Carolina Tree Care started in 1987 with just eight employees; today the company has over 400 employees. President Jack Guffey shares the reasons Carolina Tree Care has been able to grow successfully. “There are three things I totally believe are important for any business, and especially in the tree care business: Processes, controls and people,” he explains. “You have to have processes in place, you have to have the people to carry out the processes, and you have to have some sort of system that holds everyone accountable. I think that’s been crucial to our success.”
When the company started, it had a utility maintenance contract that provided a source of steady income, but the small margins in that part of the business meant growth was necessary. Guffey says, “The first year I didn’t draw a salary. I just hunkered down and managed with small margins and few people. I realized right off the bat that I was going to have to grow if we were going to get some volume coming in.”
Guffey has actually gone through the growth cycle again. Five years ago, Carolina Tree Care began offering commercial/residential tree care, starting that segment of the company with just four or five employees. “The margins are a little higher, but we’ve really utilized the same processes,” he explains.
One guiding principal has been conservative financial management. “I think it’s important to live within your means as a company,” says Guffey. “We’ve had a very conservative approach and didn’t spend what we didn’t have.” When the capital-intensive nature of utility tree work required the company to take on debt, he was careful about managing that debt.
Guffey frequently observes tree care companies that overspend on equipment. “I see it all the time. Although the margins are better on the residential side, you still need to be extremely conservative. And you have to make your equipment last. I also see so many smaller companies that are stretched so thin that they try to delay or put off their maintenance program, and that eventually crushes them. It will cost you more in the long run,” he says, adding that aging, poorly maintained equipment also creates dangerous situations. “And you end up with more downtime, and you end up displeasing customers because you’re not there when you say you’ll be there.”
To that end, Carolina Tree Care has processes in place to ensure that all equipment is maintained regularly so it lasts as long as possible. “We also recognized when it’s time to sell it — we don’t just hold on to equipment forever, there’s a fine line there.” He says the company has become more sophisticated over time as far as tracking the expenses on each piece of equipment.
Managing employees is even more important than managing equipment, notes Guffey. “Leadership is key, and first and foremost that means taking care of your people,” he says. “We feel like if we’re taking care of our people, then they are going to take care of our customers. We just have that culture.”
One constant challenge when growing a company is to not overtax employees, states Guffey. “I started off in the business with a grow-or-die mentality. We had several years of double-digit growth, but our profit margins were shrinking. So we realized pretty quickly that what we needed was smart growth,” he reports, noting that his experience has shown that 15 to 20 percent growth per year is about the maximum that can be sustained.
“This past year we had about 30 percent growth and it’s really stretched us — it’s stretched our people,” he reports. Even at a larger business, that kind of growth creates a real strain. “We’ve added 100 employees in the last three months, and even though we’re confident in all the processes in place and we have payroll in-house, when you grow that many employees that quickly, everyone feels a little out of control. And you’re having to hire and train new management. Everyone feels taxed, and you have to remember your people,” Guffey explains. “This coming year we’re actually going to try to put the brakes on and refocus, because we want our profit margins to grow in sync with our revenue growth.”
Finally, to make decisions about equipment, adding employees, what services to offer or any other aspect of managing a business, you need to know your numbers, stresses Guffey. “We invested in job costing software years ago, which is probably t e best move we’ve made,” he says. Carolina Tree Care uses the Timberline system from Sage; it’s designed for the construction industry and, while it can take some training to fully learn, it’s worked very well, he reports. “We can job cost all of our jobs, so we know which ones are making us money and which ones aren’t, so we can make corrections if we need to,” he adds.
To really grow in a smart way, you need hard figures to work from, Guffey reiterates: “So many companies are just operating week to week, hoping they’re going to make it. From a strategic planning standpoint, you need real data.”