Mowing 'em Down

Mowing 'em Down

COMPANIES by Mark Gordon | Managing Editor

Finding ways to save on gas and electricity has provided a jolt for a growing landscaping company seeking to conquer the entire Gulf Coast.

Simply cutting grass and trimming bushes for businesses is no longer good enough for Nanak's Landscaping, an Orlando-based firm with a growing presence on the Gulf Coast.

Lately, the firm's focus has been on cutting costs, too. From gas bills to utilities to fertilizer, the company has redefined how it approaches efficiency. It dumped gas-hogging SUVs and pick-up trucks for Toyota Priuses and Scions, for example, saving 15,000 gallons of fuel in 2006 - $1.6 million - in the process. And its headquarters is completely solar-powered, saving the company thousands more per year.

The efficiency model is meshed with Nanak's middle-manager heavy philosophy, which relies on a bevy of field supervisors to have frequent contact with clients, to make sure things are running smoothly.

Combined, the strategies hit the spot for Nanak's: The firm's Tampa office crossed $10 million in annual revenues about two years ago, joining the Orlando and Jacksonville branches in passing that threshold. In total, the company has 600 employees, with about 100 of those working on the Gulf Coast. Company wide revenues were $33 million in 2006, a number projected to grow to $38 million in 2007.

What's more, the Tampa branch even got too big for itself and the seven Bay-area counties it was covering. So in July the company opened its fourth office, in Sarasota, and early success has been even more startling than its other openings: Revenues have increased from $100,000 in November to $1.2 million as of April; it's been so successful, that company executives say within a few years they could be making plans to open an office in Fort Myers or Naples, to handle more growth.

All this from a company that at its core, cuts grass. Although the company doesn't do individual houses, clients range from golf course communities with multiple homes to office parks, hotels and corporate headquarters. "Our mowers don't mow lawns particularly better than other company's mowers," co-founder and president Sampuran Khalsa concedes. "But what we do better is respond quickly."

Lush gardens

That response can be so fast, company executives say, because it assigns one manager for every three crews, as opposed to one supervisor for every five crews, the industry standard. The downside is paying more managers, but the upside is that clients have easier access to someone who can institute significant change, says Ed Coil, who was hired last summer to run the new Sarasota office.

Coil, a former pastor in the Washington D.C. area who moved to Florida in 1993, opened the Sarasota office by himself, initially working out of Tampa until he found space for office and equipment on Fruitville Road, a few miles east of Interstate 75.

By November, he had 10 employees, and by last month, he had 25. "The key is to communicate with clients," says Coil. "We expect our managers to go over and check on things."

Just like Khalsa, Coil says Nanak's hasn't reinvented landscaping. The crews in the field however, do perform the basics well, says Coil, and also go through extensive training in fertilizing techniques, water management and pest control.

Coil, who worked for other landscaping firms in Sarasota for seven years, says his industry pet-peeve is seeing landscapers spray and water just for the sake of saying they did something. "We look for the problem, instead of just covering it up," he says. "We don't spray just to spray."

In addition to supervising the office, Coil's other task has to been look for new clients in Sarasota, Manatee and northern Charlotte counties. So far, he's signed up more than 20, including the Summer Cove condo complex on Siesta Key and the Turtle Rock Community Association in Palmer Ranch in Sarasota.

Company-wide, hotels, apartment complexes and condo and homeowners associations make up about 50% of the client list. The other half is split up among office parks, schools, hospitals and a few government buildings and properties. Nanak's counts the St. Augustine-based national headquarters for Ring Power, Harbour Island in Tampa and several hotels and resorts in Disney World as customers.

It's a long way from the early 1980s, when Khalsa and his close friend, Mahan Kalpa Khalsa - no relation - decided to expand their two-man landscaping shop from homes to businesses. They had been running the operation since 1978, working for a time out of the back of their cars in Greater Orlando.

The low cost to starting a landscaping business 30 years ago was their greatest ally, as it didn't take much to get things going. Khalsa, who was born on a submarine base in Connecticut and lived on several bases while growing up, says he knew he wanted to do something with plants and trees ever since he was 10 years old and he went on a family trip to Japan, where he was smitten with the country's many exotic and lush gardens.

"Anyone can jump into this business," Khalsa says. "All you have to do is get a truck and know some idea of what you're doing."

Threatening pests

Nanak's circa 2007 is considerably more complex. The company provides several landscaping services, from trimming curb areas to planting trees and bushes to individually designed pest control systems that are created by the company's internal horticultural gurus.

The overhead to perform those jobs can be staggering. For instance, company-wide, Nanak's has 85 riding mowers, 300 trimmers, 250 pruners and 60 chain saws, representing only a small portion of all its equipment. Overall, equipment costs run several million dollars a year, company executives say.

But the biggest threat to future revenues and profits, says Khalsa, is the "instability of fuel costs." Before the run-ups in gas prices of the past year or so, Khalsa says he more or less treated that expense as literally the cost of doing business.

His disposition changed early last year though, as both gas prices and the distance crews were traveling grew. And the competitiveness of the commercial landscaping industry, which is made up of a few big national companies and dozens of mom-and-pops, made price increases a non-option. "Our marketplace will not except a fuel surcharge," says Khalsa. "It doesn't fly."

The second problem: The leases Nanak's held for many of its Ford Explorers, which were getting about 18 miles per gallon, were for 10 years. Getting rid of them halfway through the lease would be costly.

Still, Khalsa analyzed the numbers and even with that extra cost, it still made sense to jettison the SUVs and most of the pick-up trucks, which were getting 14 miles per gallon.

Savings were seen almost from the first fill-up: The Priuses get about 50 miles per gallon, Khalsa says, and the Scions get about 30 miles per gallon.

The second major cost-saver for Nanak's has been the solar power program it uses at its Orlando headquarters. The genesis of the program stems from the 2006 Florida Energy Act, which legislators passed to motivate businesses to use renewable energy technologies (read: give tax breaks and credits).

The company moved quickly to be part of the program and its speed paid off. After tax credits from Florida and a similar program run by the federal government, Nanak's actually only paid about 35% -$160,000 - for the solar power system, which has been running since Jan. 19. The company has already had a 15% return on that investment.

Just like the change in cars, the savings were seen immediately. In the first week, says Khalsa, the company avoided emitting 1,734 pounds of greenhouse gasses, enough power to operate 28 homes for one day. Indeed, the company is saving so much power, it's able to sell back the excess to the utility company.

REVIEW SUMMARY

Business. Nanak's Landscaping, Tampa and Sarasota

Industry. Landscaping for businesses and commercial properties

Key. The company has cut costs in gas and electricity to foster more growth

Geographically growing

Sampuran Khalsa has turned a two-man landscaping business into a $30 million company with four offices that covers almost half of Florida. His expansion from just Orlando to Jacksonville, Tampa and most recently, Sarasota, was based upon customer requests. Here's Khalsa's advice to other business owners looking to open new offices:

• Stay local: Hire managers that are already living and working in the area, as opposed to bringing in people from outside or a distant corporate headquarters. The new managers should also have experience in the industry, so they can use their contacts in the new office.

• Let go: Khalsa says the best way to expand is with managers that are trusted to make the own decisions. "They have to be empowered to make decisions and carry their passion across the finish line," Khalsa says, "rather than call in to corporate headquarters when faced with every major decision."

Be patient: After finding the right managers and allowing them to make decisions, Khalsa says the next step is to monitor it from afar, making sure the manager is a good fit, not just someone who wants to be the big shot. "There is a lot of caring and feeding required to maintain that attitude," he says, "but it is the only way to reap success from each location."

-Mark Gordon

BY THE NUMBERS

NANAK'S LANDSCAPING

Year Revenues %growth

2004 $27 million

2005 $29 million 7%

2006 $33 million 14%

2007 $38 million (projected)

Source: Nanak's Landscaping