I OWN A SMALL LANDSCAPING BUSINESS that operates out of my house in Raleigh, N.C. The business, Amsterdam Landscaping, grosses less than $50,000 annually. I have three part-time employees, a 1976 Ford pickup truck with 102,000 miles on it, a plant nursery in my backyard, and nine regular customers who contract for my services. If you divide my income by the hours I spend doing everything I do -- laying brickwork, trimming hedges, filing entries in my maintenance log -- I probably earn only slightly more than minimum wage. My "salary" last year -- the money I took out of the business for food, rent, and other family expenses -- came to just under $16,000. Cash out all my assets, and I doubt you'd find me worth more than $10,000, total.
As a very small-business man, I've had to face many of the same questions confronting owners of INC.-type, fast-growth companies, yet the answers I've come up with don't always fit the conventional profile of corporate success.
I started my business seven years ago for two principal reasons: because I like working with plants and shrubs and because I don't particularly like working for other people. At various times since college -- I'm 35 years old and graduated from North Carolina State University in 1975 with a degree in horticulture -- I have done yard work for a Catholic diocese, run a small printing operation, been employed by a property-management firm, and driven a beer truck. Nothing has been as satisfying to me as running my own business. I'm doing what I like to do every day, looking after my accounts personally, and making sure my customers get the kind of service they've come to expect. I figure I turned away as much business as I took in last year.
Most of my accounts are residential ones, the kind of jobs where personal contact is high and the profit opportunities relatively low. Last year, however, I had the opportunity to expand my business substantially by picking up a major commercial account. By borrowing $30,000 or so in working capital (and coming up with $7,500 myself), I would have been in a position to get an exclusive landscaping contract with a Raleigh builder who was constructing houses in the $150,000-to-$200,000 range. More such contracts could have followed, and soon I would have been managing a fast-growing business.
Many friends and customers urged me to go this route. They said I'd make more money -- and be that much more satisfied, I guess -- if I started managing landscaping projects instead of doing them myself.
I couldn't live with that decision, though. Never having borrowed money to finance the business -- I have a $1,500 line of credit on my checking account at Wachovia Bank & Trust Co. and good credit at the local plant nursery, but that's it -- I suddenly found myself waking up in the middle of the night thinking, $30,000! How do I make payments if business starts drying up? Who'll I be working for, myself or the bank? After that, sleep was hopeless. I couldn't function at all.
One mentor -- Bill Kopke, a client of mine who owns a very successful fruit-importing business in the New York City area -- recognized this right away. Bill and I had dinner during the time I was thinking about expanding my business, and Bill told me in no uncertain terms that he thought it would be a mistake. I was tremendously relieved when he said this, because I knew in my gut he was right. In fact, as it turned out, not as many houses have been built in the project as had been anticipated. So if I'd become involved in the project, I'd probably be in Chapter 7 by now. Trusting my own instincts in this situation may well have saved my business.
Beyond keeping my own enterprise afloat, I also feel there's a subtle tendency in our society to belittle the very small-business person, to champion growth at the expense of other issues. In my view, there are people for whom growing bigger is a disaster, a promotion to incompetence, if you will. Plus there's the issue of losing touch with what I consider the fundamentals.I remember visiting my uncle in Ontario -- he's a very successful car dealer up there, with a house on 70 to 80 acres -- and asking him how a certain piece of equipment on one of his cars worked. He said he didn't know, that he managed the business and that wasn't his department, so he hadn't bothered to find out. That kind of attitude doesn't sit well with me. I like knowing what I'm working with, just as I like showing my employees how to do the job right the first time. I'd hate to have to go back and have them redo a project to my standards because I hadn't been around in the first place.
So I made a conscious decision to stay small. Not because I couldn't get the business, but because it would have changed me in ways I didn't really want to change. For one thing, I would have had to drop at least some of my residential customers, the ones who helped me get started in this business. Most landscapers are all too eager to go into commercial work -- that's where the big money is -- and abandon the residential stuff. I feel just the opposite: I've always said I'll continue to work for these people until they either die or buy a town house and don't need me anymore.
More importantly, if I had grown my business the way the "experts" say, I would have lost the time to do the little things that make work so enjoyable to me. Having lunch with my client, a retired army lieutenant colonel who tells me about his battle campaigns in World War II. Fixing somebody's leaky faucet as a favor or listening to a personal problem because I'm an "outsider" who can. There would be less time too for things like taking my wife and two children off to the mountains for long weekends. Or for projects like The Land Stewardship Council of North Carolina, a broadly ecumenical, Judeo-Christian group I work with that tries to promote intelligent land use, alternatives to chemical pesticides, and other environmental concerns.
Since 99% of my friends and customers had urged me to expand, a lot of them took my decision to mean that I simply wasn't ambitious as a businessman.That really griped me at first. I do have ambitions, and I do consider myself a successful businessman. My ambitions just don't lie in the area of making more money. Instead of mortgaging myself to the hilt and not having time for my family. I'd rather grow along with them and have a little less now, a little more later. We all hear about chief executives who wish they'd spent more time with their families and less with their businesses. I don't want to look back in 10 years and make the same complaint.
This isn't to say that I haven't already made my share of mistakes. Years ago I had no idea how to charge for my services. I underbid on a lot of jobs simply through lack of a sophisticated cost analysis. If a job that I figured would take 80 hours actually took 100 -- well, there went my profit. It's tough doing business with friends, which most of my clients have become. But I can't stay in business by undercharging them. Now I provide them with a complete cost analysis of all my work and a detailed letter of explanation whenever I feel it necessary to raise my rates. And they have stayed as loyal to me as I am to them.
Being an independent sole proprietor, I probably measure the business universe differently from, say, the average INC. 500 company manager. My idea of a small company, for instance, is one with two or three employees and revenues of less than $100,000 a year. A midsize company would have maybe three or four full-time workers, an equal number of part-time workers, and no more than $500,000 in sales. Large companies? To me, that would be 20 to 25 employees and around $2 million in revenues.
Also, unlike many successful comany builders, I don't consider myself to be a risk-taker. I'm actually fairly conservative by nature, although not always politically (and certainly not environmentally). As a businessman, I like to buy good equipment, but if I can't afford what I want, I'll do without it. Individually, given the opportunity to save money, I can probably save it better than anyone I know.
My 1985 federal tax return shows I paid $3,935 in wages last year, spent $8,383 on landscaping supplies, $2,676 on insurance, $2,512 on truck expenses, $53 on office supplies, and $0 on travel and entertainment (no three-maritini lunches for me). My total tax liability, state and federal, came to about $5,000. I took nothing in oil-depreciation allowances and the only stock in my investment portfolio, a fast-food restaurant chain out of Atlanta, went from $3.50 a share to Chapter 11.
I did win $1,329 in a local radio station cash-call contest. The money was nice, but I forgot to see some of it aside and that screwed up my tax situation. Right now I'm paying off the Internal Revenue Service $1,800 that I owe from last year. That's really the key to good business management, I feel. Setting aside money when you have it for the times when you really need it. Ideally, I'd have $10,000 in the bank at all times to cover emergencies. That's ideally, however. The closest I have gotten so far is $5,000, and my operating cushion is usually a lot less than that.
I know that businesses like my own aren't the sexiest part of the U.S. economy. We don't hire a lot of people or rent out five floors in an office building. We don't get recruited with tax incentives by governors who want to rebuild their local economies. I have often paged through the INC. 500 issue, and I have wondered if there would be a way to measure my side of the equation. How I fit in with the Bill McGowans (MCI Communications Corp.) and the Alvin McCall Jrs. (Ryan's Family Steak Houses Inc.) of the business world?
The effect of companies like mine is cumulative. Last year I pumped $22,910 into the local economy. Multiply that times the thousands of very small businesses in the Raleigh area, and it spells big bucks. We provide a stable and healthy local economy, one on which the McGowans and McCalls depend for growing their own companies. We can't afford to do without these people: men and women who see a small niche, a window of economic opportunity, and are determined to fill it.
If I were to measure success by the personal satisfaction I get in owning my own business, then I would consider myself as successful as the McGowans of the world. I may never make the INC. 500, but I am making my fortune every day -- when I nurture my young nursery plants or have tea and gingerbread with a 90-year-old customer. These are the things that make me fortunate.