Our Level Up series shares the strategies that help landscape and lawn care companies get to the next level.
Landscapes Unlimited, based in St. Paul, Minnesota, was started in 2008. Founder Chris Holmgren had worked in the landscape industry for 15 years before creating his own company with the goal of building the biggest and best landscape company he could that provides the highest quality of work.
Recently, he brought on Tom Hougnon as the COO of Landscapes Unlimited. Hougnon started his career in the golf industry before moving into the commercial landscape sector.
“I went into the traditional landscape business when I was probably in my late 30s,” Hougnon says. “The opportunities in the true landscape business, whether it’s commercial, whether it’s residential, are the opportunities to build a career. You can grow from a guy digging holes to being the COO of companies. Hindsight is always 20/20, but I probably would have gotten in the landscape business earlier in my career.”
Currently, the company is at $15 million in annual revenue. Hougnon was brought on to help grow the company to $25 to $35 million and shift to a 50/50 mix of recurring revenue and construction revenue.
“What Chris and I and the whole team are building here is a lean company that’s giving people great opportunities to grow as the company grows and be rewarded accordingly,” Hougnon says.
Preparing for Economy Shifts
Landscapes Unlimited’s most popular service is residential design-build, with 75 percent of their revenue being residential and the other 25 percent being commercial.
“Commercial, we’re trying to grow, trying to develop a little bit more of that recurring revenue model to help support and sustain our residential model as we have environmental and economic changes and that type of thing,” Hougnon says. “Commercial is more of a growth focus while our residential, we’re growing that at about a 10 percent rate a year, if not more.”
The commercial work they do includes properties from office complexes to retail spaces, as well as HOAs and apartments. Hougnon says they have a minimum spend of $1,000 a month for their maintenance clients.
“We should be capturing 75 cents to $1 for every maintenance dollar,” Hougnon says.
The company is also growing their snow removal services as it allows them to provide more work for their employees and subcontractors. Hougnon says it makes up eight percent of their revenue right now, but they want to grow it to around 20 to 25 percent.
“That helps us so we don’t go in the hole, we don’t lose money,” Hougnon says. “We keep the profits that we made all summer long.”
On the residential side, he says while their work on new construction is still steady through June, they’re expecting a 40 to 50 percent decrease in new builds after that. Hougnon says this is why they are looking to move to more high-end development and build more builder partnerships. Market studies are showing people looking at $1 to $2 million homes aren’t going to be as affected by a recession.
“They’re going to still do their thing,” Hougnon says. “It’s more of the mid-range home that we’re seeing tailing off, so we are looking at selling ourselves a little more than the past three or four years. We’re trying to make sure we’re pretty sustainable, no matter what the economy and the local environments throw at us.”
Hougnon says while in the past they’ve had customers seeking them out, they are looking to add a full-time marketing person to their team to help stay top of mind with clients.
“We’re going back and getting ourselves back into some of the home shows and trade shows in front of customers who are there locally and also the bigger ones in the Twin Cities, Minneapolis, St. Paul metropolitan area,” Hougnon says.
Landscapes Unlimited has always done irrigation in-house, but when they acquired a small irrigation company in 2021, they opted to make it all a separate entity. Hougnon says they want to grow their irrigation company and start a separate plant health care company as well.
He says having the businesses set up separately allows them to spin some companies off if someone approaches them about buying one or if they want to approach someone about selling one of the businesses.
“There’s always that thought about potentially selling it down the road,” Hougnon says. “The other side is we’d like to be able to service other people in our industry, somebody who doesn’t have an irrigation service company, we could be their irrigation provider.”
Keys to Success
Hougnon says some of the main keys to their success are building off their reputation, rarely saying no to work and tying themselves to successful builders.
“If they went from 100 homes a year to 150 homes the next year, we’re able to ramp up, we’re able to find employees, we’re able to find equipment,” Hougnon says. “We’re a strong, financially solid company. We have some real good resources in finding employees and growing that way.”
He says the company has grown 25 to 30 percent each year for the past three years. They’ve utilized subcontractors to help with installs as they grow. The company’s design-build side is growing by six percent and the commercial side could grow anywhere from 17 to 20 percent this year.
Part of the reason Hougnon was brought on is his background in commercial landscape work, which has allowed them to form connections with property managers. He says one thing he couldn’t offer in the past at his other companies was designers.
“We’re seeing with these commercial properties in a lot of cases are starting to build outdoor patios,” Hougnon says. “With COVID and with people realizing when they come into the office, they want some nice outdoor space. People don’t necessarily want to be sitting in that conference room. We’d like to be outside. So having the ability to have some designers on our team now that we can utilize with our property managers, that’s helping us sell ourselves more than I’ve ever been able to in the past.”
Hougnon says they are always looking at other service lines that they can grow to complement their core business. They’ve considered purchasing a concrete company in the past.
“We’re always looking at those opportunities, whether it’s an acquisition, whether it’s an organic start,” Hougnon says. “The owner, Chris, is very excited about other opportunities to grow the business and not just focus on our core.”
Hougnon says he’s the one who had Landscapes Unlimited become an NALP member, as he used it quite a bit at his previous organizations. He uses NALP’s industry events as a reward for people on staff who want to grow.
“To me, with any association, you get what you put into it,” Hougnon says. “It’s just like a piece of software; somebody needs to be the champion of that association.”
He says the Pricing for the Green Industry book has been particularly beneficial.
“It’s a great tool for people to understand what we’re doing, why we’re doing it,” he says. “I think it’s a good tool for new design-build people who come in or new salespeople on a commercial side.”
Recruiting and Retaining Employees
During the peak season, Landscapes Unlimited employs around 120 to 140 people. Hougnon says their owner is their best recruiter as he’ll talk to anyone, whether you’re a laborer or a president of a company.
“He always wants to learn and there’s no arrogance,” Hougnon says. “You see that a lot with owners in any industry. People are drawn to him and people are drawn to the company.”
Hougnon is working on improving their retention by developing a career path for their employees.
“How can we help that person attain their career goals and really try to understand where people want to go their career to go,” Hougnon says.
He says one challenge they’ve dealt with as they’ve grown is some key people may not want to grow and take on the additional roles and responsibilities of a larger company.
“I think the challenge with growing companies is making sure your team wants to be part of that growth and is excited for it,” Hougnon says. “Growing from $15 million to $30 million is a lot of work. I love it, but that doesn’t mean everybody else loves that part.”
As the company grows, Hougnon says maintaining their culture is tough, but they make an effort to bring their team together periodically, whether for training or a barbecue.
“Culture isn’t a product of just one person; it’s a product of everybody,” Hougnon says. “COVID, I think, created a lot of wedges in companies and a lot of silos in companies in our industry in particular because the sales and the admin and the designers, in a lot of cases, weren’t coming into the office and production people all had to come in. You weren’t having your Christmas parties and your quarterly barbecues. I think some of the culture building is very different from even three years ago.”
While they don’t have a true HR department, he is hopeful their future marketing person can handle some internal marketing as well.
“We need to improve our internal marketing where they know we want you here, we’re happy you’re here,” Hougnon says. “What can we do to improve your path, your career goal?”
He says they also try to be transparent with the team about expenses so they understand all the money isn’t going straight to the owner.
“Just because it’s a $100,000 project doesn’t mean we’re making $100,000,” Hougnon says. “We might make $10,000. We may make $2,000 and then that gets invested into purchasing the next truck or the next skid steer.”
Landscapes Unlimited does open-book management for the majority of their management team. Even their field crews know how much a project is that they’re working on and the profitability potential as well.
The company has the mindset that everyone is a salesperson, so they reward any staff member who gets a client to do a project with Landscapes Unlimited with two percent of the top-line profit of that project.
Click here to read more Level Up stories.