By Kevin Kehoe

Are you wondering how the industry fared in 2013? And how you did by comparison? Over the course of the next few months, the consultants at Three Point Group will provide answers to these two questions in this monthly column.

In this first of the series, I will share information on industry revenue growth, the strategies that worked, and some predictions for 2013. The information is derived from the Three Point Group client base. We looked at 30 companies (randomly selected out of over 100) to compile this for you. Table 1 shows the results of the benchmark analysis. The average revenue growth rate from 2011 to 2012 was 8%. This average disguises some very high and low growth rates.

Table 1: revenue Growth Overall

Table 2: revenue Growth by Revenue Size

Table 2 breaks out growth rates by annual revenue size and clearly shows that the most robust growth took place in companies under $5 million in annual revenues. And if we sorted the information by region the lowest growth rates took place in snow markets, and the highest growth in non-snow markets. If you are in a snow market, this in fact might be your experience. What can we learn from this?

1. There is still growth and solid conditions in most markets especially for smaller to medium size players.
2. It is really hard to grow a larger business at high growth rates. This is the result of the continued slowdown in overall economic growth. Specifically, in most markets, there is still precious little construction and new development to drive big dollar growth.
3. The highest growth companies invested money in employing CRM systems (BOSS, SalesForce.com, etc.), sales management programs (putting someone in charge of the sales team), and sales force training (coaching business development and account management staff in time management and face to face skills).
4. While there is still low pricing by some industry participants, this strategy WAS NOT the tactic that drove sales growth rates for the high performers.

What drove growth? It was targeted and assertive direct sales force efforts… period. Companies that invested in sharpening the marketing message, the lead generation machine and negotiating tactics did well. In other words an investment in #3 above paid off last year - finally. What can we expect in 2013.

1. Market growth may not be robust but it will be steady enough to support 10% growth in most markets.
2. CRM systems will continue to be a good investment - driving sales team productivity and effectiveness.
3. Increasing customer loyalty will present a selling challenge. “Taking business away” from competitors will get harder. There was a clear improvement in retention rates in 2012 in most markets. This trend will continue.
4. The biggest risk to growth might be cheap money and rising real estate values. Cheap money combined with rising values is leading to consolidation in the property management business. And anything that happens in this business affects our business.

Overall I expect another year like 2012 in 2013 – at least on the revenue growth side.

By Kevin Kehoe
Principal – Three Point Group

Are your prepared for the financial and personnel impacts of the 2014 HealthCare Tax? The first step is to get a handle on the elements of the legislation so you understand how to navigate what will no doubt continue to be murky waters and changing currents. Here are some important numbers.

50 – The law applies to you if you have more than 50 Full Time staff on payroll. If you are thinking about breaking your business up into smaller companies with fewer than 50 to avoid compliance… forget it. The IRS is wise to this approach.

120 – The number of working days in a year that qualifies as Full Time. This includes seasonal workers.

90 – The maximum number of days an employee has to wait to get insurance coverage from you. This used to be 120 days.

$2,000 – The penalty you pay for each employee should you not offer coverage. For example, if you have 70 Full Time employees and offer no coverage, then you are liable for 70 less the minimum 30 requirement – that’s 40 people times $2000 - $80,000. Clearly this is a large number.

Given these costs, most likely you will be offering some coverage to avoid this penalty (tax). Here are the numbers that matter when putting together a plan.

9.5% - This is the maximum percentage of their annual earnings that an employee can pay out of pocket for the coverage you provide (in theory it is supposed to be household income – but the IRS is still working on this one). For example, a fulltime foreman making $14 per hour working 2000 hours can pay no more than $2,660 year in premiums ($221 per month).

400% - This is the income level as a percent of the national poverty level that can qualify for government subsidies by bypassing the employer and going directly to the exchanges to get insurance coverage. In real terms this means that anyone making under $90,000 per year may qualify. Why is this important to you? The $14/hour younger foreman may opt NOT to use your program and keep the $221 per month and take his chances at the exchange (young people have done this forever). But since you offered coverage you are in compliance.

$95 – This is the annual penalty an employee will pay (in taxes) were they to opt out of the coverage you offer.

Insurance by its very nature is a discriminating practice. Premiums are based on actuarial tables to determine pricing based on probabilities. If you have a larger pool of people with lower risk (read: younger), then the increased size of the pool at younger ages may in fact LOWER your overall insurance premiums. This is especially true if you have “carve out” program that only insure you and a few key people. How do you get ahead of the curve here?

Three More Steps:

1. Conduct a financial analysis of offering and not offering health insurance. In some cases offering it to everyone may actually reduce your premium costs.
2. Work with a knowledgeable insurance broker who can provide the array of “qualified” plans that will put you in compliance. There are still many ways to provide insurance as a benefit without throwing all your employees out to the “exchanges”.
3. Prepare a communication to your staff about their options and the costs to you and the business. They should understand how the new health care insurance system will affect them directly.

It’s hard to ignore an 800-pound gorilla in a small room. Better to address this now and protect your business interests and those of your staff. Remember people need time to prepare for change. Waiting until the Fall to start thinking about this might cost you dearly.

By Jeff Harkness
Principal- Three Point Group, Inc.

For Employers who have adopted a wait and see approach with the Patient Protection and Affordable Care Act (PPACA) the time to wait is over. 2013 now becomes a critical planning year with strategies around cost containment and compliance. This should be a key focus for green industry employers to get a hold of before this fall. Don’t panic! I believe employers and employees don’t have all the cost and plan design options yet. This will drive decisions! Here are some facts and myth busting ideas to consider:

A.The first step is to get a handle on the elements of the legislation so you can begin to formulate a plan on how to navigate. Under the law, businesses are considered a “large employer” and thus must provide health insurance to all full time employees if they have 50 or more full-time employees. Employees are considered full-time if they average 30 hours per week or more. As a large employer you can be subject to penalties for not providing qualified health coverage to your employees at a penalty rate of $2,000.00 per year for each employee ( minus the first 30). For example, if you have 70 Full time employees and offer no coverage, then you are liable for 70 less the minimum 30 requirement- that’s 40 people times $2,000 or $ 80,000! Clearly a large number! If you are under 50 employees then you get a pass from providing coverage, but beware of strategies like these to minimize head count.

   1. If you are thinking of breaking up your company into smaller companies (i.e. each branch or division will be its own company) don’t bother. The IRS is wise to this approach and you will fail the control group regulations under IRC 414(b), 414(c) and 414 (m). If employees of multiple businesses are deemed to fall under a master control group then the aggregate sum of employees will be totaled.

   2. If you are looking to re-class workers as seasonal employees or part time workers then proceed with caution. In anticipation of this adjustment the law addresses the handling of this.

      i.Each month employers will be required to calculate total aggregate part-time service hours and divide the total by 120 hours. This is called the “Full Time equivalents” (FTE’s). Employers can be deemed large if the sum of full-time employees and FTE’s break 50. For example if you have 45 part-time workers who each work 29 hour per week for a month then the calculation is as follows:

( 45 x 29 x 4) = 5220, then divide by 120. This gives you 43.5 employees deemed full time.
Add 7 full time employees to the organization and you are at 50.

      ii.If an employer’s work-force including seasonal workers exceeds 50 employees for more than 120 days or four calendar months then the employer will be deemed “Large”. Most companies have high production schedules that run longer than 120 days, thus the issue.

B. The key planning items for most “Large” employers who are required to provide coverage is to understand plan design, minimum essential benefits, and employee contribution limits. Here’s why:

   1. Employees cannot contribute more than 9.5% of their w-2 wages to total annual premiums.
For example, a full-time foreman making $15.00 per hour and works 2080 hours can pay no more
than $ 2,964.00 per year in premiums ($247.00 per month). This is expensive particularly those employees that have passed on insurance already or looking for a low cost option.

   2. The families of our production work force (house-hold income below 400% of the national poverty level or in real terms 90k of household income) may qualify for government subsidies by bypassing the employer plan and going directly to the exchanges to get more affordable coverage. Why is this important?

   The $15.00 per hour young foreman may opt of the employer and keep his or hers $247.00 per month and elect to get a better deal individually on the exchange with subsidies. The big issue previously with individual coverage was always pre-existing conditions! This is no longer the case under the new law. Conclusion: As long as the employer-sponsored plan has design and benefits that are in compliance with PPACA regulations THEN the employer is not required to pay a penalty for employees who pass on the employer plan and pursue more cost effective options on the exchange!

   3. A number of employees will pass all together on taking coverage despite the individual mandate to carry health insurance either through your employer or individually. Why? The annual penalty is $95.00! This may become just an economic decision for some workers (i.e. young, single and healthy)

Lastly, every employer should conduct a financial analysis and plan design offering this spring and summer. Work with your consultant, lawyer and insurance broker to create the right strategy for you and your team. Finally prepare communication to share with your staff so they are educated on options both from a benefits and cost perspective. This is too big to screw up! Get it right!

New York, April 20, 2011 – Town & Gardens Ltd a premier landscape installation and maintenance company operating in Manhattan, New York City has concluded the sale of their business to a strategic industry buyer. Town & Gardens Ltd and the acquirer are both regular PLANET award winners for their design, installation and maintenance services.

Three Point Group, Inc. was engaged by Town & Gardens Ltd in 2008 to establish a transition and succession plan for the owners with the idea that they and the employees would continue to work for the company. The plan created with key employees and facilitated by Three Point Group, Inc. resulted in the sale of the company this month. Three Point Group, Inc was the primary advisor on the deal including the search for and identification of the buyer, the negotiations on price and deal structure and the consummation of the purchase agreement. The buyer is a long time industry leader - Ultimate Services Professional Grounds Management, Inc. based in Wolcott, CT.

The combination of these two companies makes great strategic sense with overlapping client and services business and opportunities in the Manhattan and Connecticut residential and commercial markets.

The owners of Town & Gardens will remain with the company and assist in the integration of business systems and sales growth. Both companies are excited by the potential created by this deal and look forward to the synergies that will enable rapid growth in the future.

Don Sussman, President and largest stockholder of Town & Gardens Ltd. : “Although we had a very strong company that generated a lot of interest, finding a buyer that had similar values and embraced our company culture was the critical factor in making this transition happen. Only a few weeks into our new structure we are already seeing the wisdom and benefits of this approach.”

John G. Chiarella, Jr. President and CEO of Ultimate Services: “ We could not be more pleased to unite our families with those of Town & Gardens, Ltd. The synergies we had hoped to realize have been more than surpassed in the short time we have been together. We are excited about the future of what our companies can achieve through our joint efforts, and are looking forward to fulfilling our mutual goal of being the premier service provider in the southeastern Connecticut / New York City region.”

Town & Gardens, Ltd. will continue to operate in the Manhattan NYC offices as usual.

For more information:

Three Point Group, Inc.

Kevin Kehoe, of Three Point Group, Inc. advised on this transaction. Three Point Group works with green industry business owners to create, execute, and monitor plans that help businesses and their owners grow smarter, maximize business value, and create wealth by executing an exit strategy. For more information visit: www.3pgconsulting.com : Kevin Kehoe, kevin@3PGConsulting.com or (714) 401-2389

Town & Gardens Ltd.

Established in 1995, specializes in commercial and residential landscape design, installation, maintenance, and other related services. For more information on Town & Gardens Ltd. visit www.townandgardens.com.

Ultimate Landscape Professional Grounds Management, Inc.

Established in 1971, landscape design, installation, maintenance, and other related services for both commercial and residential properties. For more information on Ultimate Services, Inc. visit www.ultimategrounds.com.

March 1st, 2010-Atlanta - Landscape Management Services, Inc. (LMS) announced today that it has successfully transferred 100% controlling ownership interest to Robert Owens as part of a combination buy-out of former shareholders Mary Madulka and Santigo Molina. Madulka will formally retire and Molina will continue his employment under LMS and Owens. Terms were not disclosed.

Three Point Group, Inc advised Owens on the buy-out assisting with its, valuation, funding and deal structure. Jeff Harkness, managing partner stated, “This was a team effort in getting this deal structured and closed. We worked closely with the other shareholder’s advisors and ultimately I think the collaborative effort got the deal closed.  This is a win-win for everyone and I know Robert is excited. The buy-out creates great momentum for the company’s growth strategy and we are looking forward to continuing our consulting relationship.”

Robert Owens added, “I’m excited about moving on and growing this company to new heights. We have a great team, customer base and business model. I feel like we can expand the brand and with a continuing focus on people and processes we can provide our clients with the best service at the right price. The Three Point Group team was a major key in getting this done and I’m looking forward to their counsel as we grow a smarter more profitable company.”

For more information:

Three Point Group, Inc.

Jeff Harkness, of Three Point Group, Inc. advised on this transaction.  Three Point Group works with green industry business owners to create, execute, and monitor plans that help businesses and their owners grow smarter, maximize business value, and create wealth by executing an exit strategy. For more information visit: www.3pgconsulting.com : Jeff Harkness, jeff@3PGConsulting.com or (678) 366-0333

Landscape Management Services, Inc

Landscape Management Services is a full-service Landscape contractor specializing in landscape maintenance services for the Atlanta metro area.  For more information on LMS contact:  Robert Owens at (678) 410-2290

Please join us as Three Point Group conducts a one-day workshop on Friday, February 19, 2010 at the Planet Executive Forum at the ARIA Resort & Casino in Las Vegas, NV.  The workshop, Winning in the New Economy, will provide participants with facts, analysis and tools to assist contractors in identifying areas where they can improve their investment leverage and increase growth and profits.  The agenda will include business forecast and 2009 industry performance data to help you benchmark and determine your 2010 plan.   Winning in the New Economy will provide practical tools and examples of “how to’s” of our three core strategies for profit generation – revenue, labor hour and overhead management.  The workshop will be in a series of three presentations, followed by round table discussions and hands-on learning.  Our goal is to have every participant leave with a clear action plan outlining the investments and actions that will pay off for them in 2010.

Please join us at this great PLANET tradition.  Come prepared to learn strategies and practices that can be implemented immediately.  PLANET has created an ideal forum for green industry professionals to learn, exchange ideas and have some fun!

For more information:

PLANET, Professional Landcare Network
PLANET, the Professional Landcare Network, is an international association serving lawn care professionals, landscape management contractors, design/build/installation professionals, and interior plantscapers. PLANET provides its members with a good business foundation to help them evaluate, plan, and better manage their companies.  Visit www. www.landcarenetwork.org

Three Point Group, Inc.
Three Point Group works with green industry business owners to create, execute, and monitor plans that help businesses and their owners grow smarter, maximize business value, and create wealth by executing an exit strategy. For more information visit: www.3pgconsulting.com: Jeff Harkness,  jeff@3PGConsulting.com or (678) 366-0333; Frank Ross, frank@3PGConsulting.com; Kevin Kehoe, Kevin@3PGConsulting.com

Atlanta, October 2, 2009 – Nature Scapes, Inc. & Landscape Maintenance Group, Inc (LMG), two of Atlanta’s premier landscape maintenance companies, announced today that they have merged effective October 1st.

Three Point Group, Inc advised on the merger including its funding and deal structure. Jeff Harkness, managing partner stated, “This is great opportunity for both companies to leverage their strengths. The merger will enhance the route density of both firms and has created a buzz among the employees of both teams. This momentum will help accelerate growth, enhance best practices and provide customers a better product.”

With the merger, the combined entities will produce over $10 million in revenue, making Nature Scapes one of the largest locally owned landscape companies in the Southeast. The addition of LMG’s office and facility will provide Nature Scapes an immediate branch in Marietta, allowing for broader coverage of the metro Atlanta area and enhance a regional model.

“We are very pleased to join forces with LMG,” Rick Upchurch, CEO of Nature Scapes, said. “They are a well-established business, having served Atlanta for 15 years, and they have an excellent reputation and loyal client-base.”

Kyle Johnson, CEO of LMG, added, “I believe this merger is a win-win situation. It’s the coming together of two seasoned leaders in the Atlanta real estate market. Nature Scapes is a quality organization and there is tremendous synergy with our cultures, production models and customer base.”

Kyle, who will join the Nature Scapes ownership team, added “I am very much looking forward to joining the ownership team with Rick Upchurch and Mike Kneeland (Chief Operations Officer, Nature Scapes). They both have extensive experience in the industry and as executives. I anticipate benefiting greatly from their wisdom.”

“Kyle Johnson is a 25-year veteran of the landscaping industry,” Mike Kneeland said. “He will be a tremendous asset to us. He understands the value of customer service—some of his customers have been with him since the first years of LMG.”

In the immediate future, Landscape Maintenance Group will operate under the name LMG, a Nature Scapes Company. Operations in the Marietta offices of LMG and Lilburn offices of Nature Scapes will continue as usual. “We look forward to providing our customers the same high-quality service they are used to and now with greater coverage on the west side of Atlanta through our new Marietta location,” Mr. Upchurch said.

For more information:

Three Point Group, Inc.
Jeff Harkness, of Three Point Group, Inc. advised on this transaction. Three Point Group works with green industry business owners to create, execute, and monitor plans that help businesses and their owners grow smarter, maximize business value, and create wealth by executing an exit strategy. For more information visit: www.3PGConsulting.com : Jeff Harkness, jeff@3PGConsulting.com or (678) 366-0333

Nature Scapes, Inc.
Nature Scapes, established in 1983, specializes in landscape maintenance, irrigation, and floriculture services for multi-family and commercial properties. For more information on Nature Scapes visit www.nscapes.com
Nature Scapes: Rick Upchurch, rupchurch@nscapes.com or 770-923-7023

Landscape Maintenance Group, Inc.
LMG is a full-service contractor specializing in complete landscape management and landscape enhancement for both commercial and residential properties. For more information on LMG, visit www.lmgatlanta.com.
Landscape Maintenance Group: Kyle Johnson, kyle@lmgatlanta.com or (770) 514-8000