Latest / Scaling Up with Fexingo: How Small Businesses Become Mid-Market Companies / How This Landscaper Scaled to 20 Million by Fixing Seasonal Labor
Transcript
- Lucas: Last week I was talking to a landscaper in Minneapolis who hit eight million in revenue — and he was miserable. Luna: Miserable at eight million? That's not a typo? Lucas: Not a typo. He told me, quote, 'Every October I fire my best people. Every April I beg them to come back. About half of them never do.' He'd been doing this cycle for twelve years and he was exhausted. Luna: So the churn was built into his business model. That's brutal. Lucas: Right. And he's not alone — landscaping is intensely seasonal. But what he did next is the interesting part. Instead of just accepting the cycle, he decided to calculate the actual cost of that churn. Luna: And what did he find? Lucas: He figured out that every time he rehired a returning crew member, he spent about eight hundred dollars on paperwork, orientation, and the productivity dip in the first two weeks. For a new hire, it was closer to two thousand. Across his fifty-person crew, that added up to roughly sixty thousand dollars a year just in churn costs. Luna: Sixty grand that basically evaporated every year. That's a decent chunk of profit. Lucas: Exactly. So he asked himself a different question: what if I could keep my crew busy year-round and avoid that cost altogether? Now, most landscapers I've talked to try to diversify into things like snow removal, which is obvious. But he went further. Luna: What else did he add? Lucas: He added holiday light installation and indoor holiday decorating for commercial clients. Think office lobbies, retail spaces, even some apartment buildings. That work runs from November through December, slots right into the dead period after snow season starts but before it gets too deep. And it uses the same crew skills — ladders, wiring, working outdoors. Luna: So he's not asking his guys to learn welding or accounting. It's adjacent work. Lucas: Exactly. And he priced it so that the revenue per employee was roughly the same as landscaping — about forty dollars per labor hour. That was his benchmark. He wouldn't take a job that paid less than that because then he'd be subsidizing the winter months instead of breaking even. Luna: Did it work? Lucas: Over three years, he went from retaining about fifty percent of his crew year-over-year to retaining eighty percent. His rehiring costs dropped from sixty thousand to roughly twelve thousand. And because his crews were more experienced, his on-site productivity in the spring went up — they didn't have to reteach basic techniques every April. Luna: So the retention itself became a competitive advantage. His crews were faster and made fewer mistakes. Lucas: That's exactly what he found. And that allowed him to take on more complex commercial landscaping contracts — the kind that require precision and reliability. He grew from eight million to about twenty million over four years. Luna: Twenty million from an eight million base — that's a compound annual growth rate of about twenty-five percent. That's not explosive, but it's steady. Lucas: Right — and it's profitable growth. He told me his net margin actually improved because he wasn't bleeding money on churn. Now, I think there's a broader lesson here for any business with lumpy demand. Luna: I was going to say — this isn't just a landscaping story. This applies to tax preparers who lose staff after April 15th, to construction crews in the Northeast, even to ski resorts in the summer. Lucas: Exactly. But the key is the framework he used. He didn't just say 'let's do snow removal.' He calculated the revenue per employee threshold first, then looked for adjacent services that met that threshold. And he had a rule: never add a second revenue stream if it dilutes the margin of the first one. Luna: That's a smart constraint. A lot of small business owners I've seen diversify into anything that brings in cash, and they end up with a messy portfolio of low-margin side hustles. Lucas: Right. And the other thing he did was he didn't try to keep everyone. He identified his top twenty percent — the crew leaders and the most skilled installers — and guaranteed them forty hours a week year-round. The rest he kept on a seasonal schedule but with a promise of first-call-back if they wanted to work the winter services. Luna: So he segmented his workforce. That makes sense — you don't need your whole crew doing holiday lights, but you need your best people to stay. Lucas: Exactly. And that tiered approach kept his fixed labor costs manageable. He didn't have to carry a full fifty-person payroll through January and February, when snow removal is often inconsistent. He only carried about twelve people guaranteed, and the rest worked on an as-needed basis. Luna: I want to push back a little, though. Not every business has an obvious adjacent service. What if you're a pool cleaning company in a cold climate? There's no natural winter service that uses the same skills. Lucas: That's a fair point. And for those businesses, the solution might be different. Some pool companies I've seen offer winterization and pool cover installation, but that's only a few weeks of work. The real answer for them might be to build a seasonal buffer — save enough during the peak months to cover fixed costs in the off-season, and treat the winter as a planned downtime for training and equipment maintenance. Luna: So the decision tree is: first, can you find an adjacent service that meets your revenue per hour threshold? If yes, go that route. If no, then build a financial buffer and use the downtime strategically. Lucas: That's exactly the framework. And it's worth noting that this landscaper's approach wasn't revolutionary — it was methodical. He spent about six months just tracking his costs before making the move. Luna: That's the part a lot of people skip. They want the solution before they understand the problem. He did the math first. Lucas: Right. And that's a good reminder for all of us. You know, one of the things I appreciate about this show is that we get to dig into stories like this — real numbers, real decisions. And if these conversations have moved your work forward in some small way, there's a simple way to help keep the show going ad-free. Luna: Yeah, listener support has been the backbone of Scaling Up from the start. It's what lets us take the time to find these case studies and not rush to a sponsor read. Lucas: Exactly. So if you're someone who values that — and if this episode gave you one useful idea — you can support the show at buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. No pressure, no perks, just knowing the show stays independent. Luna: And now back to the landscaper. What happened once he hit twenty million? Did he plateau? Lucas: He didn't plateau — but he hit a new ceiling. At twenty million, his management structure wasn't scaling. He had one operations manager trying to oversee both landscaping and holiday services, and things started slipping. Luna: So the diversification solved the labor problem, but created a management problem. Lucas: Exactly. And that's a classic scaling challenge. He ended up hiring a dedicated winter services manager, which cost him about eighty thousand a year in salary. But that manager freed up his ops manager to focus on landscaping, and the holiday division grew by thirty percent the next season. Luna: So the lesson is: solve one bottleneck, and a new one appears. The key is to anticipate it. Lucas: Right. And he's now looking at adding a third service line — commercial property maintenance, like pressure washing and parking lot sweeping — to fill the shoulder seasons. He's already run the revenue per employee numbers. Luna: Of course he has. That's the guy we're talking about.