Learn how the owners of Maldonado Nursery & Landscaping stayed on top in spite of the recession and a historic drought
One Texas landscape company is rebounding nicely from the recent Great Recession, and is also surviving the state’s Great Drought. It’s overcoming these two huge challenges by thinking preemptively about issues and addressing them before they become problems, as well as making operational changes.
Everything from routing of jobs to choice of trucks has been rethought at Maldonado Nursery & Landscaping, allowing it to survive the Great Recession.
PHOTOS COURTESY OF MALDONADO NURSERY & LANDSCAPING.
The company is Maldonado Nursery & Landscaping, Inc., headquartered in San Antonio. Company Vice President Jerry Maldonado says the recession came to Texas later than most other states, and the company, forewarned, reacted constructively. As a result, the company that went from $25 million in sales in 2008 to $18 million in 2009 was able to jump back up to $24 million in 2010. Equally important, the company remains healthy.
Maldonado Nursery & Landscaping, Inc.
Headquarters: San Antonio, Texas
Locations: Austin, Corpus Christie, Rio Grande Valley
Officers: President Rogelio Maldonado, Vice President Jerry Maldonado, Treasurer Roy Maldonado and Secretary Oscar Maldonado
Year Founded: 1987
Employees: 300 in peak season
Services: Design & installation, commercial & residential services, lawn maintenance, irrigation systems, landscaping, xeriscaping, hardscaping, garden center
Jerry and his father, Rogelio, along with brothers Roy and Oscar, started the company in 1987 in San Antonio. It was just the four of them. Now Maldonado Nursery & Landscape has more than 300 employees at peak season and offices in Austin, Corpus Christi and the Rio Grande Valley. Rogelio is president, Roy is treasurer and Oscar is secretary of the corporation.
“When we first started we were fresh out of high school, and the first focus was just on paying for the property we purchased for the business,” Maldonado recalls. It was just the four of them clearing lots, planting trees and taking on any job they could find. The maintenance side of the business didn’t come to fruition for about 10 years. Now they’re glad they expanded the maintenance division – it is almost 40 percent of the business – because during this economic downturn it has kept the cash flow steady and helped keep the company strong during a period when landscape construction evaporated.
The Maldonados found that by focusing on a higher percentage of maintenance during the recession they could improve cash flow.
Even as far back as 2008 the family began hearing how landscape companies across the country were suffering from poor sales and going out of business, and that was before Texas felt the effects of the construction crash. The four owners got together and decided to adopt a different company mentality, Maldonado says. Each examined their particular division and came up with ideas on how to cut costs and increase efficiency. Their time and efforts were well-spent.
“We’ve grown a lot in maintenance. We focus on the lawn maintenance,” Maldonado says. As construction became increasingly scarce, they intensified their efforts to sell and deliver maintenance services.
Withering drought hits
Even as the recession crept into Texas, another challenge presented itself: a devastating drought, one of the worst in the state’s history. That exacerbated a regional water shortage, which discouraged clients from installing plant materials that could not get by on the one irrigation per week as ordained by the San Antonio Water System (SAWS), one of the most progressive systems in the U.S.
So the company focused on “desertscapes,” he says, and using more drip irrigation in their designs. Drip irrigation users are allowed to irrigate more often than users of sprinklers. This practice occasionally gave them a job that wouldn’t have materialized if sprinklers had been the irrigation system of choice.
In examining the company’s internal efficiency, the Maldonados found plenty to work on. They sped up adjustments to operational practices so they could save money before money became scarce. It remains that way today. “We try to put them in place well ahead of the need,” says Maldonado, who is convinced that the steps they took to reduce costs and increase operational efficiencies has allowed them to remain healthy while other established companies in their markets went out of business.
Some of the changes involved vendors, who were asked to reconsider the prices they were charging for supplies and services. Surprisingly, most vendors came back with better deals. Other changes involved purchasing practices. For example, they installed a computerized system at their fuel tanks that calculates how many miles per gallon each vehicle gets. The system lets them know when vehicles aren’t getting peak mileage, for example, a vehicle that should get 15 mpg is getting 10 or less. Then it’s time to repair the vehicle or replace it. The resulting savings in fuel costs were enormous.
Vehicles get a hard look
“We’ve been buying more used vehicles than before,” Maldonado notes, because the company owners decided they needed to cut back on capital investment. The focus became less on the appearance of the vehicle than on its cost and efficiency. In addition, sales personnel were shifted from three-quarter-ton trucks with four doors and four-wheel drive to half-ton, two-door trucks with two-wheel drive. That riled up some people who liked their big trucks, but it saved money – lots of money.
Vehicle savings extended to the company’s shop, where prior to the recession 100 vehicles were getting oil changes every 3,000 miles. They researched the situation and found that by buying a more expensive oil they could delay oil changes to every 7,500, or even 9,000 miles. Again, this small detail yielded thousands of dollars in savings every year. The company also gained huge savings by placing GPS tracking devices in almost every vehicle and using the data to reschedule crews, redirect routes and resolve numerous other problems, such as billing disputes.
Office costs also underwent scrutiny, Maldonado says. A receptionist was let go once the position was examined – very little foot traffic comes into the office, so why have someone there to greet clients? Even seemingly minor elements were changed where needed. For example, a policy of turning lights off in empty rooms resulted in energy savings. An exemption was made for office coffee, however. Maldonado, who oversees the office and shop, tried to purchase cheaper coffee, but that left a bad taste in employees’ mouths, so he switched back.
New service opportunities
Once this mentality took hold, the entire business was opened up to any and all ideas that would save money and help the company get through the tough times. That included everything from going to the banks and renegotiating loans to lower rates to buying cheaper ballpoint pens for office use. It did not mean the company would abandon its aggressive role.
“Our game plan has always been, and continues to be, diversification,” Maldonado says. Switching focus from construction to maintenance was part of that program. Another is to try to add new business in other areas. For example, the Maldonados do some janitorial work and are in the process of purchasing a company that buffs concrete floors. This new operation will be a separate division or subsidiary, but will be an LEED-certified entity that will enhance the company’s ability to legitimately brand itself as a green company.
The underlying principle still applies here: stay ahead of the curve and stay nimble by instituting practices that will allow the company to avoid negative factors such as rising costs or a worsening economic picture. In a way, Maldonado says, the mentality that has been forced on them may be a good thing. It positions them well for the recovery that will someday come.
“We realize that things are going to get better,” he says, and at that point the company will be lean and able to take advantage of its strong position in acquiring new clients and business. One aspect that cannot be overlooked is how the management team must be able to work together toward a common goal with trust and good will.
“We’re here 25 years later because we respect each other’s opinions,” Maldonado says. Still, foresight can’t be overlooked as a management strategy.
Don Dale is an experienced reporter, who lives and works in Pasadena, Calif. He has written extensively on green industry companies, trends and issues for more than two decades.