Contractor Stories

Surviving the Worst of Times

By Tom Hatlen

For David Goodman the economic downturn arrived early (October 2007) and hit hard. The Phoenix, AZ area he serves ranks among those most severely hurt by the housing market collapse.

"It was like we hit a brick wall. Calls weren't coming in. Sales people didn't have leads to go on. Our project manager didn't have jobs to manage. By the first week of December we had eliminated all 4 sales people, our maintenance supervisor and our project manager."

That was just the beginning. Today the company is down to 24 employees from 50 just 2 years ago. The company's profit margin is up. Yes, up. David says he kept his margin up by applying the same management principles he has used the last 5 years with Vander Kooi Associate Tony Bass.

Profile

Goodman's Landscape Maintenance LLC
David Goodman, President/Landscape Designer
Phoenix, Arizona

25 Years in Business

Customer Base
95% residential
5% commercial

Service Mix
21% Hardscape
15% Greenscape
40% Maintenance
10% Lighting
7% Irrigation
5% Water feature
2% Design

2008 sales
$1.8 million

Employees
24

Know Where You Stand
& Act on a Plan

David uses spreadsheets that show him where the company stands regarding expenses, income and profits. If the income isn't there he has to figure out where he can cut back.

"As a smaller company we're not as top heavy in management and overhead expenses. So our margin is going to be higher. Tony and I talked about that last year. We made a game plan and we went with it."

Part of that plan involved David running the construction department doing all sales and all project management in addition to running the company. The company's general manager Guillermo "JR" Gonzalez took on additional duties for sales and supervision of the maintenance department.

For most of the year there has been enough work for 2 construction crews (down from 4) to push jobs out 2 to 3 months ahead. There's been enough work because eliminating salary costs for sales people and the project manager allowed David to bid jobs lower. Clients also like working directly with the company owner.

David regrets having to let good people go. But he says those that remain are exceptional, experienced and don't need babysitting. And with him on site his people work a little faster and a little smarter.

Twelve of Goodman's 20 trucks are currently idled due to lack of work.
Maintenance Isn't Immune

David says his landscape maintenance division has not held up as well as he hoped with a 20% sales decline. Before the downturn they served 250 solid, upper-end, primarily residential accounts. He says, "I thought we were very secure there. But, we've had clients with multi-million dollar homes stopping service and letting the place go or switching to an unlicensed service."

They've modified their routes and crews to work more efficiently in an environment where there is almost no add-on work. Clients used to request extras like cleanups and remedial landscape projects on a daily basis. These things would have left part of a large crew sitting idle. With no extras they now run 2 four-man crews and 1 three-man crew rather than 6 three-man crews so they can economize with fewer vehicles.

June Spark to October Darkness

Construction work spiked up again in June 2008 and David built back up to 4 construction crews. He looked to his general manager and irrigation technician for help managing the work, and he hired a driver to run errands so he could max out his time managing jobs.

With a minimal management staff they worked heavy hours but made very good money for 3, almost 4 months. They remained extra frugal, paid off debt and banked their remaining profits. Good thing too because the door to work slammed shut again with the October stock market plunge, and many of David's contracted jobs were put on hold.

By mid-November he had scaled back to 1 five-man crew which is where he was into December. "In Arizona we work all winter, but right now it's hit and miss. We just finished a job and are starting a job I just sold. If I don't sell another job for next week we're out of work until a new job is sold."

Twelve of David's trucks are now parked, but he has no intention of selling them. "I own 90% of my trucks and equipment outright. So when the economy gets better I'll be ready to hit it head on. I may have to put on some tires or a new battery, but it costs me nothing to keep it here. I just take off the registration and reduce the insurance to comprehensive only."

Find a Way

David Goodman

While things look bleak now, David vows to continue the fight. "This is my 25th anniversary year in business and I'm working myself to the bone. I'm working 85 hours a week like I did when I started. So the American dream is a little bit shot for me now.

"But, I'm not going to say: 'There's no landscaping work. I guess I I'll go home.' I don't do that. What other things can we do? We have workers. We have trucks. We can paint your house, clean up your garbage, deliver phone books, help you move from your house, take care of your pool, wash your windows...

"What matters to me is getting work for my people. They're all for it. They will make wage concessions if we get a lower paying cleanup job for an abandoned property and have to haul couches to the dump. If I have to bid the job 20% under to get work they're willing to take 20% less on their wages. We've done these kinds of things. That's what we need to do until things get better."