It’s no secret that I’m bullish about owner-operated businesses. At the Herring Group, we have a passion for serving them and helping them find success.
Private equity (PE) investors also are not shy about seeing opportunities in owner-operated businesses. PE firms have entered the landscape industry and created a lot of liquidity for owners, providing an opportunity to cash out and exit in some cases.
PE investors bring the following to owner-operated companies:
- Money.
- Smart people.
- An “outsider’s” perspective.
- A high-growth mindset.
- An understanding of how to grow and develop businesses.
- A three-to-five-year focus in most cases.
At the same time, there are many potential advantages to remaining an owner-operated company, including consistency in relationships, consistency in branding and a long-term focus.
Ewing Outdoor Supply, a fourth-generation family-owned distributor operating in 30 states, understands what it is like to compete with PE-backed competitors and even a public company. Ewing CEO and Chairman Doug York recently joined me on a webinar to share his insights about running a 102-year-old company and going up against well-capitalized players.
Developing employees
The leaders at Ewing learned long ago that developing employees and treating them well ultimately leads to success with customers. The company created a learning management system for employees before it was a popular concept, and it continues to evolve its training program, which features multiple career tracks.
Ewing did away with tenure-only raises, instead tying compensation increases to progress in the training program. York estimates that Ewing spends 25 to 30 percent more on training than other distributors.
“Honestly, that’s why we’re not fearful or not overwhelmed about private equity (competition),” he says. “There’s no timeline. It’s an ongoing evolution.”
Focusing on customers
York advises landscape companies to avoid being intimidated by the size of a competitor or its access to capital. Instead, tune in to your customers’ needs locally and execute well.
“We need to do what’s right by the local market and take care of our customers, and the rest of the business will take care of itself,” he says. “I honestly think (the landscape business) is hard to do from a private equity standpoint, because it’s very much an art. Planting a tree, planting a plant (and) getting it to grow is not something you can do in a spreadsheet.”
Succession planning
One thing PE-backed companies are contemplating — and you should be too — is succession.
“(You) need to start thinking about, ‘How can I create an environment for someone to take my place?’” York says.
About 20 years ago, as he began to take the reins from his father, Ray York, Doug focused on building teams at the branch level and giving them autonomy to make decisions within a well-established framework.
Part of the framework is Ewing’s robust mission statement, which has remained remarkably consistent for 30 years. It has eight bullet points, the first of which outlines the company’s values: honesty, courage, loyalty, integrity, tolerance, responsibility, quality work, perseverance, self-discipline and faith.
It goes on to explain Ewing’s target market and ways of doing business in clear, simple terms for the whole team.
“Every time we think we need to change it or update it we go back and look at it and say, ‘Hmm, that’s pretty spot on.’”
My thoughts
Speaking with Doug on the webinar reminded me of the high-performing landscape company owners I work with. The common denominator among them is a winning mindset.
As Ewing embarks on its second century in business, it’s hard to ignore the company’s optimistic nature and focus on creating win-win-win situations for employees, customers and the company.
