Say “Yes” and Figure It Out: How to Turn Customer Needs Into Recurring Revenue | Podcast Eo. 288

Hello and welcome to Toolbox for the Trades. My name is Amanda Salvatore, and today I spoke with Tony Lisa, CEO of CAM Partners in New England. As a business owner, it can feel almost impossible to break through that $5 to $10 million ceiling, but Tony found that saying yes and being consistent in communication and staying true to your values can make all the difference. We dive into how he scaled and diversified his services by listening to his customers' needs and delivering quality work in the commercial landscape and property management industry, and how you too can break through. I hope you enjoy this conversation as much as I did. Tony Lisa, you are the CEO of CAM Partners servicing New England, and today we are going to be discussing business scaling, diversification, and acquisition strategy within the commercial landscaping and property management industry. Thank you so much for coming on Toolbox for the Trades.

Very excited to be here. Thanks for having me.

Absolutely. Before we get into the nitty-gritty, let's have some fun. I know you're a golfer, so your favorite golf course you've ever played, and does it beat your home course?

Yes, my favorite golf course I've ever played is on Long Island. It's called National Golf Links, and my home course doesn't compare to that place at all. I've played there 3 times in my life, and for anybody who's listening, more than willing to accept invitations if you have them to give out.

Amazing. Well, we'll, uh, we'll make sure they reach out to you on LinkedIn so you get that invitation. Who doesn't want to go to to Long Island in the summer, you know?

Yeah.

Amazing. Well, let's get into it. How did you find yourself in this industry?

It was a bit of a circuitous career path for me. I started my career in finance and went to work for a bank when I graduated from college. And I essentially spent, you know, the equivalent of almost 20 years as a financial analyst. In various roles. And the last role that I had was at a money management company. We were, you know, making investments, picking stocks. I got a bit tired of talking to people about their businesses because everything they talked about seemed very exciting to me. I've always had a bit of an entrepreneurial kind of kernel that I've wanted to scratch. I think that you know, my experience as an analyst with a number of small companies becoming bigger companies kind of just inspired me to kind of get out there and take a little more control of my own career, my life. Little did I know that would, you know, translate to a lot more pressure, but so be it. It's been a lot of fun. So in late 2010, early 2011, I started looking around for a business to buy. Something I could understand, something that was relationship-oriented because I thought I was pretty good at that. A business that had the ability to consistently demonstrate profits to some extent was not affected by swings in the economy. Most landscape maintenance businesses are built on recurring revenue and that, you know, someone who's taken a lot of risk that make me sleep well at night. You know, I didn't want to do something that was heavily exposed to technology. We had just come through the internet revolution. Digital was exploding. You know, I feel like a dinosaur when it comes to that kind of stuff, although I've been getting dragged along in evolution like everybody else. And so, you know, with these sort of characteristics, I started talking to friends, lawyers, accountants, and stumbled across a business in southern Massachusetts that was for sale that kind of fit that. And that's how I ended up with the first piece of what is now CAM Partners.

Amazing. Well, let's talk about CAM Partners. What sort of services are you providing for those who are unfamiliar?

So CAM Partners today is quite different from what I started with, but CAM stands for Common Area Maintenance. And if anybody's renting or leasing a piece of property and you have a, what's called a triple net lease, you pay what's, what are called CAM charges. And those are property maintenance charges. And those are things that every landowner or every building owner, you know, needs to execute on and also pay for. You know, that's where we kind of harvested the name from because at the end of the day, what we want to do, what we're trying to do is to be a one-stop shop for CAM services, common area maintenance services, to portfolio owners of real estate. And those services are essentially anything that I would call non-licensed trades. So landscaping, as you might imagine, snow removal, parking lot sweeping and maintenance. And then we have two other service line categories. Which are very all-encompassing. One is called Construction, which we consider outdoor work, right? And in this, in this world, it's not big projects. It's more like small-ticket work. You might think of replacing a sidewalk or potholes or flagpoles or fence work or a roof patch and on and on and on. And then what we call our Facility Maintenance service line is indoor work. Again, that could be small-ticket handyman type of work. And we do everything from cleaning to pest exclusion inside to, you know, tile replacement, floor tiles, ceiling tiles are the kind of things we get a lot of calls for. And our customer, our true favorite customer is the maintenance manager. And he's that person that is responsible and typically extremely overwhelmed. Managing the upkeep of, you know, 10 apartment complexes or 10, 15, 20, even larger chain stores, right? We service grocery stores and, you know, gas stations, apartment companies, and our best customer is usually completely overwhelmed at his job. And we feel like, you know, we've We've threaded a needle that is really answering to kind of what they're looking for, so.

So you start this company in 2012 and you're starting with essentially landscaping with some snow removal, and now you have a plethora of services. How did that transition actually start for you?

It's a great question, and I definitely, you know, owe a bit of thanks to the guy I bought the original business from who worked with me for a while after I took it over. In addition to what was mostly a landscape and snow business, you know, there's this revenue category in the original P&L that just said other and buried in that other. And it wasn't particularly big, maybe 10% of revenues. Was all kinds of project work, power washing at a certain store, fix a fence. I remember one very clear in my mind, like it was yesterday. We got a store manager had asked him, asked us to build a storage cage, right, in a back room. Pretty simple kind of thing. The message from the previous owner was, you know, say yes and figure it out. Because they're desperate to have somebody to help them to do this stuff. So that, you know, in the early days was a way to accelerate revenue, but it started to turn into a learning experience. The first step was, you know, probably a year and a half to 2 years into that, we could afford to staff a crew, right? A 2-man crew going around to do project work on a regular basis. You know, probably 6 months after that, we participated in an RFP where we won a parking lot maintenance contract. Previous to that, all we were doing was going to that store 2 days a week and picking up trash in the parking lot. And then they decide to institutionalize this process. We want, you know, sweeping 4 nights a week. We don't only want it one and done at this one location. We want Done at 7 locations. And next thing you know, we're buying a sweeper and we're in the parking lot maintenance business. And, you know, to be honest with you, it was kind of one experience after the other that led to that. And one customer in particular that kind of crystallized this opportunity for me, as you know, I built a relationship with that customer and I got to see how, how the business works from his perspective, not from my perspective. And while I always wanted to spend a tremendous amount of time talking to him about the small amount of work we were doing, he had this much more work to be done by numerous other contractors who provided numerous other individual services. It just kind of built on itself from there. And in fact, you know, as I might have mentioned previously, um, That customer introduced me to who is now my, my partner. And it was, you know, before we decided as a team to start working together, many, many long conversations about, you know, wow, if you could be the perfect company servicing a customer like us, what would you look like? That, that led to another very interesting stage of the company's development. So.

It seems to me that you were listening to your customers. They're expressing their needs. You're showing up and doing great work, and they wanted to expand on those services and you answered the call. What would you say is your biggest lesson that you learned once you started adding more services?

As you can imagine, in our business, you know, you're only as good as the project, the job that you're doing. Our business has a low barrier to entry. It's not hard to get the work. It's hard to sustain the work over time. It's hard to make money doing it, right? But anybody can say yes for a low price. And so, you know, I learned very quickly that the quality of the people and the team that we're employing, you know, my success is really tied to them. So we've worked very hard over the years to build an organization that incents all the way down to, you know, our newest employee in a way that they have a path to success in their individual roles. And that beyond their individual roles, if they want to grow with the company, that that opportunity exists. And at the end of the day, that's translated into, you know, on balance, people who enjoy what they're doing and are happy to be here and, you know, treat the work like it's their own. Whenever we have an issue at the company, one of the more common phrases myself, my partner, and the rest of the management team is treat it like it's your own. And I think we've been lucky enough to be able to hire and, and manage and work with a lot of people who take that to heart. I think that's the key for us.

You said what is difficult is maintaining and keep going with those services. What would you say about sustainability when you're adding on these services? What's the key?

You know, it's pretty mundane stuff. It is a good quality control process. Let's just take landscaping, for example. Owning and managing a maintenance contract for a particular property can get pretty routine over time. And the longer you've had a certain customer, the happier they get with your services, the quieter they get. And all of a sudden, by accident, someday they're not getting the attention that they deserve. And if you don't have a good quality control process in place, that essentially ties your manager and your crew leader's success to how that job is done. No matter how routine it is, week after week, summer after summer, year after year, cracks start to emerge. And so not to repeat myself, but I think a lot of it has to do with incentives because incentives— I believe that incentives drive our managers. Managers own the quality control process.

Process.

We want what we call technicians who can become crew leaders, crew leaders who can become managers. You know, I have a number of guys in the company now who started in one space who are at the management level and have been working on, you know, an individual property for the entire 14 years that we've here. I mean, we've lost our fair share of business over time. Everything that we're great at comes from a mistake that we made, right? I'm a big believer in You know, not beating on people or ridiculing them for the work they did, but slowing down and trying to learn what the lesson was in that and not repeat it over and over again. So, you know, to be direct, the answer to your question is a quality control process that you can really have faith in.

You mentioned earlier that you started to have these conversations that has really opened up what the business now currently is. I know that you were talking to your business partner in 2019 and starting to have these conversations. What did those early conversations sound like?

My partner, whose name is Chris, worked for what was one of our larger customers then and now, uh, at the time, and we've been able to sustain that relationship with his transition. Like any good relationship, we became friends. We started spending more time together, working through certain problems as customer and contractor. And I was always asking him for advice, you know, how do other people do this? At the same time, asking him how he would like to see things done. And that led to, you know, him sharing with me a true view into the kind of work that his customer was actually constantly asking people for, as if to say, here's the opportunity set that's out there, right? So some examples that, you know, the average landscaper might not think of, but you're servicing a chain store. That chain store has a landscape RFP, it has a snow RFP. Those are the ones you know about. It's got a drain maintenance RFP that goes out every year. It's got a roof maintenance RFP that goes out every year. It's got a pest exclusion that goes out every year. It's got a lot sweeping one that goes out every year. And if we're already on campus once a week doing one thing, you know, why, why can't we do more things? So him showing me all of the program work that they do was part of the answer. He then went on to say, but what's really hard for us is the stuff that we can't stick into a program, right? Like a crack in the parking lot, right? We don't know when they're going to show up. They're all different. They're all over the place. But when it happens, we have to deal with it. An extreme example might be a vehicle hit the building. Again, not a program, but we need to find a contractor who can solve that problem for us when it happens and do it pretty quickly. You know, needless to say, we didn't start doing building repair in the beginning, it used to be really easy, mundane stuff like fence repair or somebody knocked over a sign, can you dig a hole and stick it back in the ground? But over time, you know, as we hired a construction team to handle that kind of stuff, the skill base in the company started to grow. It started to build the confidence in Hey, let, let's ask for the next most complicated thing that you have. We would get that project and then we would say, let's go hire some more skills. And it, it, it really started to feed on itself. I was at a crossroads with the size of the business. Like many people listening to this, I had reached that stage, call it $7 to $8 million in revenue, where I was in the middle of everything. I was making every decision, every quote, managing every crew. It was hectic, borderline unhealthy at the time. And like many other people who reached that stage, the thought was, well, I've either gotta, I gotta sell this thing or I gotta turn it into a bigger business that can scale. And the conversations that I was having with what is now my business partner got me very excited about, you know, going after it, if you will. Spent a lot of time talking about it. I mean, partnerships are marriages and it's very important to make sure you have the right teammate. And I'm incredibly lucky on that front. And we raised some capital, cleaned up some small debt that I had. So we had a sort of debt-free balance sheet, sat down with a consultant, worked on a business plan, and kind of got after it. And by 2020, we changed the name of the company to CAM Partners. And here we are with a lot of hard work in between.

Amazing. Yeah, that tends to happen, right? So I know you said you're a relationship-oriented guy. You referred to this relationship with Chris as similar similar to a marriage. So for those who are looking to expand and go into business with someone, what are some things that they should consider?

The best way to answer that question is based on my, my experience individually. It's probably not the same for everyone. If I think about the things that make our partnership work, you know, neither of us hold grudges, right? There are, there are plenty of difficult situations in our business to work through. And in general, we have equal temperament when it comes to dealing with problems. So I think that's very, very important, the ability to sort of slow down and deal with difficult things professionally. We have very complementary skill base. I'm the finance structuring, cash flow accounting guy, and he is the crew acquiring, equipment, you know, execution. I mean, everything we do, he's done 100 times before. We think about customer service exactly the same way, like being aligned on core values. Not just that it's a piece of paper with a bunch of bullet points, you know, it took us about 3 minutes to decide what our core values were. But if they are true to who you are, you show them, it's infectious, right? Our business has grown quite a bit, but You know, if you don't share those, it just, it presents itself very quickly, right? We, we know if you're right for the company, if you're not. If I could give any advice to people who are considering taking their business to the next level and they have this sort of, oh my God, my life is crazy. How could I, right? We're, we're 5 times the size we were in 2019. We're more organized. We're in a 10 times better financial position. I have more control of my life than I've had in 15 years personally. And it really comes down to building a team around it. I mean, I think every entrepreneur, particularly in the landscape and construction and snow management business, like, you know, I'm the guy, I, nobody's gonna do it better than me and I gotta be involved in everything. Well, you know, that's an express pass to getting, being crazy. And I lived that for way too long. Having a partner and being able to build on top of that with a much larger team has not only allowed us to scale, but it's given me a lot back personally. The to-do was decide what you like, decide what's gonna work, and don't be afraid to try and replicate it in other people because You know, that's given us back a lot and it's also helped us grow the value of the business quick.

You said that you learn from your mistakes. It's okay to make these mistakes. We're here to learn. What mistake do you feel was your greatest learning experience when breaking through this ceiling?

We were executing too much work without a lot of supervisory management, quality control at the time. And so, you know, I had a very painful experience with a big and trusted customer that had given us a lot of work. And at one point, you know, sort of had to sit through a meeting that was like, you're not paying anywhere near the attention you used to pay to us and you're doing you know, 200% the amount of business you were with us a year ago. We expect more from you. These things all seem obvious in the rearview mirror, but when you're building a business and not trying to put yourself into too much debt that you can't manage and make sure everybody gets paid every Friday like they need to, you know, you make there's a lot of self-rationalizing that goes on, and those, those things can turn into bad decisions. And I did that in a big way. Today, that customer is another 200%, another 100% bigger than it was at that time. They've given us pretty much all of their work in, in a certain area in, you know, in New England that they have. And that is, you know, snow landscaping and all kinds of construction projects. Albeit small ones. In fact, we've used them as a model for how we want to build out this customer relationship management stuff throughout the rest of our company. So making sure that crew leaders are talking to property— individual property managers, that our landscape manager is talking to a regional manager, that in the wintertime the regional snow manager is talking to the same person.. And that instead of me trying to handle every problem, the really, really big problems are getting brought to my attention, but I'm managing by exception as opposed to having, being involved in everything. And that's, you know, I, I thank that customer a lot. In fact, they played such a big role in helping us get where they were. One of the best compliments I got was when we were raising money. I asked them, I said, it would be a crime if I were to be successful and not allow you to participate in this. Please feel free to say no, but we're going out and raising a little bit of money. And they decided to make an investment in us. So that is something I'll never forget and always be very grateful for. And it was a customer that was frustrated with us that took enough time to say, hey, we expect more from you. And, you know, thankfully I was listening that day.

It was a lucky day. It was a lucky day. It seems to me that throughout your whole career, what you have been doing is listening to your customers, to their needs, and seeing how you can help facilitate. So it doesn't surprise me at all that you took that note and ran with it and opened up that communication and made sure that you were giving them what they needed.

You know, I think a lot of people will tell you, well, you listen to your customers and that, that's key to success. In our business, they tell you what they want and need day after day after day. And they're all in positions, you know, unfortunately in their industry, they're not as valued. They're not as valued by their companies as the role that they play in making those businesses operate, right? They really play a crucial function. And I see this more in the private space, right? We work for large, well-known public, you know, that you might call public companies, but our customers who really respect their maintenance managers are the private real estate owners, the guys who built their own empire with their own hard work. And that property is a reflection of themselves still at the end of the day.. And in those situations, they have maintenance managers who are very empowered to execute on their behalf. Those are the people that we really love working with at the end of the day. Of course, the, the other group is a much bigger set of customers at the end of the day, and they're typically being forced— they're always getting asked to do more with less, right? To get back to what, what, what got us on this topic is they tell you what they need every day on a regular basis. You see it. You hear it and, you know, in our business, it's not hard to succeed once. Again, it's hard to succeed consistently. It's hard to maintain that customer, but return their quotes quickly. If you get the job, schedule it as fast as you can, make sure it's done well, and ask for feedback when you're finished. It's, it's not a hard playbook to run. It takes a lot of will to just do it consistently.

Yeah, consistency is key. I want to move on to acquisitions. You've experienced this quite a lot in your career. So when you're evaluating a business for acquisition, what are some of the biggest green flags that you're looking for?

Our acquisition program is built on filling out geographical presence, right? We want to be 20 to no more than 30 minutes from any location that you might own if you're a customer. And so in New England, you know, we have a big map that we're sticking pins in, as you might imagine, where we have 7 locations now. And in our perfect world, we have 11 if we can get the exact 4 locations that we don't have. And so we've done a lot of that. We're still working on it. One of the questions is geographic location. We very much are trying to find a customer that was in that exact place that I was. The what do I do now? I'm at $5 to $7 million in revenue. I love what I do, but I don't love the lifestyle that I'm living that comes along with it. I'm stretched, I'm nervous. I can't see myself making the investments. The reason I say that is because we want them to stay on. We are not buying businesses where the owners want to harvest something and leave, we want to basically acquire entrepreneurs and turn them into bigger entrepreneurs. In our capital structure, you know, that's often called a roll-in. So some of the price that we're paying them for, they're taking a position or compensation, as compensation, a position in our business. Typically, we're finding, you know, businesses that are focused on landscape and snow. And we, they need to be willing to expand the service line to, to do everything that we do. We've had some deals where the FM and construction stuff has been brand new, and that takes time, probably takes about a good year and a half to get it up and running. We've had other ones where, you know, they've done plenty of construction project work on the outside. In many cases in la, on the landscape world, they're big, you know, sort of installation type hardscape construction projects. And it's not hard to turn that, that sort of mentality into, well, let's just fill a pothole or let's fix a curb, right? You're putting in beautiful patios. So, uh, third thing is willingness to increase your service line and then being aligned on values, right? I mean, we're, we're in, we're in a hustle business and A lot of our customer relationships are serviced across all of our locations. And so we want to make sure that they're— that that customer is getting the same response, response rate, sense of urgency in every location.

So for an owner who is in this position, they want this lifestyle change. What should they be doing now to make their business more attractive for acquisition?

Cleaning up all the personal stuff that you have running through your business. That is something that's going to get unwound anyway as you're negotiating price. And the easier you make that on the buyer, the more the conversation can focus on the real stuff as opposed to the ancillary, like, you know, you have your kids' cell phones running through the company or your wife's car. Again, very common in small businesses, but cleaning up that kind of stuff, I'd say, would be important. Secondly, and probably more important, I should have mentioned this first. This would be the first thing is to have a number 2 who agrees with what you want to do, right? Usually those businesses, every business that we've acquired, whether we've seen it on the way in or have observed it after the facts, have a great number 2 who can be that person when you don't have access to the original owner-operator. What's buried in that experience is that like, hey, you've got one of these, right? We can duplicate this. We can empower you to elevate, to hire more, to train more, you know, turn this into a place that everybody wants to work, not just this one individual. Getting that process started is, is relegating some of that, some of your responsibility to your trusted sidekick partner, whatever that number 2 is in your, in your organization.

When it comes to technology, I kind of want to dive into that a little bit because I know that you run on Aspire and technology sometimes is slow to adopt within the industry. When you're looking with M&A, are you also looking at their tech stack? Are you looking at what they're operating with?

I mean, we evaluate it, but it's really more in, in the spirit of, is the climb gonna be easy or hard? We're not making decisions to buy companies based on the technology that they're using. If somebody is 100% paper, and that might mean the owner is really old, for lack of a better description, and his organization hasn't involved at all, you know, that would be a red flag that would make us ask more direct questions. But these days, you know, it's very rare that you're not doing some sort of job in our business and having to record it digitally somehow. You know, we chose Aspire for very specific reasons, and we've had a great experience with it. One of the requirements of our acquired companies is to kind of fold in technologically to what we're doing. So that means getting on our accounting system, getting on our payroll system, but most importantly, using Aspire because this is my black hole as a financial analyst, right? I could talk about this forever, but Aspire allows me to set up the financial guardrails that literally every single quote, hundreds a week, goes out with the same parameters. So every service line that we have has a gross margin target, and every quote that gets produced has to be within the parameters of those service line targets. And then as that job gets won, which is a word that everybody in Aspire is used to using, Once something gets quoted, it gets won, it gets put on the schedule board. You're then performing against that quote. And that's how we track our ability to execute to those targets. Should they be raised? Should they be lowered? What are best practices? You know, there's so much information in that process after you've started doing it and recording it. So big part of what we do, every company we acquire starts in the training program. We have One going on right now for a business that we closed on in January, and they're getting their first taste of it. And this is a company that is, you know, actually has an estimator that came with it. Sometimes businesses we buy have those, don't. He never used it before. And, you know, I've gotten a few calls from him and like, wow, this is going to make my job so much easier. And there's a lot of visibility in here. And so it's been a great experience.

Tony, before we leave, is there anything you wish we covered today or any advice you want to give any owners who are really in the thick of it in between that $5 and $10 million range?

Yeah, there was a, a, a point in time, albeit I guess very short, where I was afraid of getting big and got over it pretty quickly. That takes good partners, right? Confidence from my family, confidence from my partner, confidence from an, uh, an investor. I guess one piece of advice would be don't be afraid to get big. And the key to doing that is in investing in your team and scaling your team. I mean, that's the thing, you know, one of the things I'm 56 years old and I have the privilege to say to a lot of friends of mine, like I'm having the most fun in my career, like right now. And that's a blessing these days in any business and not just ours. I can see our path to success. I think it's, you know, we got plenty of execution risk out there, but what we're doing is working and that's a lot of fun to be part of. And it's a lot of fun to see people benefit from it. Taking those steps of compensating my first manager, watching him grow, hiring a second one. Before we got on this acquisition program, I did buy a second location pre-2019.. And doing that, which stretched me, then forced me to take the first step in developing my team and then seeing the success that that had, growing a little bit more. And so, you know, don't be afraid to be big. And the key piece to doing that is investing in your team. When that happens, they have given me a lot of return that, that has been great, you know, both personally and professionally.

Well said. Thank you so much, Tony Lisa, for coming on Toolbox for the Trades.

Happy to do it. Thank you very much and look forward to talking to you in the future.