”? And then how did you get to that, and how did you then communicate that internally to your team?
Justin White:
Yes. In 2015, it all started with a question from our business coach. And I do want to say business coaches are very valuable. I think they’re worth the investment. They’ve paid off in great dividends for us. My business coach, Jonathan Goldhill, asked, “Where do you want to be in 15 years?” It was just a random question that I’ve never been asked, and I said, “Well, I don’t know. I want to have a 300-person company.” I just literally pulled that out of the air. We started talking about what that means, how much in revenue, how many locations, and we just did a vision board of what all this means, to have a 300-person company, and it really started to come to life.
Justin White:
As we started to define that goal of 300 by ’30, it really had a nice ring to it, and from there, we just kind of engineered going from 300 employees in 2030, and we just worked our way back. Where did we need to be every year to hit that target? How much do we need to grow? We built in at least one recession, which we haven’t seen yet, but I expect will come in the next nine years. We’ll see something. And we built that out, and it worked. Everyone picked up on it, and we got a lot of buy-in from that.
Justin White:
We had about 12 employees at that time, so it’s a lot easier to get buy-in from 12 employees than it is to get buy-in from 100 employees. But if you have that vision and you start to hire, you can onboard people by training them to live that vision and live your core values. If you don’t have alignment around your vision, from your new hires, then they’re probably not a good fit. You’re going to want to find someone who may be a better fit for where you’re trying to take the company.
Justin White:
As you continue to scale, you have to look at that vision, break it down into annual targets and quarterly targets and adjust based on your environment, the economy, your employees, and everything else, all these variables that come into play. So, for us, we have an all-day offsite strategic planning session every single quarter, and we talk about … We start talking about the 2030 goal. Are we on track? Are we all on the same page? So far, it’s been a yes for the last six years. And then we step back and say, “Okay. What’s our three-year goal?” And we define that. And then we say, “Are we on target for that?” And then we break it down into a one-year goal. Are we on target for that? Through that process of quarterly strategic planning sessions, we’ve been able to update and keep to date our three-year plan, which has enabled us to hit our growth goals and exceed them most years.
Ty Deemer:
That’s really cool. As a leader of a company your size, how do you decide who to include in that quarterly meeting? Is it everyone? Is it a specific leadership team? What’s your mindset behind starting off with the core nucleus and making sure they’re able to communicate it out to the rest of the company? Do you ever get on a platform to communicate it to the company as a whole? I’m just curious what comes of those meetings.
Justin White:
Yeah. Well, great question. It has evolved. Basically, every year for the last five or six years, these quarterly planning sessions have evolved. At the beginning, it was the ownership team. That’s it. Pretty soon, we were including a couple project managers and account managers. As we scaled, we realized we had to have different planning sessions.
Justin White:
So as of today, I’ll take you through our quarterly planning session week. We do this every three months. It starts off with an all-hands planning session. This does not mean the entire company. It means everyone who is a supervisor or above. Right now, that means it’s about 35 people for K&D, and we do learning. We talk about the vision. We talk about how we just did in the last quarter and where we’re going in the next quarter. We just have a great open conversation about what’s working and what’s not working within the company. It’s the perfect chance for the CEO to give a presentation on vision, because I do believe the CEO’s main responsibility is to share the vision and gain buy-in of the vision.
Justin White:
From the all-hands planning session, we have a leadership planning session, which right now consists of … We call them department leads. You may call them department heads, but it’s basically each person who is in charge of a revenue producing department is part of the leadership team, along with our HR and director of operations. So you have your leadership team who consists of your executive team plus your department heads. We’ll just kind of simplify it down to that. They have their own planning session, which is focused on strategy. You can talk big picture in that meeting. There’s a lot of confidentiality in that conversation because you’re talking about maybe some pretty big decisions that could impact people either positively or negatively within the departments and within the company.
Justin White:
From there, each department breaks out the next day and has their department strategic planning session. So you can kind of see how we go about this. And then, finally, we wrap it all up at the end of the week with a quick check-in with the entire … Ideally, it’s the entire company. COVID has kind of made this really difficult. But, ideally, you have the entire company, all 110 employees, and you give a quick one-hour to two-hour presentation on everything that you’ve just decided and the vision that you’ve created for the next quarter. That’s a perfect strategic planning week. It’s a lot of work. No one loves it, but everyone really enjoys the fact that we have them. It just does take away from the day-to-day operations, so it can be challenging.
Ty Deemer:
Yeah. I really like the premise that you shared, because I agree with you. I think a lot of the CEO’s job, whether it’s at a landscaping company or a software company, is casting that vision and getting buy-in at a base level. But I think you, with that system, also empower your team’s leaders to kind of take ownership of it, because you have your big core meeting, and then it sounds like you’re sending out your leaders to have similar meetings with their teams. And it’s just kind of a trickle down effect. I’d love to hear your thoughts on this, but I think one of the hardest parts of scaling a business is getting middle management or even your secondary leaders to have the buy-in to share it with their teams, or even the tools to share it with their teams, of how to get them to coach it, because you can start the initial buy-in here, but your leaders and their teams have to meet in the middle for it to really go all the way out.
Justin White:
Yeah. Let’s just talk landscape industry specific. It’s one of the hardest parts of a landscape owner’s successful scaling of a company, is getting buy-in down to the entry-level employee. We call them tradesmen here. You may call them whatever, laborers. But, basically, we have a demographic where there’s a lot of Spanish-speaking individuals in our industry. I think a lot of the mistakes that happen is that people focus on their upper management and get them trained up great, but they’re not giving them the ability to communicate that down to the lower-level employees.
Justin White:
Everything you do, depending on what part of the country you’re in, should be translated to the first language of your team. If that first language is Spanish, and you’re going to put out a monthly newsletter, or you’re going to put out some kind of written strategic piece, you should have it translated so every single person in the entire company can read that. You should also train your supervisor teams and your foremen, your crew leaders, on the vision, the core values, and what’s going on in the company, so they can then train the new employees, because those new employees are eventually, hopefully going to become crew leads and eventually become supervisors. So if you can train them from the beginning through a really great onboarding process, you have a better chance of promoting from within, which, let’s face it, in this time, in 2021, you have to promote from within. You just can’t go out and hire foremen today. It’s literally the hardest thing you could do in business, is try to hire middle-level managers in the landscape business.
Ty Deemer:
Yeah. Let’s talk about it briefly, onboarding. What are some of the key elements in your mind of a great onboarding process for really anyone in your company? Whether it’s that entry-level employee or once they level up to management, how do you onboard at K&D? What do you think has been successful, and maybe what personal lessons you’ve learned?
Justin White:
Yeah. Ty, first off, it starts with having the right employee to onboard. So at that hiring process that yields wonderful new employees, once you have your new employee, that’s where the onboarding really has to be strong, because if you don’t onboard right, it’s kind of your one chance to make a first impression. You really have to make sure and onboard your employees successfully during whatever season you’re in.
Justin White:
I think the landscape industry has a tendency to hire people Monday evening, and Tuesday morning, they’re in the field. Ideally, they have a day that they spend with your HR manager or one of your senior leaders to learn about the company. What’s the history? What are your core values? What’s the vision? I keep saying vision because I think it’s so important. What’s the vision of the company? Where are we going? What are some of the benefits of working at K&D? What is something that your HR manager or your senior leader needs to communicate to this new employee that may not be communicated by your field team? It’s your opportunity to share all the wonderful things about your company that they may not learn from their foreman, including if you offer a 401K, if you offer any kind of other fringe benefits that they may not be aware of, such as health insurance or something.
Justin White:
The onboarding is your chance to brag about the company and build up the new employee to get excited about what they’re doing, to create a purpose behind what they’re doing. Simon Sinek talks about it. You have to have a why. You can’t just say, “We do landscaping. Go out and do landscaping.” You have to say, “We do landscaping because we want to raise the bar in the landscape industry and be the best in the area.” That gives them more passion. That gives them more purpose to attack the job with.
Justin White:
From there, I think it’s really just having weekly check-ins with your new employees. We call it the 10 by 15. They spend 10 minutes filling out this little survey, and then their supervisor spends 15 minutes talking about the survey. The questions are pretty simple. What’s your morale? What questions do you have about the operation? What ideas do you have to improve the operation? It’s amazing. Some of these new employees have great ideas. When you can grab one of those ideas and implement it, they really feel a part of that company.
Justin White:
From there, it’s having a 90-day review. The 90-day reviews are really important because that’s a period of time where they should be fully onboarded. They should be part of the culture. They should know the core values. They should know the vision. Within that 90-day period, you’re going to be able to tell if they’re going to be a long-time employee, a seasonal employee, or maybe someone that needs to be gracefully exited from the company at that 90-day period.
Justin White:
And then, from there, you do your annual reviews, and you retain as many employees as possible. But our focus is really on retention more than recruitment. I think today people are focused on recruitment and trying to hire as many employees as possible. You got to close the backdoor before you can open the front door, right? Good onboarding yields great employees. Absolutely.
Ty Deemer:
Yeah. That’s all really, really good stuff. I really like the idea because I would agree. We’ve had people on the show before that have talked about their onboarding process. It always seems like there are people that will say, “We want to get you these different pieces of information before you start,” but there’s such a tendency to get the value out of the person onboarding right away. So it’s like, “Hey, watch these training videos before you show up,” and then, day one, let’s hit it. But taking that time to really give them a frame of reference for what they’re stepping into as an employee and getting them excited about it and reminding them of, like, hey, this is a good place to work, has to be a good jumping off point for them.
Ty Deemer:
And then it kind of coincides with a little bit of the shift you’ve been talking about, with shifting for you personally, of focusing less on growing the business and sales and selling the work, to building people. That obviously coincides with retention. What are some of the ways or systems that you and K&D Landscaping have in place to build into your employees? Is there training programs? Talk me through what that looks like for you all.
Justin White:
Yeah. Absolutely. Hunger is one of our core values, which, for us, that means the hunger to learn. The hunger to learn needs to be curated in every company. Most of your employees, if you ask them what their goals are, are going to have some type of advancement goal, which means they have to have training, because on-the-job training is not going to yield enough to give them a promotion, unless you’re just promoting people because they’ve been there for three years or what have you.
Justin White:
So first it starts with having a wonderful HR manager, which we have. I highly recommend anyone who has a company of 20 employees or more and is looking to grow to at least 50, hire an HR manager immediately, as soon as you can find one. I know you probably feel like you can’t afford it, but you truly can’t afford not to have someone focused on your people. We’re a people company. We just happen to do landscaping.
Justin White:
Going back to the training, well, going back to retention, I feel it all goes back to training because when you provide your employees with training and you provide them with knowledge, they feel more valuable to your organization, which they are. And when an employee is more valuable, you can pay them more. We really try to not tie wage increases to tenure or number of years with the company. We try to tie into value that they add to the company.
Justin White:
We have a certification process that we have partnered with Greenius on. Greenius is a great training platform, and we have great little company badges that everybody wears with a little barcode. You can scan that barcode with any smartphone, and you can see what their certifications are. They have certifications in equipment operation and everything from pesticide applications to irrigation and everything in between. Pretty much everything you do as a landscaper, there’s some kind of certification for it in Greenius. So that’s been a really great platform that we’ve utilized.
Justin White:
We also do a lot of personal education. When I say personal, I mean beyond workplace. We bring in financial professionals to talk about credit card management, to talk about retirement management, and creating a personal budget for your household. Financially smart employees are good employees. People who are just always broke, they’re going to be more of a challenge for you. So we try to help improve their personal life. We do a lot of wellness coaching and work-life balance coaching, and we bring these speakers in to talk about how to improve your life overall, because, again, a healthy employee and someone who’s financially healthy, financially literate, and personally healthy is going to be a better team player. And they’re going to remember that. They’re going to remember the value that you gave them.
Justin White:
So it goes on. I can go on and on about all of our attention and benefits. We do a 401K with a four percent match. We’ve got a great health insurance program. We do quarterly bonuses every quarter. That’s a big one, I think. Every quarter, we give a bonus based on gross profit of that department and personal performance, which goes a long way. Annual bonuses are great, but they’re so spread out that people forget about them come July, August, when you’re in the busiest time of the year. So quarterly bonuses are great. It helps you spread it out as well.
Justin White:
And then the other thing, of course, you have to pay your employees well. Landscape industry historically has been pretty low on the pay range. We’re always trying to get by with paying our employees as little as possible. Our philosophy at K&D is we want to lead the industry. So if one of our employees goes out and decides to quit and go look for a job, we really don’t want them to be able to find a higher paying job in the landscape industry for what they’re doing. That takes a lot of market research, and it takes a lot of cash when you’re scaling, because you got to really stay up with those wages. I’m sure we’re here late August, early September of 2021, the market is moving rapidly. We have laborers that are getting recruited for $30 an hour on the West Coast. Now, granted, that’s a concrete company or a carpentry company that are recruiting our guys. They’re out of the industry. But our goal is to pay as much as we possibly can afford to pay and still provide that service to our client for a competitive number.
Ty Deemer:
Yeah. That’s all just really cool nuggets. I love the idea of the financial literacy coach and having that person come in because that’s something that I don’t think I’ve really thought of from a business owner’s perspective. If your employees are robbing Peter to pay Paul and they have that stress in the back of their mind, of like I need this paycheck because it’s my paying off a credit debt or dealing with that level, it’s just probably going to make them, number one, less focused about their job that they’re doing, because they’re more focused on getting paid at the end of the week. But also, you’re just enabling them to kind of be present with their work and also giving them a very valuable tool that I think a lot of people that maybe don’t have a certain level of education have any exposure to, at any point in their life. So that’s got to be an awesome thing some of us at the show could just implement and give their team those resources. It probably has a just huge mental impact for your team.
Justin White:
Yeah. Just to comment on that, we have used our 401K provider as free training. So if you have a 401K, ask your contact there who manages your plan if they are able to provide free training, because for us, we didn’t even think about it. And we asked them, and he’s like, “Yeah. Me and my team can come in and do a PowerPoint. We can do Zoom, whatever you want. And here are all the topics we train on.” So if you have a 401K, leverage that relationship. If you don’t have a 401K, look at getting one because it’s really inexpensive to a company, versus the benefit it provides to your employees. So that’s what we’ve utilized, and it’s just, again, it was free for us and just a benefit of doing the 401K with that team.
Ty Deemer:
That’s really cool. That’s just one that I hadn’t really ever thought of before. That’s really unique. The other thing I kind of talk towards with a company like yours, and your strategy of having clear aspirations, there’s a lot of growth involved with that. I think everyone in the industry kind of has a different perception of how you attain growth. Some of it’s with that gross profit you were talking about. How do we become more profitable, or how do we add more customers? How do we grow our team alongside of it? When you think of growing your business, what’s your recipe for it? Is it trying to understand your profitability at a better point? Or is it about growing your size in the market and adding these locations? Is it all of the above? In terms of growth, what’s your annual growth percentage that you’re trying to achieve?
Justin White:
Yeah. Growth is a complicated discussion because there’s so many different ways you can grow a business. You can grow profitability. You can grow top line. You can grow your employee count. You can grow in different sectors. Growth looks different in recurring maintenance income than it does in commercial construction. Commercial construction, you can ramp up and double your sales in one year, and then shut it all back down, versus recurring maintenance, you have to really invest in the long run. So it is a complex conversation.
Justin White:
Let’s just talk primarily to how do we measure growth? We measure growth primarily through top-line sales. I don’t love that we do that. I’d rather measure growth more around gross profit or employee count, which we also measure and have goals for, a compounded growth rate per year. But let’s just talk top-line sales because I think the industry really talks in terms of growth based on top-line sales.
Justin White:
2015, we started to grow at about an 18% growth rate, from 2015 to 2017. We then sped up, and we actually doubled the company between 2017 and 2019. We went from about four million to about eight million. And then, in 2020, which was a very challenging year, we did squeak out another nice 15% growth rate in 2020. We’re now kind of leveling off top-line growth to focus more on systematic growth and operational system implementation. Our recurring maintenance has grown consistently about 40% a year for the last five years. The jumps in growth usually happen due to a big project or a couple big projects that the commercial or residential team take on, and that kind of can spike your growth from time to time.
Justin White:
You’ve got to be really careful with that. I think those that went through the ’08 recession like myself saw the immediate drop in new jobs, and you’re left with a yard full of equipment and a big payroll that you have to lay off a lot of people. So I really value going after recurring income sales, specifically in the maintenance side of things. But if you’re a million dollar company, you can easily grow. You can add $500,000 a year or $750,000 with the company, and it’s not going to be unreachable. But as you start to get to the five, 10, and 15 million mark, you really have to think about your growth more strategically because of the amount of cash that is needed to add three or five million dollars in top-line sales.
Ty Deemer:
Yeah. You mentioned at the beginning of the show your service offerings and what you’ve prioritized has shifted over the years. Does that have something to do with it? You’re just kind of fine-tuning what you feel like makes the most sense for you operationally? And then, also, what can help you achieve your growth goals? You mentioned you don’t do as much residential maintenance anymore. Is that part of the reason why?
Justin White:
Yes. A lot of the strategic planning sessions I referenced before results in some kind of new growth plan. Whether it’s reducing a certain sector and increasing another sector, we’ve basically realized that the department leader in a certain department may be at their capacity, and if you try to grow that department any further, they’re going to either overwhelm or sink that department leader to the point where they’re going to either quit or become nonproductive. So it’s kind of a twofold conversation where you have to take in consideration the current economic situation. You have to next take into consideration the leadership capacity of that department leader to grow. And, third, you have to take into consideration the profitability and cash flow implications on your business for growing that department.
Justin White:
I’ll just do a quick example. For us, we’ve identified recurring commercial maintenance income as the best form of growth for us. The challenge is we have to increase the department leaders’ capacity, which is really nice. It’s my brother, so I have a little more control there. He’s also a 25% owner of the company, so he wins when the company wins. So he has a lot of motivation to grow.
Justin White:
Third, there’s a big cash impact on growing recurring maintenance. So we’ve identified that, and we are currently leveraging strategic debt to grow that department because you have to invest in trucks, weedeaters, lawn mowers, et cetera, and people, for a very small monthly increase in recurring income. That then is paid out for hopefully in perpetuity for that account. But it is a challenging sector to grow, and you have to take all of those variables into consideration before making a really big decision to grow.
Ty Deemer:
Yeah. That all is great info, too, because I think that’s one of the things that people somewhat forget about, or just not forget about, but they get caught in that trap of growing their business, because when you start out, you’re selling any work you can get. You’re just wanting more jobs. You’re really doing it all. But once you can get to that point where you can start being really selective and start understanding, hey, what work makes the most sense for our team … I’ve heard it said well, too, in the past, like what work do my employees like doing, even? What work excites our team? And what we can be more profitable. When you can begin deciding or prioritizing those sort of things with your growth, man, it can have such a big impact.
Justin White:
Oh, man. You just hit on something that I think is so important. I’m glad you brought it up. I’ve heard this saying a number of times from some great mentors of mine and some great business professionals. You get to a million dollars by saying yes. You say yes to every opportunity. You get to 10 million by saying no. That right there is probably one of the best nuggets of today’s conversation because I think you hit it right on the button. You have to be smart about what growth you go after.
Justin White:
You’re in marketing, Ty. Let’s bring it back to marketing. If you have a strong marketing department, you should be able to choose what industry or what sector of our industry you grow into. For us, we spend a minimum of two percent on marketing a year. Actually, most people have a maximum marketing budget, and we kind of use a min-max system. So we want to spend a minimum of two percent on marketing. If we’re not doing that, then we’re probably going to have an issue with growth in the right place.
Ty Deemer:
Yeah. That’s a really cool point. Dang. We could have a whole other podcast episode just on that topic alone, because that’s really interesting. Yeah. That’s so interesting. I love that quote of you get to one million by saying yes, and you get to 10 by saying no, because it really is so true. It’s just the reality for a lot of people. Coming to grips with that is just a very strange thing.
Ty Deemer:
We’re towards the end of our conversation. I always like to finish the episode with a forward-thinking question for our guest. It’s pretty simple. It’s really, Justin, with everything that’s going on right now, whether it’s the delta variant or growing your business, going towards those aspirational goals that you have for your business, what comes next for you? What are you most excited about in this season?
Justin White:
Well, great question. I’ve got a lot of stuff going through my head. All right. I think, for me, I’m most excited about our water management department that we’ve launched this year. If you pay attention to the news at all here in California, we’re in a major drought. And, really, it’s extending across the country. But every water district in California is implementing some type of water contingency plan, and they’re implementing some type of reduction in water use.
Justin White:
On average, 40% of landscapes are over watered. I think it’s probably close to 60% or 70% if we’re being honest. A lot of that water just goes right down the drain. Our focus in the water management department is to provide our customers and clients of maintenance a water management solution that reduces their water bills. Simply put, Monterey, California, just 20 miles south of us, has the highest water rates in the entire country. An acre of turf will cost you on average about $40,000 a year to water. One acre of turf. So it is incredibly expensive to water landscapes on the West Coast of California.
Justin White:
Our focus is not only to save our clients money, but it’s to preserve this natural resource that is becoming less and less available. So I feel like we have a great mission. It’s for a cause that I think everyone can get behind. When I have customers that are calling me or potential customers that say their water bill was $7,000 last month, and the month before, it was $1,000, and they had a seven times increase because of one leak, that tells me there’s an opportunity in the market to save our clients money and save our community money. So we’re going to focus on that. We’ve got a great plan, and we’re going to be really launching big next spring with a ton of new technicians and certified water managers. So we’re really expanding on that.
Ty Deemer:
That’s awesome. That’s such a cool thing, too, because our team recently put out a blog post, shameless plug, about fire smart landscaping and just talking about exactly that issue, because that’s something that’s so present right now. Yeah. Not only is it great that it serves a bigger purpose, but it also can be a great revenue stream for you as well, for a very needed service. That’s exciting.
Justin White:
Absolutely. Yeah. It is kind of a recurring income model where we’re on site managing water weekly for a monthly service fee. So I’m hoping that we can continue to grow that. Eventually, our plan is to create a playbook for other businesses to take advantage of that strategic plan that we create, which leads me down the road, eventually, we’re really hoping, my brother and I, to get into consulting, primarily focused on second generation business owners who want to scale their family companies. We just took ours from a million to 10 million. Our goal is to take it to 30 million and beyond. Part of the reason I’m doing this today is because we have a desire to help other second generation business owners achieve that level of success. I think there’s a huge need for it.
Ty Deemer:
Yeah. I couldn’t agree more. Justin, I can’t thank you enough for coming on for this episode. We talked through a ton of really interesting topics. I felt like there’s still more on the table. So maybe we might have to have you back on in another season and get some more things for you. But thank you so much for joining us. I really look forward to staying connected over the next couple months.
Justin White:
Well, thanks, Ty. It’s been great chatting.