Controlled Growth

REVIEW SUMMARY
Business. Macy's Termite & Pest Control, Venice
Industry. Pest control
Key. Firm has ambitious growth strategy to more than double its revenues in five years.

The chain of command chart at Macy's Termite & Pest Control is a recession-era testament to bold ideas. A work of futuristic fiction, the diagram is what Macy's President Dean Burnside envisions the Venice-based company will look like in 2016, when he projects $5 million in annual sales and 50 employees. The firm is currently at $2.1 million in annual revenues and has 27 employees.

The chart has turned into a rally cry: Employees look at it and see where they could be, and hopefully, says Burnside, find inspiration to get there. “I tell people,” says Burnside, “pick a box, and show me you deserve to be in it.”

The box at Macy's has swelled lately. Sales are up 20% in 2011 over 2010, says Burnside. The company has grown both through new clients and an acquisition. It recently hired three employees.

Overall, it's a good-news story in a sea of bad news, especially in pest control, which, like so many others connected to real estate, has struggled for a few years. It's a fact not lost on Burnside, 51, when he talks with other executives. “I almost feel awkward about it,” says Burnside.

Modesty aside, Burnside has Macy's in a position to grow through a series of shrewd moves going back a decade. The first big decision, in 2000, opened doors to the booming Gulf Coast residential real estate market. And a half-decade later, when change loomed in both the market and the pest control industry, Burnside didn't hesitate to shift the company's direction.

The upshot is a firm confident enough to post a future organization chart that details a five-year growth burst yet unseen. That confidence is also the template behind a forthcoming marketing campaign at Macy's wrapped around a new slogan: “Macy's, the Good News Company.”

Burnside hired Rockefeller Lane & Co., a Tampa-based marketing and branding firm, to run the new campaign. It includes a new logo and marketing materials, in addition to print and social media outreach, says Natalie Rockefeller Lane. The strategy, she adds, is to parlay the good news at Macy's, everything from employee promotions to coupons, into new customers.

“(Macy's) has a lot of national competitors, and that's a big challenge,” says Rockefeller Lane. “People aren't always apt to change.”

Macy's serves Charlotte, DeSoto, Lee, Manatee and Sarasota counties. It has about 5,000 residential customers.

Business shift
Entrepreneur John Macy founded the pest control company out of his home in 1989. Burnside, a longtime salesman who moved from Ohio to Florida in the early 1980s, joined the company in 1996. He previously sold cars, insurance, office supplies and office furniture.

But pest control, says Burnside, “is the easiest thing I ever sold.”

That's because pest control, especially in Florida, is a need, not a want for most people. It's why Burnside's personal tagline for sales speaks to the inevitability of bugs. Says Burnside: “There are two types of homes in Florida — those that have termites and those that will.”

Burnside bought out John Macy's ownership stake in the firm in 1998. Macy moved to Georgia, although he recently rejoined the company. (See sidebar on 12.)

The building boom began shortly thereafter, and Burnside followed it. The Macy's sales team developed a rapport with local Realtors, mortgage brokers, closing attorneys and anyone else linked to the sale of a home. The goal: be hired for termite inspection in the house prior to close, to get to know the new homeowner. “We created a relationship with the buyer before they even owned the house,” says Burnside.

Annual sales grew to $2.3 million by 2006. But that was the peak. The subsequent real estate crash forced Burnside to modify Macy's business model.

The strategy was to go green.

But the motivation, at first anyway, was more defensive than do-good or offensive. In 2006, when the housing bubble was about to burst, Burnside saw trends in the nationwide pest control industry lean toward more regulations. Pesticides and other chemicals were on government hit lists in New York and California, so Burnside figured changes to Florida laws would soon follow.

“There was a green wave coming in pest control,” says Burnside. “So we said: 'Let's jump into green and all-natural and be ahead of everyone.”

The all-natural, botanically based pest control formulas, on average, cost about 15%-20% more than previous products the company used. Burnside went all-in on green, which added to the expense, and risk. For example, the firm joined many local and regional green business groups, unfamiliar territory for pest control companies.

The timing proved fortuitous. The housing market was in full slowdown mode by 2007, when Macy's began its green shift.

The good news: current customers embraced it, says Burnside, and potential new customers inched closer to signing on, with the comfort of an all-natural approach. “We had great results,” Burnside says. “We had the confidence we needed.”

Impending threats
Another way Burnside plans to grow Macy's is through acquisitions. The firm's most recent deal was for Mike Wilcox Pest Control in Venice. Macy's bought the firm, with 700 customers, in April. Burnside's son, Adam Burnside, took over operations of Wilcox Pest Control after the deal, which will boost the company's 2011 revenues by 10%.

A pest control competitor of Macy's, Sarasota-based Arrow Environmental Services, is executing a buy-to-grow strategy in a more pronounced way. Arrow has bought five companies since late last year. (See sidebar, right.)

Burnside won't rule out more acquisitions for Macy's, though his current focus is to lead the company toward its goals by growing its customer base organically. Burnside says at $5 million in annual revenues, which is the target by 2016, Macy's would be listed on the back end of the 100 largest pest control firms in the country.

Of course, there are some potential impediments on the way to $5 million. Burnside, for one, keeps a close watch on local, state and federal regulations that could crimp his business plans. “We are in a super-regulated industry,” he says, “so that has to be in your thinking.”

Another threat: An industry that currently relies on customers who need, not want pest control, will flip if the recession worsens.

Burnside can already see how his customer base is impacted by the recession when he looks at the firm's accounts receivables. The time it takes for customers to pay has been pushed back, he says, and credit card payments are up significantly.

All of these challenges, while tough, aren't enough to make Burnside cower. He plans to stay with the company through its five-year plan and beyond. Says Burnside: “I wouldn't even think of leaving for at least the next 10 years.”