The Kings Of Memphis: Herbi-Systems
"Article reprinted with permission from the
March 2001 issue of Lawn & Landscape magazine - www.lawnandlandscape.com."

Kenny Crenshaw thinks that after 16 years, Herbi-Systems is now an "overnight success."

The truth is that he never expected to build a lawn care company. The president of this 16-year-old firm in Memphis, Tenn., has an agriculture degree and was doing grounds maintenance for another company that eliminated his job after losing a big contract.

"The guy I was working for told me he thought lawn care would take off and that we should get into that work, so we did," Crenshaw remembered.

The company’s beginnings were anything but glamorous. "I was living at home and I wasn’t married, and I don’t think we took any money out of the company for two years - not even a salary," he recalled. "I did other jobs to make money, and when I did start taking a salary it was only $100 a week."

Today, Herbi-Systems is one of the leading lawn care companies in Memphis, and Crenshaw, his general manager Carl Quick, and his industrial vegetation management manager Lee Barclay find themselves turning a company into a real business to ensure its continued success.

At A Glance HEADQUARTERS: 7551 Bartlett Corporate Cove East, Bartlett, Tenn. 38133 PHONE: 901/382-5296 FAX: 901/382-7111 WEB SITE: www.herbi-systems.com FOUNDED: October 1984 2001 ESTIMATE REVENUE: $2.75 million SERVICE MIX: 60 percent of the revenue comes from residential customers, 30 percent from commercial/industrial and 10 percent from government/municipal. Fifty-eight percent of Herbi-Systems’ work lawn care work, while 40 percent is industrial vegetation management and 2 percent is trees and ornamentals. EMPLOYEES: 23 year-round, 2 seasonal EQUIPMENT: 15 spray vehicles and 2 maintenance vehicles. Two aerators and four all-terrain vehicle spray rigs. The Company MISSION STATEMENT: We do the job right so you don’t have to. FUTURE CHALLENGES: Being able to balance growth and profitability while maintaining excellent customer service and continuing to develop, train and empower our employees. The Owners Kenny Crenshaw Carl Quick Lee Barclay Crenshaw founded the company in 1984 and remains the majority owner. Crenshaw graduated from Mississippi State University with a degree in agricultural engineering. Over the years, he has allowed Quick and Barclay to acquire minority positions in the company.

THE EARLY DAYS. Crenshaw has vivid memories of Herbi-Systems’ first few years in business, and they weren’t glamorous times. "The market was starting to take off, ChemLawn was doing a lot of advertising locally and we got the crumbs from under the table that it didn’t want," he noted. "When you’re starting out, you have to take all of the work and junk contracts that no one wants, like the smaller, $1,000 government contracts that you have to bid. Then you have to try to make lemonade out of lemons."

Making a profit in these early years challenged the company, but Herbi-Systems didn’t want to earn contracts just because it had the lowest price. "We tried to avoid low prices because companies that start out that way are going to have a tough time getting their prices up," he related. "So we looked for jobs that other companies didn’t want because they were either low bid or more challenging. We don’t deal with a lot of that low-price bid work today, but we were able to figure out a way to make money at it back then."

Herbi-Systems benefited from being in a market that included some successful lawn care companies because this gave Crenshaw the opportunity to learn from the best. "We tried to copy everything successful companies did from their program to their routing," he admitted. "If you see something you think works, copy it. But then you have to innovate and do your own thing to build the business."

After about five years in business, Herbi-Systems started enjoying tremendous growth - up to 40 percent a year. "Today, the market is much more saturated, and we’re satisfied with 10 percent growth," Crenshaw noted.

"The market today includes a lot of swapping of customers from company to company," added Quick. "We’ve gone from spending nothing on advertising 10 years ago to spending almost $100,000 this year, which is 7 to 8 percent of lawn care revenue. But we don’t spend anything marketing the vegetation management."

Regardless of Herbi-Systems’ growth, Crenshaw has always maintained a long-term perspective. "I take a long view of things, and sometimes that hurts us," he related. "Any time I do something, I want to know how that will help or hurt the company in five years. We don’t do things for the short term if they won’t help us long term. For example, we won’t buy a piece of equipment that we won’t be using five years from now. Sometimes we’ll even endure some immediate pain for long-term benefits.

"We might buy a piece of equipment that we don’t have the work to support right now but that we’ll have too much work for in five years," Quick added. "We’ll buy it to get a foot in the door and get ourselves going."

Crenshaw’s long-term vision resulted in a new facility, built from the ground up, five years ago, which he said was an investment in the company’s future. "We have a completely self-contained facility that was unlike any other in the market when it was built," Quick described.

"The facility really helps us during the hiring process," Crenshaw noted, adding that he thought ChemLawn used to attract the best technicians in part because of its professional appearance. "When people see our nice, brick building they know we’re a permanent company and that we offer more than a summer job. They know they can make a good living with us and that they’ll always have a place to park and wash their truck, products will be well stored and there won’t be junk all over the place."

Today, Herbi-Systems employs what Crenshaw called "the best technicians in Memphis," each handling between 500 and 700 accounts for a six-application program.

"The challenge is that we’re working out of a $500,000 facility, and we’re competing against people who are operating out of their homes," Quick added. "They’re using part-time labor while we’re paying benefits to 23 employees. We’re trying to sell quality, but our competitors can buy the same products we use. Selling quality can be tough because some people just want a decent-looking lawn, but we have to sell that quality and name recognition to get customers at a higher price."

"We also designed the facility to save wasted time, such as filling up trucks, cleaning up and doing paperwork," Quick explained. "We want our technicians working on their craft and out in the field because that’s when they’re making us money. So our filling area lets us load two trucks at a time with a loading dock that puts the tank level with the floor. We have water pumping in at 100 gallons per minute, and all of the products are stored right there so people aren’t walking all around for products."

Taking on Vegetation The world of industrial vegetation management (IVM) is one that many lawn care companies know about but that few explore. Minimal competition and the variety of the jobs are what drew Herbi-Systems, Memphis, Tenn., toward offering this service. "IVM was more interesting to me than lawn care," explained Kenny Crenshaw, president. "IVM is a different town every day, and we have IVM clients in seven states, while lawn care is more local and routine." Herbi-Systems found enough synergies between IVM and lawn care to offer both services, with lawn care representing 66 percent of sales and IVM 30 percent. "Both services require the same equipment, but IVM customers are pipelines, power companies, chemical plants and cities," Crenshaw said. "These are typically big accounts, so you become very customer driven and you go where they want you to go. We prefer to stay within two to three hours of Memphis, but that’s not always feasible." Crenshaw hopes the market for IVM work will soon grow. "A lot of municipalities have resisted herbicide use in favor of doing everything by hand, but we’ve established a good track record with the products we use and we’re overcoming that obstacle with some people," he commented. "The problem is that governments don’t want to make waves. They’ve got X dollars in the budget, and they’ll keep doing work however they’ve always done it. "Now, people are looking for governments to save money, and that means using herbicides," he continued. Herbi-Systems dedicates employees to its IVM work in two-person crews and always strives to cover travel costs in its job bids. "These companies pay us in a timely manner, and the competition isn’t as intense as in lawn care," he observed, adding that lawn care typically delivers slightly higher profit margins than IVM. "But there isn’t nearly as much work to do, either, so customers are harder to find." - Bob West, Editor Lawn & Landscape

A MARKETING MESSAGE. Most lawn care companies do some marketing. Herbi-Systems wanted something different, so it turned to the radio to generate customers.

"We did live commercials on the radio, and the customers came in so fast that we could hardly keep up," Crenshaw recalled.

For the most part, the company hired a local radio personality to be the voice of the ads, such as a morning talk show host or the traffic reporter. "We wanted to use someone who could catch people’s attention and who people would believe," Crenshaw explained.

Herbi-Systems has scaled back its radio advertising for more direct mail for now because radio prices got too high, although it continues advertising on a local home and garden show. "I would recommend doing that for anyone," Crenshaw related. "Those commercials don’t generate a lot of leads, but it does get us some good leads."

The company is also is also spending more time analyzing its advertising. "We track all of our leads and ask everyone who calls the office how they heard about us," Quick related. "This tells us where to spend or not spend our money, when to quit spending it and when to spend more.

"We used to think we knew all about our marketing, but then we’d get to the end of the year and be surprised about where our sales came from," Quick continued, noting that weather impacts the effectiveness of different advertising methods. "Studies show that half of a company’s advertising is wasted every year, so the challenge is knowing which half. We’re constantly trying to chase that down and spend less in areas that aren’t working and more in areas that are working."

Ownership All Around A few years after founding Herbi-Systems, Kenny Crenshaw’s first employee left the company to enter the ministry. This individual had gained some ownership in the company, so Crenshaw decided to buy it back from him over a three-year period. Since that time, Crenshaw has let two other key employees acquire equity in the company, both of whom still work there. "I always thought that I wanted to own something that other people could own a piece of as well," Crenshaw explained. "A lot of people just want a place to work, but others want ownership, so you need to figure out a way to make that work. That meant we had to change the business from a partnership to a C corporation." Crenshaw still believes in this philosophy, but he isn’t certain about how widespread ownership in a company can be. "I’ve found out that this process is complicated and expensive, which is why most people probably don’t do it," he explained, adding that owners who want to share ownership should use a good attorney. Crenshaw and his general manager, Carl Quick, have also taken steps to protect the company in the event either of them dies unexpectedly. "We have a buy/sell agreement as well with our life insurance so that if either one of us dies the other one will be able to buy his stock," Crenshaw noted. - Bob West, Editor Lawn & Landscape

MONEY MATTERS. Now that the popularity of lawn care work has attracted so many new companies into the industry and the company’s growth has slowed, Herbi-Systems finds itself spending more time on business management issues that didn’t seem as important in the past. So while Quick focuses on managing the lawn care work and Barclay oversees the vegetation management, Crenshaw focuses on the financial side of the business, oversees advertising and works to grow the vegetation management. Additional difficulty stems from the fact that each of these three key managers has an agricultural background instead of a financial base.

"There aren’t too many chiefs at this place, but sometimes we probably have too few of them," Quick recognized. "We used to be growing so fast that we just had to get the work done. The work was so easy to get that we didn’t have to worry about sales or marketing.

"That would have been a good time for us to learn the business part of the company so we could run it better then and now," Quick observed. "Then we could’ve been marketing the right way and been prepared for the more challenging times. Now, we’d like to get more profitable through increased efficiency so we can keep our wages up and pay more than our competitors pay. To do that, we have to provide the best service so our customers are willing to pay us more. That all leads to a quality company.

"Sometimes it leaves us longing for the old days of going out and doing the work," Quick continued. "But, as you grow, you have to move from the guy doing the work to the guy figuring out how to get the work done."

"We need more foresight now as our company gets bigger," Crenshaw confirmed.

"We could’ve been more bottom-line oriented and squeezed more out of the organization, but everything isn’t always about money," Crenshaw concluded. "We’re different than a lot of companies because we service and maintain our own equipment. We seldom send anything out for repairs unless it’s a specialized repair. That may not make us the most profitable company, but it helps keep employees all year."

The author is Editor of Lawn & Landscape magazine.

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