SCOTT PICKER - FOUNDER & OWNER OF ASPEN CREEK LANDSCAPING - EP. 29
My conversation with Scott Picker, founder and owner of Aspen Creek Landscaping on:
- Starting Aspen with his wife
- How his role as owner has evolved
- Building a customer-focused team and culture
- Raising 160 longhorns on his ranch
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Thank you very much for coming on the podcast. I've been looking forward to having more business owners on the show, and speaking with you over the last few months, your business is really interesting. I'd love to learn more about it. So, would you start by sharing a little bit about your background? I know you grew up around Oregon and you started a business quite a few years ago. How was your childhood, and did you grow up around landscaping? How'd you get to start Aspen?
I grew up on a ranch in eastern Oregon, so we raised cattle and did alfalfa hay. For my project, I always had a big garden for school. I think that's where it started, my love of gardening and plants and all of that. When it came time to get to what my career path was going to be, I chose Washington State University. I was going to major in agriculture law or minor in it and work my way up, and my dad kind of made me rethink that. I decided maybe that wasn't the best option.
I became a agriculture education teacher with an emphasis in horticulture. So, I got my plant knowledge and loved working with kids, but I knew I wanted to be outside. So, when I got a chance, my wife was in her last year of med school. We weren't used to making money. So, I went out on my own, and I don't regret it at all. I started with just myself and worked my way up to where we are today. It was pretty fun. It didn't happen overnight, but that's kind of a quick fast-forward of how I got to where I am.
What was it like in the first few months of starting the business? What did you actually do? Did you go buy a truck? How did you get customers? Did you set up a website? What things did you do when you first started?
I was working for an agriculture management company for the summer, and during that time in the evenings I'd come home and I'd write a business plan. Went through all of kind of the things I learned in college to make sure I had it in place, which was good. I really appreciated that. But it gave me a time to really identify where I wanted to go with my company, what I wanted to do, benchmarks I wanted to set for myself, things like that.
So, after looking at my business plan and kind of tearing it apart, going back and forth with my wife about it, she had a chance to own a vet clinic. We thought about that, and then we decided no. The landscape company, I'll own. That will be our baby. And then she can always work as a vet so we don't have to work together all the time. With that, we took the business plan, we fine-tuned it. I remember being on a little getaway to Vegas to be away from everything and just commit to our plan. So, we spent the weekend actually writing it and doing things like that with the company and naming it, getting a slogan, everything. It was pretty cool, because we got on the same page from the get-go.
The other thing we did different that most new business people don't do is we made a commitment not to work Saturday and Sunday. Her dad was a guy that worked all the time at a produce company. Always gone, always one the road. And she didn't like that. He's a great guy, a good parent, but he wasn't there half the time. So, we decided, okay, we will commit to not working Saturdays and Sundays, and that's always been our business philosophy, which is unusual for a landscape contracting company, but it's worked really well for us. Every time I think about adding an extra day to the week, my wife grounds me and says, "Nope. That wasn't part of our plan."
The guide we made back then, we still go by, and it's been really helpful for our company. Of course it's been expanded, and we've added things to it, but that first year, it was key to have that guide, because I kind of would go back to it and go, "Okay, this is why I'm doing this. We're reinvesting in the company." And we invested every penny we had back into the company, and we just kept doing that for a few years. We weren't used to making money, and my wife had a pretty good income by that point, being a veterinarian. So, we didn't get used to spending too much. Instead, we invested in the company, and it just kept growing.
We would do what we'd say we were going to do, which people forget how important that is in business. That was key to our beginning success. Being from a small town, my dad taught me you always do what you say you're going to do, but you wouldn't believe how many people I've come across that don't quite do that. So, I always made a commitment to be that person. I wanted to treat others like I wanted to be treated in business. I've hired contractors to do things on our house, and they didn't come through, and I feel bad about it on my end. I'm upset about it. I don't like the contractors' business ethics in those cases. So, I learned from that and go, okay, don't do that to your customer.
I think by treating people like you want to be treated, it's helped our company a lot. And I only hire guys that do the same thing. That's the important part is hiring the right people under you. Starting out just myself, it was easy to slowly grow, but then when we started getting into a big growth curve, it got more interesting. We had to really look at what jobs I liked to do and was good at and what skillset our guys coming in had and could be utilized for.
So, we got a little break in business. I had a customer that came up from California that had retired early. She was one of the original human resources officers for Sun Microsystems. So, she had made a pretty good chunk of money, was bored, and she wanted to use my company as her hobby. So, she took us through her human resources booklet and how we operate and interviewed my employees for me and did things like that and at no charge. She was just appreciative that we were doing a good job for her.
When it came back, she was telling me everybody's personality traits and how we got along as a company and how we didn't. It was a big eyeopener for me to realize how important something like that was to a company. So, then I actually hired someone outside of the company to start doing things like that, and it really helped, matching personality traits. My strengths are my strengths, but I know my weaknesses. Some of the guys didn't know their weaknesses. And I don't want people with the same weaknesses. I want them to be their strengths. So, we started filling gaps that we needed, and it really, really helped. Understanding people is a huge part of any business.
Yeah, it sounds like you're pretty self-aware in terms of what you're good at and what you're not. So, in the early days as your business grew, and I'm sure your role was very hands-on in the first year or so and then slowly evolved ... So, at what point did you start to realize that your time was better used somewhere else, other than out in the field, and your role had to evolve with the company as it grew?
I think every business owner goes through that growing pains, good or bad. I would say growing pains are good, because they're exciting. You get challenged at that points. When I decided I needed other managers was the hardest part for me, not to be in control of everything, not to know every single one of my customers, not to know every detail about every customer's yard. You just can't do it. You're going to be exhausted. So, once I realized I can hire someone that I trusted and let those pieces go and just manage people instead of individual projects, it turned up the business a lot, because we continued to grow at the rate we wanted to.
We've put the brakes on a few times, because I'm comfortable with slower growth, and sometimes we try to grow too fast and you get yourself in trouble. But getting the right people in place, I had the confidence in them to be able to let go of that part of the job. I'm not saying I would just ignore it. I would have things in place that I could check in on them. But really, I let them do their job, and people will do their job if you let them. It seems like, when you get in their way, they say, "Well, why don't you just do it yourself?" So, I had the right attitude to say, "I'm going to step back and let them do their job." How long did it take for you to adjust to that and be able to trust that someone else was going to take care of it, even if you didn't know all of the intimate details about what they were working on? How long did that take?
I would say it takes different amounts of time for each employee, earning that trust. On average, a couple of months. You get used to what a new manager is doing. And if you see them get a bunch of successes, you start to kind of give that rope a little bit more leeway and let them do more things and things like that.
The first time around though, it was at least a year. I had an employee that I kind of hired as the number two in command, and, boy, it was just a lot of little mistakes on their end. They maybe weren't ready for the position. I might have been putting them in a position where they were set up for failure. Or it could have just been that we didn't have the right recipe in place. But once I got a different person in there, really it only took a couple of months to realize, man, this guy can do this job better than I can. And that's when you feel really good about something.
When someone comes in and does that, it's easier to step back. When someone comes in and makes a lot of mistakes or needs a lot of coaching, it's kind of harder to step back. So, we had to work a little bit harder on just making sure we found the right person and weren't trying to make someone they weren't.
So, do you feel like you've become over time more consistent and stronger at identifying great people and getting them to work for you?
Yes, for sure I have, and I think it's because of all the failures or a hire three people and keep one kind of deal. Now I can interview six or seven people and really get a feel for that person. I have another business, which is our property holding company, and I just hired the first kind of ranch manager for our farm. He's an ace. It's not because it was an accident.
I cast a big net, using Indeed and classifieds and different things that you can get a bigger group of people. I've learned that that's also a big benefit is pulling a big group of people and then filtering them down, filtering them down again, until finally you get to the point where you have maybe two or three candidates you're interviewing, and you can really spend time with those few candidates to really understand what they're about. Then you can hire the right person based on that.
I did hire recently two people for the same position, and kind of just to see which one was going to be better after the end of two weeks. And I made it no secret what we were doing. I don't know if that's always the best way, but it seemed like it was a good fit in this case, and we ended up hiring both of them. We just found another position for the other person. It was kind of interesting. I really was just going to hire one, and they both impressed the heck out of us. So, it was kind of nice to get that.
That's awesome. So, as the company has grown, how do you maintain a strong culture? I'm also assuming too that the culture was different early on and has had to change with the company too. But how do you make sure there's still that customer focus and team focus as the company has grown?
I'll tell you, Alex, right now is the most challenging time of ours, just because there's very few meetings that we have together right now. It's Zoom meetings and things like that. You get a little bit less personable in a Zoom meeting than you do if you're all at the same table. We have weekly managers meetings. Right now they're on Zoom. So, that is keeping us all on the same page and doing things like that.
With our employees, we have weekly safety meetings, and every Monday morning the whole group kind of would be in a meeting together. We'd talk about safety issues in the company, and we'd give a little kind of bonus to a guy that did the best job that week. We'd always make sure we mixed it up, and we hold Timbers tickets and things like that. So, we draw a name out of a hat. If someone did something good during the week, we throw their name in the hat. At the end of the week or the following week, we'll pick every Monday morning a name, and they'll either get dinner on us or go to a Timbers game or something like that. So, we keep them interested in it.
But we have four goals every year, and they're all based on employee motivation. We also have a slogan for the year. The slogan that we had over the last two years is "No mas o menos," and that is a Spanish term for "Eh, it's okay," and we're not that kind of company. Not everything's just "It's all right." It needs to be great. So, we like it to be better than everybody else. The guys buy into this "No mas o menos" policy where, if someone says that, it's a very common term with the Hispanic employees. Everyone looks at him and goes, "Oh, no, we don't do that here. You bring your best game every time." When I see guys buying into that because of our weekly meetings and reminders and motivations, we try to do positive reinforcement. It really helps. It really does.
We do reprimand when we have to, but we don't do it as a regular thing, and I think that way, when it actually does happen, the guys respect that we have boundaries. But we're always trying to do positive reinforcement first, and it's definitely helped us as a company with the guys. Some managers come in, and they're not used to giving positive reinforcements. It's a learned thing. Some of them like to reprimand really quick. I don't reprimand the same day. I now take the night off. The next morning I'll address it, because I know it's better for us as a company to keep a level head at every obstacle you hit. I've taught my number two in command that same thing, because he used to be a little bit fiery. The guys respond really well.
That's fantastic. And you alluded to it a little bit, but Aspen focuses primarily on high end residential and commercial projects. So, why the focus on high end versus trying to be the jack of all trades, all up and down the price point?
That was an important decision we made early in the game in our business plan. We felt like there weren't a lot of people operating in the high end residential. We do high end residential and wineries, and those were being a little bit neglected when we first came into the industry. I just thought, hey, what a better plan. It's the same amount of work to do, a really small job, as it is to do a big job. Why don't we operate at a level that no one else is operating at, which in turn kind of eliminates a lot of our competition? There's a lot of fly by night guys out there, some of them not even licensed. They can operate that that lower level. That's fine. We don't mess with that. We operate on difficult projects that are time-consuming, and attention to detail is super important.
You had mentioned that we do commercial. Our only commercial is wineries. And the reason we say we're not a commercial install company, because usually those are really quick installs, and it's all about the dollar and cent. And my guys aren't trained that way. They're trained to watch the big picture, make sure everything's detail oriented. We could do a great job for our customer and a good value, but it's not going to happen in five minutes, kind of deal. It takes more time, a little bit more thought and a little bit more precision.
You also talked about how just now you focus on a lot of projects and construction, but you also do maintenance. So, what's the percent difference between those two sides of the business, and how have those changed since you first started?
That's a great question, because that shows how our company evolved. We weren't anticipating that part of it. When I set out to be a landscape contractor, I wanted to do installs only, but I'd come back to the jobs and they wouldn't look very good. And I thought, man, these guys need maintenance help. Well, that wasn't my expertise area nor was it my passion. So, I had to find a guy that came in that that was his passion. Once you find that person, that part's easy. They run that part of the company. I don't know most of my maintenance customers, but I know we've won tons of awards for how we maintain properties. So, we must be doing something right. And that was just an afterthought for the company.
So, we do have three divisions to the company. One is our construction part, so that's the installs, which I manage. Another part is what we call special services, which is our smaller installs and longtime cleanups and get ready for a wedding, get ready for a backyard barbecue, whatever it is, something kind of quick and ... Our campaigns, those are lighting campaigns and irrigation campaigns. So, that division is kind of our highly profitable, a huge, high skillset for the guys that are involved in there, and lots of training. Then our third division is our maintenance.
Maintenance is about 40% of the company now. Construction's about 45, and then the remainder is special services. So, that's kind of the breakdown where we are right now. When we first started out of course almost 100% was construction, and slowly maintenance started growing into its own beast. Then we added this special services division just to be quicker response time for our customers. So, it was kind of a customer service oriented decision.
Gotcha. Then you also have lots of systems and processes for monitoring routes and the project results. So, when someone finishes doing a job for a customer, they can take a picture and make sure that the customer's happy with that. What systems have you put in place to make sure your company runs well? I'm assuming they're different for construction and maintenance and special projects. You'll have different types of systems in place. How do you organize those?
Systems are a key to any company's success, because, if one guy's sick for a week, another guy should be able to pick up his paperwork and be able to understand the project and how things run. So, with that in mind, when we make our systems and try to create something that's very basic at first, and then keep fine-tuning it. The reason why we don't spend so much time on getting them the very first time exactly right is because they're always changing. They're always evolving as well.
So, what we've done for maintenance for systems is we have a checklist from one to five. And whenever a site manager goes through these, he grades. It's almost like a report card for the crew. What we do is we take that crew's paperwork at the end of the week and put it all together and say, "Okay, these guys are doing really good at the first five thresholds we have for them, but the last two, we're having problems. Is it training? Is it lack of attention to detail? What is it?" So, we can grade those guys. That system's in place to assure us high quality end results.
In the construction end, we have a checklist as we go, and I have a job board behind my desk that has a dry erase marker check board. As the project progresses, we are writing each step of the way, making sure we make contact every day with our customers so that we don't get behind. We also have open communication about change orders and things like that.
So, this living job board behind my desk is for all of the managers that work in construction to add to so we can see where they're at, how they're developing on a project, and also we know if they're behind on a project, to be prepared for the next project so it doesn't get bumped or whatever, or we find a way to catch them up with other employees and things like that. That's kind of one of our living processes. It actually works really well for us. Once a week, we sit down at a bigger job board, and we take our labor that we have available to us in the different construction crews, and we make sure that they're on schedule as a group.
We vocalize if we're getting behind or if there's going to be change orders. Then the group at the end of that knows exactly where our calendar is for one more month ahead, barring any changes. Then, once we get to that, it's a living thing, so we just keep adding to it. Someone will call in sick, and we know to put another guy in their place. We have them trained where we can use the lower tiered employees as pegs that can fit in with any of our construction crews, and it really has helped having people that have some flexibility in their schedules.
Certainly. In regards to systems and hiring and team, what do you think has gotten easier over time, and then what's become more challenging at Aspen?
Easier in time is getting customers. We only operate on word of mouth. It's been amazing. I'm embarrassed to say we used to pay for yellow page ads and things like that. Those are dead, dinosaur things. Now we get organic leads. They come in what we call through customer referrals and things like that or repeat business from customers. So, what's become easier than I had ever anticipated was our customer base and getting customers and having jobs.
The thing that I was not prepared for was all of the employee, not problems, but it's difficult to find labor. It's difficult with some personalities and trying to find the right personalities. So, I would say what was most surprising to me was the human resources end of things for a landscape contracting company has been a little bit more difficult than I thought it would be. There doesn't seem to be as many people out there as there are jobs. When we put out applications for jobs that we think we would get 20 or 30 applicants, we're getting about five or six, which is really surprising. Not everybody is an ace that applies for a job, so then you're wedding out those, and you might even only have one to two qualified people for a position when you get down to the end of it.
Why do you think that is? Is there something about the job market as a whole where there's not a lot of people looking for those jobs? Is it a pay differences? What do you think's going on?
I think the trade schools kind of slowed down for a few years, and you're seeing a big pickup on that, metal workers, landscape contractors, things like that. They're starting to push those things again, because they realized that was a little bit being neglected, the vocational trades in schools. There's a lot about high tech. There was a lot about business, things like that, but it kind of didn't become a glamorous thing by any means. But we need that skillset in the job market. So, we weren't getting as much of that.
So, we had to rely on a lot of Hispanic labor. Now, for us, we make sure everybody's legal, all the forms are filled out and everything else, but there's a lot of people that don't, and it became kind of a lower end competition and see how people can get away with things. The other thing is a lot of our market for employees comes from Mexico, whether it's a work visa or a temporary some kind of visa, or they're trying to get residency. With for us, people got a little bit scared over the last few years about coming in an out and over the border. So, I think that did reduce things. I really do.
In a perfect world, everyone would have all their paperwork in order and we wouldn't have any of those problems, but I think it's a bigger problem than we really think it is. Our labor got reduced, because I think people got a little bit scared about coming to work. Also, we got a lot of competition from the farming industry where they weren't getting the H2A employees, so then they started going, "Well, we need labor. That's all there is to it." When you have to get a crop in the door, they're willing to pay whatever it takes. So, some of our guys would go to trades like that.
The final one that we came up with was the competition for construction jobs in general. When we get a big housing boom, the price you can pay per labor hour increases because of demand. So, that also made it very competitive for us in that market so that the actual housing starts ... Guys out go over to constructing houses, roofing houses, things like that, versus landscaping. So, we lost some employees to that as well, just trade competition.
In regards to getting new customers, you've mentioned that you only do word of mouth today. Have you tried other things in the past, different marketing channels, and they just haven't worked?
We have tried several things in the past, and they have worked very well for us. The problem is we're kind of trying to have controlled growth. So, we aren't seeing anything in the future that's letting up for us, so we don't need to market. Now, that's kind of stupid, because I know a lot of companies would say, "Hey, you should be marketing as you go along no matter what," and we do, but we don't do it to the extent where we're begging for customers right now. We want to keep this reputation out there. We have a lot of I don't want to say tricks up our sleeve, but things ready for marketing when thing go south, and they have gone south. In '06 and '07 we got rid of a lot of our bad habits, because we had to really tighten down. The market was really tight.
Then we went back to a lot more internet marketing, a lot more Facebook, a lot more ... And those are things that actually our office staff can do. They're posting pictures all the time of our projects. A picture's worth a thousand words. The Instagram, I can't tell you how many people get onto that. I wasn't even into that at all, and we hired a new office staff and they were like, "Oh, you've got to have this." We've gotten jobs just from those. So, it's kind of cool. So, those kind of marketing that actually really don't even cost us any money, just time. Actually we're putting portfolios together anyway for our customers as we're doing this, so putting out pictures, as long as we have their permission is great.
Also, you've got to toot your own horn sometimes, so we do apply for some of the awards that are out there when they come up, so some national awards for projects. We've won a couple of them, and it's been pretty exciting. So, once people see that, "Oh, you're a national award winner in the landscape division for $100,000 plus residential ... We've got one of those projects. We'd like to have the best," so, it's kind of nice. In Oregon itself, they also have awards where we've been the Maintenance Contractor of the Year for the last four years. So, that's pretty exciting. You get other employees off of that too, because they are like, "Man, I want to work for a company that's doing really well."
Is there any marketing channel you see yourself trying anytime soon, or do you think you've kind of figured out a good plethora of options for you?
There's marketing channels that we've been talking about as a group, but because we're so busy and backed up right now, it doesn't make sense to start initiating anything that's I wouldn't say costly, but anything that's going to cost us more time. If we get more customers in, we won't be able to service them correctly until we get better growth in the employee end of things. So, we have kind of taken a break from ... And I say we take a break from marketing. We really aren't taking a break, but we're not investing in Google Ads or anything like that right now at this point, which we have some campaigns ready for that, but we really haven't needed to. So, we thought, well, why spend the money if we don't need to?
I am learning a lot about the market with the Google platforms and things like that. I'm on a marketing committee for ... I raise Texas longhorns, and I'm on the marketing committee for the national group. I've been learning a lot about that. So, I think I could take that back to Aspen Creek when I need to and be able to start going, "All right, we're going to initiate some of these things," because it's amazing how many people you can get to and how you can narrow that market down just by a computer search. So, I'm ready for that when we need to, but right now we're kind of staying away from it.
Have you looked at acquiring other competing landscape firms and companies to acquire new customers but also new employees?
When I was younger, yes, I did. There was a really good contractor who was getting ready to retire, and I thought, man, I'd love to have this guy's book of business, because they kind of mirrored what I was doing. In particular, there was a really nice estate out on Wilsonville Road, and so I always went by it, and I thought, man, I want to get that place. Well, that was one of this guy's contracts. So, I thought, all right.
So, I started dealing with him, and he never came to a number. He started getting kind of back into it a little bit. But he had a set group of employees, and they pretty much just left him. Then he really just lost his business, couldn't maintain that place. Another competitor ended up getting it, and then he came back to me a year after that and said, "Okay. I'm ready to sell." You don't have anything to sell now. It was pretty bad, because he could have actually made some money and exited at the top of his game, and instead he waited a little too long. So, I'm always watching out for myself as well. I don't want to get burned out and not want to do this anymore, but as long as I love it, I'm okay with that. But that was one company we went to acquire.
Another company was servicing a neighbor of one of our customers, so it was the right neighborhoods and things like that. He was just done. So, I paid him X amount for his company, and he gave me all of his maintenance contracts. That fast-forwarded our maintenance part of things. I think today we might have one or two of those customers, because we've gotten so much better that those customers became really, really small. So, we kind of decided it was more profitable for these bigger customers that we can spend more time with. Then acquiring through ... It sounds like you've had kind of mixed luck using acquisitions to grow. So, have you ignored that aspect completely and just focused entirely on organic?
I've focused entirely on organic. Like I said, we're growing so fast, doing it just the way we're doing it. We've never had ever in any of the years a downward turn. Even in the rough years, we've always gone up a little bit. But this year's a good example. We're 20% up from last year. And I don't think it's healthy for a company to grow too much faster than that. You've got to keep getting managers in place. You've got to keep bringing people up inside the company. That takes time. And it keeps us really solid.
My number two in command is extremely aggressive business-wise and would love to go acquire three more companies, and I just try to put the brakes on and say, "Look, we're making a really good margin at where we're at right now. Why do we want to mess up this applecart?" And he's like, "Well, if we're taking a piece of this smaller pie, we could take a piece of the bigger pie." And I get that philosophy, but exponentially I think, as you grow as a company, your profits get reduced slightly. You're not as in control. Even with processes, you don't have quite as much control. So, we're at 55 employees. We'll be still comfortable at 75 and 85 employees, but we just have to keep getting the right managers in place as we continue to grow. Do you ever see Aspen Creek taking that number above 100 and becoming a much larger regional firm?
We have discussed that. We actually really tried about four years ago to buy a satellite office over in West Linn. If we had acquired that, we had things in place to have a manager at that one, a general manager there. I would have been the general manager over on this side. So, we would have split it up. That would have been the first step. Actually then we had a third location in Tri-Cities, Washington, which, man, looking back right now, that town is growing. Those towns are growing like crazy. We would have been really well positioned.
I'm a very aggressive businessperson, but I just thought it wasn't the right time. We all work a lot, and I'm sure you're no different. We also have to mix that balance with family. And for me, I just decided that it was more appropriate to at that point in our life to stay more with the family. We preach that in our company: family first. It really sucks, because sometimes we really have to push that family envelope first. Someone has a kid, they're out for a month. Someone has a medical problem, we want them to support their family. We practice what we preach, so we're understanding. I think our guys appreciate that. So, it's been successful for us. Keeping ourselves not too small, always growing, but never staying stagnant. That's the key.
I remember earlier you mentioned you only work during the weekdays. Has that ever been a disadvantage for you, or have you found that to be much more of an advantage than a disadvantage?
I feel like it's more of an advantage. Our guys love 4/10s. And on Fridays, which is the fifth day, just the managers work out of the office. So, the guys are done by that point. We don't have those distractions. Then we're ready for a nice, clean weekend. So, for us, balancing family and business is super important, and that's been very successful for us.
The disadvantage of it is our employees have found other jobs on those other two days, maybe a Friday and a Saturday, and then they're exhausted by the time they come back to work on Monday. We've actually started a couple of other companies because of that. The guys had too much time on their hands, so they started their business, and then now they're out on their own.
So, I think those would be the disadvantages of giving a little bit too much free time to the employees, but what it does is help control our routes. Like I said before, we have mapped out routes, and they're very detailed. So, we can fine-tune and be as productive as possible. We're going through Portland and Lake Oswego traffic, and at the wrong times of day it could be detrimental. If we're working 4/10s, we're there before the traffic starts, and we're done after the traffic ends. It works out well for us.
Yeah. You also mentioned you raise longhorns. So, when did you get into that? What other side things have you been doing as your business has grown and given you some more capital and free time?
What I first started doing with the extra capital, my wife and I, we never needed a lot of money, so we were always reinvesting. One of the things we liked to invest in is real estate. So, we usually buy about a 50-acre farm with a house. We always have our same formula: 20 to 50-acre with a house and fix them up and make them someone's beautiful ranch to come home to. We've done that five or six times, and we were able to do that recently where we were able to buy a 320-acre ranch of our own and just 1031 exchange those into it, which was just a great opportunity to make a lot of profit without having a tax event and get them into a bigger piece of property.
Once we did that, we knew we could kind of start our longhorn venture. So, I grew up on a ranch. We raised cattle. The longhorns were just some weird thing we saw one day and thought, "Let's try it," and now we have 160 head of those. It's another full-time job almost. That's a lot of cattle. But Thursday morning, I'm taking off to Oklahoma to go sell some. I ship them down, and then I meet them down there at these big sales. It's kind of fun. I've learned a lot. Business colleagues, not in a competitive field, bounce ideas off each other at these longhorn sales. Most of these guys are business owners of some sort. It's been fun. It's kind of a nice getaway.
I know nothing about raising longhorns. How does that work? What do you do at the ranch? Then, what do you use the longhorns for?
Our longhorns are for registered genetics. They're kind of a little bit more expensive. I also call them a rich person's pasture ornament, because we go to these sales, and sometimes just some guy wants to buy this pretty thing to put in his front yard so his friends go, "What in the world do you have there?" It's a lot of work. We have to feed through the winter, because it gets too rainy. So, we keep them in barns during the wintertime. This year I finally hired a ranch manager so he could help feed as well. Last year, I fed 210 tons of hay by myself, and that was a lot of work for the evenings.
Then our other byproduct is lean ground beef. We do a lot of lean ground beef. In the Portland metro area, it's been really good, because there's people that are health conscious. So, we sell our lean ground beef by the quarters, and then we also sell them on a couple of different places' menu. So, that's kind of exciting, but they have to be USDA inspected and all that stuff. That was a whole nother ballgame, but we've got it down now. That's kind of a fun outlet to have people go to a nice restaurant and go, "Hey, we had one of your burgers the other night." Pretty cool.
That's awesome. What are the economics like for raising cattle? Is it something that's fairly profitable, or is it more like a winery where it's more of just kind of a fun side project?
It's exactly like a winery. If you want to make $2 million, start with 10. It's an expensive hobby at this point. I think it can be a money maker down the road when maybe we get a better name for ourselves. We've been at it for six or seven years now is all. I've been to an auction where a guy sold a cow for $380,000. I was like, "Well, that could be profitable." The most I've ever gotten on a cow was $14,000, and I was so excited. So, it's in scale to where they were with things, but it can be profitable down the road. Right now it is a little bit of a hobby. It also keeps our farm in deferral, so we have very little taxes. And it gives our kids some responsibility and something to do with mom and dad on the weekends. So, it's kind of a cool family thing too.
So, what was the difference between your $14,000 longhorn and that guy's $380,000 longhorn?
The horn growth on his was pretty amazing. So, it's kind of like this record new setter. But really, it took two buyers. It's at an auction, so it takes two people bidding against each other. What that happened to be was just kind of a pissing contest, seeing who could flash more cash on this, and it was pretty funny, because these guys weren't backing down. They both had deep pockets. The cow was probably worth about $100,000, but 380,000 was what she went for. Is the horn length ... Is there something with the hide or measurements or something else too?
Oh yeah. The horn length is called tip to tip. From one tip to the other tip is a very important measurement on our cattle. You can get a lot more money if you have good tip to tip and early and everything else. Then there's another one called total horn. So, with the cows with the curly horns, you're measuring a tape measure all along the horn and you can get a total horn. That's another really important measurement. But color, color sells a cow. Someone wants something flashy. It's got to be pretty, especially for those pasture ornaments. So, definitely black and whites and spotted ones and brindle ones versus an all-red one or an all-white one, you're going to get a lot more money. You sound like you love to just work hard. How do you think about your succession planning within Aspen Creek? Do you have kids who are interested in taking it over? Is there a manager you're looking to turn the business to? Or is there some other plan you have in mind?
We wrote our succession plan when we wrote our business plan originally, because everyone says you've got to have a plan to get out too. You've got to have a plan to get in, a plan to get it. So, we did write it where we were hoping that one of our kids would take an interest in it, but we weren't requiring that. So, we were ready.
My son went to Oregon State in business, started there last year, and we thought for sure he would want to at least have some part of Aspen Creek. Nope. No interest in it. He wants to be an accounting major as well. So, he said, "No, I'm happy without that." We kind of saved it for our kids just in case, but never wanted to make them think that they were going to be taking it over. Our daughter, she's shown a little bit of interest, and she's a senior in high school. So, we'll see where that ends up. That's why I've been hesitant to sell prior to, because I wanted to make sure that they got first shot at it.
We did do something a couple years ago we set up with our number two in command where he would have an option to buy 20% of the company if he was there for eight years. He made that benchmark. We already had kind of a set price or a formula figured out for him to purchase. And it worked out really well. It was fairly smooth, and his gains from that have been great. So, it's a win-win. We've got him hooked for life, and he made himself a really good investment, maybe too good of an investment. I probably could have gotten more.
We have had companies pursuing us, and I know that you're familiar with one of them, but we've had other companies pursue us, trying to keep within that same family. We went almost all the way to the end with one of them, and then they wanted to split the company. I started thinking how long I'd had some of these employees and how much they've done for me, and it really came down to I know I have quite a few years left, but more so some of these employees, I wanted to make sure they had what they needed to be successful once I left. I just didn't get that feeling on one of them. It was crazy, because it was a significant amount of money, but I thought, nope. I'm still young. I can hang on a little bit longer and see how this works out.
So, acquisition companies do come, and that is part of our game plan now at this point is saying, "Okay, if the right one comes along, that would be an option for us," because it's happening a lot more nowadays where, if you're not the big guy, you're going to get consumed by someone bigger. And we tried to do that too with some of the smaller companies when we were started, but it's getting more and more popular I think right now.
What would the ideal buyer have to be like for you to be really convinced to make that move?
I think just carrying on what's made us successful. No one wants to see their baby kind of get pulled apart by selling. I'd like to keep it whole or become part of something even bigger that's very successful, keeping to our standards. Aspen Creek was developed on "no mas o menos." We want to do a great job all the time. The company want out have to have that same attitude about things. They want to do things right by people. I don't apologize for making money, but I'm going to make money because I'm doing things right. I think that's really important to me. Make sure my guys are treated right once I'm gone and that my managers have a chance to continue to go up the ladder in a company.
I know that investors, when looking at a landscaping company, will value maintenance revenue a little bit higher than something like construction where it's much more project based. Have you incorporated that into your succession planning where you want to emphasize parts of the business that an investor might find more value?
Well, you always want to push those points that are recurring revenue streams, because that is what a company ... And if I were buying a company, I'd be thinking the same thing. I would say, "Okay, what's my for sure recurring revenue?" But I guess the construction part is more of a gamble, because it's not a guarantee. When we used to be 100% construction and started out with the maintenance, I began to see why people buy maintenance, because maintenance is a routine. It's constant cashflow. It's not as high of a profit margin, but it's a solid profit margin that's consistent. People will pay for consistency. Where, construction is a higher profit margin, but like I said before, it's not a guarantee. When architects start to not have projects in their hampers, then we're in trouble. So, we rely on maintenance in those cases.
So, your question about what have we done for that is we've increased our maintenance revenue. We've been more aggressive about going after more maintenance accounts versus going after more construction. Our construction part of the company, every year for the last five years has lost a little bit of its percentage of our shares to maintenance. Maintenance has taken a little bit of a higher priority. It's been good, because that's recurring revenue.
It gets our foot in the door on a lot of construction projects when we're doing maintenance. I know one really big customer we have right now, we just started as a residential customer, then we took over their maintenance. Then they said, "Hey, we've got this other house. We've got this other house. We've also got these three commercial buildings." So, now all of a sudden this one residential customer that came in organically just added like five new maintenance accounts to our scope of work. So, it's been great.
That's fantastic. What class would you teach in college if you could teach about anything you want?
Business common sense. I think that there's a lot of guys getting into our industry that don't have business common sense. It would be a class based on doing the little things for customers, marketing to your customers all the time, even if it's just little things that you're doing for them. I see so many people not following through with their commitments and their promises with customers, and in business that is key. It's got to be a win-win every time.
How might you structure that class?
Well, I would have a toolkit for people getting into the business. I would have the next part of the semester would be something based on now you've got your feet wet, re-look at your business plan. What's common sense there? What's been working? What hasn't? Because you've got to look at your business. You've got to look back at your business every time.
Then the ending part would be keep your business plan, keep those goals going every year. That's super important. Every year, our management team goes up to my cabin for one week, and it is cold out there. We have to work together as a team and keep ourselves warm. But then we also do all of this business strategy for the next year, and we really get into the nuts and bolts of things. I think people need to continue to look at bettering their business every single year. What does that look like?
I love that. That's a great answer. What's a belief you used to hold strongly earlier in life that you've changed your mind on?
Well, I think it goes back to thinking that customers would be hard to get. I think they're easy to get. The opposite, I thought employees would be easy to get and continue to grow within the company and things like that. That's been one of the hardest chapters for me to doing business is not having those guys ready to step up when I'm ready to expand. I have to hire a manager from outside. I never knew I was going to be in that position. I always thought I would promote from within, and it's not always possible. So, I just really got away from that.
I thought, I'm going to put the best person in that spot. And if someone gets their feelings hurt because they're not ready yet, then they need to get ready for the next time that that chance comes up. That's been good, because I've had to have talks with guys, saying, "Hey, you weren't ready to step up. This guy had to come in above you, and you were the next logical person." So, I think that was the one that I just stepped away from and said, "Nope, I'm going to just hire the best person for the job." Excellent. What's the best business you've ever seen?
I'll do one locally. I had a landscape competitor that always dabbled in high end, and every time I'd see his logo, his trucks, everything, I thought, this guy's got things figured out. Well, I watched him for a while, and I heard that he was getting ready to sell his business. So, I knew he'd be willing to share information with me. I went out to lunch with him, and I said, "I'll buy you lunch, but I want to learn from you." And he was impressed by that. I mean, this guy was like the gold standard of landscapers in the Portland metro area.
That guy was super willing to share information, how he's succeeded, what didn't work for him. I felt like that fast-forwarded my career more than anything I ever did was taking that guy out to lunch. Even after he sold, he would still call me up every now and then when he was in town and say, "Hey, you want to go to lunch? How are things going?" He would kind of act as my mentor. Just a nice guy, learned from him a lot, but he had lots of processes in place, lots of standard operating procedures, and he was willing to just walk me through it. I was impressed by his company, but I was also impressed by the individual and how he was willing to share that information with me.
Man, I'll tell you, re-writing his standard operating procedures to fit my company but not having to reinvent the wheel was just awesome. I mean, it really fast-forwarded ... Those things take forever. I'm sure you've had to do some in your classes way back when, but when you actually have to do it for your career and for your own business it's a lot of work. There's a lot of stuff you have to worry about.
It certainly can be a lot of work. Absolutely. I completely agree. Thank you very much for sharing your time. This was awesome.
I've loved getting to know you and your business and hear more about it and some of the nuts and bolts and wanted to thank you for sharing your time. This has been fantastic.
You're welcome. Thanks, Alex.