Elements of a Business Plan

by Katie Petersen | Nov 4, 2022 | Business Strategy | 0 comments

Elements of a Business Plan

Written by Eric Petersen, CIC

At ArboRisk, we often write about how critical planning and being intentional with your business is. Obviously the more focused you can be, the quicker you will realize your goals, but how does a company stay on track in a sea of opportunity that comes their way?

The easiest way is to create a business plan for you to follow.

In the simplest terms, a business plan is a document that will guide your business through the next three to five years. As an added bonus, a business plan can help you achieve funding from a bank to continue to grow your business.

While every business plan will be unique, there are some common elements that your plan should include. Working though each of these elements allows you to focus on your business and marketplace today and what you envision them both to be in the future.

1. Executive Summary – Even though this is the first section in the business plan, write this section last. The Executive Summary should be just that, a summary of your overall plan and why you are/will be a successful company. It is much easier to do this after you’ve written the other sections. If short on time, the Executive Summary should provide the reader the highlights necessary to understand where the business is heading.

2. Company Description – Start by describing your company structure, its management team and mission for its existence. Explain your organization’s competitive advantages and how your team is unique in delivering your service(s) or producing your product(s). This is the place in the business plan to brag about your business.

3. Services and/or Products – This section represents the chance to go into detail about the actual services and products you sell and the benefit your customers receive from them. Limiting the discussion in your plan to only your top 3 services or products will help you keep your focus on those strengths as a business. All too often, tree care companies get involved with providing so many services they do not become masters of any. It is only when a company specializes in a few select services that they truly provide value to their customers.

4. Marketing and Sales – Nothing happens for your company unless a sale is made. And you won’t make any sales if you don’t have a marketing plan to let people know who you are and the benefits that your company provides for them. This is where you explain your sales process, customer journey and post-project communication with your customers. Analyzing your market (local competitors, customer demographics and regional economics) in this section will transition you nicely to discuss your marketing efforts. Discuss your strategy for reaching your customers in-person and in-print, whether on paper or digitally.

5. Financials – The final section of your plan will include financial numbers. Use either projections on sales and expenses or a summary from the prior two years to explain the financial position of the company. This section presents your chance to request funding and explain where the funds would be directed in the company.

There is no one correct way to write a business plan, but incorporating the above sections into your plan will allow you to create a powerful document for your business to follow. If you are struggling with creating a business plan or setting the strategic direction of your company, sign up today for ArboRisk’s Strategic Planning Package or Business Finance Package.

ESOPs Q&A

by Katie Petersen | Nov 1, 2022 | Business Strategy | 0 comments

ESOPs Q&A

Written by Tom Dunn

Josh Zeidman is a Managing Director at Lazear Capital Partners (LCP), out of Columbus, Ohio in the firm’s Mergers & Acquisitions and Employee Stock Ownership Plans (ESOP) practices. He has closed several Tree Care ESOP transactions personally and his firm has handled multiple other ESOP transactions in the Tree Care industry.

Prior to joining LCP, Josh served as a Senior Manager at KPMG where he was responsible for leading one of the firm’s largest financial services clients and helping clients navigate complex business transactions.

Josh completed his Masters of Accountancy at the Farmer School of Business at Miami University, where he graduated Cum Laude. He also holds his Certified Public Accountant license. Josh can be reached at (614-902-3250) [email protected]

We had the opportunity to ask Josh about his take on the benefits and significance of ESOP’s in the tree care industry.

How have ESOP’s evolved since you started in the business and what are some of the more recent trends?

The tree-care industry is primed for employee ownership! The strong culture and commitment to people create sustainable companies in this industry and can generate significant wealth for business owners and employees. Preserving the legacy and passing the future financial benefits to the employees is a significant value proposition for many of today’s business owners. Additionally, the tax benefits offered to the seller and to the company are unlike any other exit strategy offered to a business owner, creating significant tax benefits not offered through any other exit strategy. The idea of selling the company to the employees via an Employee Stock Ownership Plan (ESOP) is almost always a win-win for both the business owner and the employees.

With increasing corporate tax rates and near-term economic uncertainty, employee ownership will continue to thrive. It’s created for sustainable long-term value creation. Unlike a private equity or competitor roll-up, in an ESOP, the management typically remains intact, preserving the continued vision of the company without “squeezing” operational costs out of the organization.

Can ESOP’s work for lower valued companies or is there a minimum threshold that is typically needed to consider starting an ESOP?

There is no hard rule about how large or small a company has to be in order to be a successful ESOP. There is an old saying where “if you have seen one ESOP, you have seen one ESOP.” Every ESOP is created individually, catering to the needs of the owners and the employees. According to the National Center for Employee Ownership (NCEO) “there are a handful of ESOPs with under 10 employees, and a larger number between 10 and 20, but in most cases at least 15 employees is a reasonable starting point”.

We encourage any business owner to sit down with an ESOP financial advisor to understand the feasibility of creating employee ownership. At Lazear Capital, we start with understanding the goals of the owner and consider over 70 different data points when preparing a Feasibility Analysis for prospective clients.

How do you address owners that may have an unrealistic opinion of the value of the company?

As advisors, our firm takes a holistic approach to understanding a company’s value proposition. This involves a deep understanding of a client’s projections, capital expenditure needs, and understanding value of similar companies. We share this knowledge with business owners as a part of a detailed Feasibility Analysis prior to engagement of an ESOP transaction.

What type of tree care company ownership structures have you seen it work successfully for?

We see a lot of success with employee ownership in the tree care industry. As mentioned above, every ESOP is created differently, catering to the needs and goals of the business. In the tree care industry, owners have found significant tax advantages for the business owner and the company in selling to an ESOP. When structured appropriately, a seller can defer the capital gains tax associated with their sale. Additionally, the ESOP Company can eliminate federal and most state income taxes post-closing, significantly increasing company cash flow to finance the buyout, invest in equipment, talent, and grow. Additionally, and this is important in the tree care industry, I see a lot of success when the Company’s capital expenditure needs (maintenance and growth) are properly considered and validated during the feasibility analysis process.

What are the typical startup costs and considerations?

Startup costs and considerations vary depending on the size and complexity of the transaction. The startup costs are comparable to a third-party sale. Ongoing, there are several compliance costs that should be considered as part of a company’s ESOP Feasibility Analysis. Business owners are encouraged to reach out to a sell-side financial advisor to fully understand all the considerations involved in an ESOP transaction. An ESOP transaction does involve multiple parties, including a trustee, a bank, a third-party administrator, and counsel.

Is there evidence that ESOP’s increase worker productivity and therefore bring in higher valuations when a business is sold?

Absolutely. There is clear evidence that once sold to an ESOP, the Company subsequently sees a direct increase in worker productivity. A 2020 study conducted by the Rutgers School of Management and Labor Relations and the Employee Ownership Foundation found that employee-owned companies outperformed non-employee-owned companies in job retention, pay, and workplace health safety throughout the COVID-19 pandemic. The study found that ESOP companies were 3 to 4 times more likely to retain staff, less likely to make pay cuts (26.9% vs. 57.3%), and more likely to take protective measures against the spread of COVID-19 (98.3% vs. 88.9%). Additionally, a 2018 study by the NCEO found ESOP participants have more than twice the average retirement savings balance of Americans nationally.

Lastly, many employee-owned companies do not pay federal or state income taxes. This significantly increases cash flow for the organization, which in turn can be used to fund future growth initiatives. This, along with statistically proven increased productivity, all drives future financial success and higher valuations in the future.

If you need further assistance with any of the core components of your business, please reach out to a member of our ArboRisk team. We have many resources that can help you with this, in addition to our Thrive Risk Management Program, which can provide one-on-one help to take your business to new heights.

Keeping Your Strategic Plan Alive

by Katie Petersen | Oct 24, 2022 | Business Strategy | 0 comments

Keeping Your Strategic Plan Alive

Written by Kevin Martlage

Over the past year, ArboRisk Insurance has published numerous articles about how to strategically advance your company. Primarily we have focus on developing a strategy around supporting your team, your leaders, and the business culture necessary to successfully advance your tree care company. In an article ArboRisk published on October 28, 2021, “Why is Strategic Planning Important”, I wrote about the importance of developing a strategic plan that not only validates the “why” of your organization, but also the steps you can take to achieve the “why” and your goals.

An impactful strategic plan is one that helps to ensure your current path is sustainable, profitable, and most importantly helps you achieve all that you can as a company. When developing a strategic plan, you must ensure you have clear goals in place for the next 1-3 years as you continue to build your company and your team? If not, you will certainly end up somewhere in the future, but is that where you want to be and have you achieved all you can achieve as an organization?

Before we talk about how to keep your strategic plan alive and relevant, I’d like to recap the process we recommend following as you develop a strategic plan. When leading organizations through the strategic planning process there is typically focus on five key areas:

Confirming the “Why”
Reviewing performance and current state
Identifying what is possible and where we want to go
Determining how we will get there
Implementation and monitoring

The outcome of the strategic planning process is several short term and long-term goals that will help the organization achieve the overall mission, or “why,” of their organization. Additionally, you then must develop an operational plan and budget that supports the goals that have been identified. This is done in numerous ways, but usually by focusing on the following key questions that will help you dive into your company to see what is needed to achieve each goal:

What resources are necessary, and do we currently have those resources?
Do we currently have the staff needed to make these goals happen?
What are some potential roadblocks that we need to proactively identify?
What are some other outside resources and knowledge that we may need to engage?

Whether you go through the strategic planning process internally as a team or have someone help facilitate the development, every organization is then left with the question of “now what”? As an organization you have spent time developing this iron-clad strategic and operational plan that will take you to the next level, but other things always seem to get in the way of making it happen. Those things are what I like to call unintentional noise which always seems to interfere with the implementation and effectiveness of the plan you just spent time creating. So how do we eliminate the unintentional noise and effectively implement and carry out your plan?

A Harvard Business Review article, “4 Common Reasons Strategies Fail” published June 24, 2022 outlines some reasons why strategic plans fail. Specifically, it notes:

“…60-90% of strategic plans never fully launch. The causes of derailment vary widely, but execution consistently bears the blame.”

I cannot tell you how many organizations I have worked with, and have worked for, where the strategy was not understood, and therefore never fully executed across all levels of the organization. In some instances, the developed strategy and operational plan is not even understood among the leadership team that developed the strategy in the first place. All too many times a strategy is developed, and the plan gets put on-the-shelf to be dusted off 3 years later or when it is determined that the organization is not heading in the right direction. When it is finally dusted off, it is realized that the answers were right there all the time. If the plan would have been followed the organization would be closer to where they now think they should be than where they are. This may sound extreme, but it happens all the time and creates lost time, extra expense, negativity towards the business culture, and a negative impact on your ability to serve your customers. So how as an organization do you ensure execution and delivery of the strategy that you and your leadership team so carefully developed? The answer starts with communication and understanding.

Every company has their own resources, budget, team and “why,” however how they keep their strategy and operational plan alive can be the same regardless of the size and direction of your organization. Here are a few steps I recommend you consider for implementation to ensure you keep your plan alive once developed:

Communicate your plan to the entire organization and ensure their understanding
Determine operational champions/leads for each functional goal to assist with oversight
Develop, communicate, and review key performance indicators (KPIs) for each goal
Review expectations and confirm understanding of key deliverables
Integrate KPI monitoring, updates, and performance review into all staff meetings
Align meeting agendas to include strategic plan performance and general updates
Align impact areas and KPIs to each specific job or functional position within the organization
Integrate strategic categories and updates into your annual review process
Review the validity of your plan annually and adjust as necessary ensuring changes are communicated and understood

The more you can integrate some of these items into your standard operating procedures, the more effective they will become in helping to keep your plan alive. Integration of some of these items can be easy depending on your company. For instance, can you create a standard meeting agenda template that always includes a strategic plan performance and impact update? Depending on your IT capabilities, can you create a KPI dashboard that is updated in real time and aligned with the strategic categories and goals of the organization. How about a weekly or monthly, CEO/Owner newsletter, webinar, or lunch and learn focused on strategic plan performance and updates.

How you approach keeping your plan alive is up to you and your company leadership. However, the most important thing is that you implement the plan and then keep it alive through consistent and intentional communication and follow up. Ensuring that a solid strategic and operational plan is kept alive will help your organization continue to have the support and ability to achieve your goals. Communication is key in this phase of implementation and monitoring. The entire team must be aware of the plan that was created to ensure that everyone is driving to the same place on the map and understand where they are on that map. It is up to the leadership of the organization to ensure that a clear understanding of the plan is in place and that everyone on the team is aware of how they impact the plan daily, weekly, monthly, and annually.

If you are interested in learning more about how strategic planning can enhance your organization,I encourage you to look at our Thrive Risk Management Strategic Planning package. In just four short weeks we can help you identify who you are as a company, what you want to become, and what strategic milestones will be needed to achieve your goals and ensure your team is all driving to the same destination.

3 Types of Safety Meetings

by Katie Petersen | Sep 15, 2022 | Business Strategy | 0 comments

3 Types of SAfety Meetings

Written by Eric Petersen, CIC

One of the main pillars of any organization’s safety culture is communication. Without effective communication around safety, a tree care owner will not be able to intentionally create their desired safety culture. The best way to improve communication around safety within your company is by simply creating a structure or cadence to your safety meetings. Many tree care companies follow a safety meeting schedule similar to what I’ve outlined below, but if you haven’t put the formality to your meetings, hopefully this will help you do so.

To keep things simple, I like to use 3 types of safety meetings when coaching tree care companies.

Weekly – 20-40 mins with production/in-field team – Often called tailgate safety meetings, these weekly meetings are quick meetings focusing on one direct topic and are usually done at the start of the work day with your production or in-field team. They are not intended to be used as in-depth training sessions, but rather reminders to applicable job hazards that your team faces each day. There are plenty of resources on the internet for tailgate safety topics, however, one of my favorites is the TCIA’s Tailgate Safety Program. Have a sign-in sheet for each of these so you can document who was in attendance.

Monthly – 1 to 2 hours with all employees – I feel it is very important for everyone in your company to gather together for a monthly safety meeting, including office staff and your sales team. These meetings should focus on broader safety topics that include near miss conversations, updates on progress of safety goals, upcoming season changes and other company-wide announcements. It is a great time to communicate items to the entire team and build camaraderie across departments. This meeting should be run by your safety committee and kept on task with a standard agenda that you use every time.

Quarterly – ½ day or longer training – This is where the real training and employee development happens during regularly scheduled training time. It is too easy to get too busy and struggle with finding time to perform safety training, so block it out ahead of time. Utilize your safety committee to create topics and a schedule for the Quarterly meetings so they run efficiently and provide the most value to your team. Hiring outside trainers is a great way to enhance Quarterly meetings.

Remember safety should not be viewed as an expense, but rather an investment as the dollars that your organization spends in lost time, decreased or interrupted productivity and insurance deductibles/premium after an accident all come directly out of your bottom line. If you ever want to look at the financial impact of an injury use OSHA’s Safety Pays website to see how much an injury actually will cost your company. It’s mind-blowing!

If you are struggling with making your safety meetings worthwhile or how to improve upon the structure of your safety meetings, reach out to an ArboRisk team member today to get signed up for our Thrive Safety Package.

How to Get the Most Out of Your Safety Committee

by Katie Petersen | Sep 13, 2022 | Business Strategy | 0 comments

How to GEt the Most Out of Your Safety Committee

Written by Eric Petersen, CIC

As you know, having a safety committee is a great way to intentionally create the desired safety culture for your company. It gives your team members some control and input around safety concerns that they face each day all while building company morale and hopefully limiting injuries and accidents.

But are you really getting the most out of your committee? Here are my four tips to strengthen your safety committee.

Create Committee Goals and Responsibilities – Have you clearly defined what you want the safety committee to do for your organization? Was your committee established because you had an accident in the past or because you’re scared of an accident in the future, maybe both? Below are some core responsibilities your safety committee should take charge of:
- Reviewing your written safety program and implementation of safety policies.
- Regular job site and equipment inspections.
- Running safety meetings and analyzing incident/near miss data.
- Addressing potential risks when providing new services.
- Staying abreast of industry regulation and changes.

Involve The Right People – Making sure you have the right team is critical to ensuring the committee stays just that, committed. Diversity in your safety committee is paramount. Aim to have a committee that receives input from all aspects of your business. For example, you may have one foreman, one climber, one grounds crew member, one lift operator and one shop member all included.

Term Limits – Create a term limit for your committee and stick to it. Many times safety committees get stale because the same people have been on the committee for years and years. Establish a rule that each members will only be on the committee for a designated amount of time. This allows a committee member a certain amount of time to create action and provides the opportunity to involve more team members. Stagger the terms so that you always have fresh members joining the current committee. I recommend using two year terms. Two years is long enough to accomplish specific tasks, but short enough to keep it interesting for all members.

Rewards – Give incentives to the safety committee members. Everyone wants to feel rewarded for their hard work and being on a safety committee can add more responsibility and stress than their normal position. Set up a reward system that allows you to praise the committee for the procedural aspect of their role. This could be in a monetary bonus for every safety meeting held or additional time off for every job site inspection performed, get creative on what will motivate your safety committee members to do their absolute best. Remember that OSHA frowns upon safety programs that have an outcome-based incentive tied to them, meaning do not incentivize your team members based on the amount of injuries. Use concrete goals and procedures as your benchmark for the committee’s performance.

Remember that the ultimate goal of the safety committee is to strengthen the culture of safety within your organization so you can get every employee home safe each night. Empowering your team members with that goal is the surest way to succeed.

Since ArboRisk’s mission is to get every arborist home safe each night, we’ve designed a specific consulting package to work one-on-one with your organization. Visit our webpage for the Thrive Safety Package to learn more. In addition to the Thrive Safety Package, all ArboRisk clients receive a Safety Culture Assessment that allows you to peer into your safety culture and find areas that need improvement.

Q&A with Work Comp Loss Control Specialist

by Katie Petersen | Sep 8, 2022 | Business Strategy | 0 comments

Q&A with Work Comp Loss Control Specialist

Written by Eric Petersen, CIC

One of my favorite things about the tree care industry is meeting people who have dedicated their lives to bettering the industry. Recently I had the chance to speak with MIchael Schrand, Senior Risk Management Consultant for ICW Group Insurance Company and was encouraged to hear all of the things their work comp company is doing for the tree care industry. Michael and his team work daily to help minimize jobsite hazards and reduce accidents.

Our conversation was so powerful, I wanted to reconnect with him for a short Q&A session so I could share some of his expert insight with our readers. Check out the rest of this article to hear his perspective on safety within the tree care industry.

Q – What is the most common cause of injury that you’ve seen within the tree care industry?

A – Since I can’t really decide on the most common cause of injuries, I’ll give you three…

Lack of planning and execution when creating a safety culture. Many times a company’s safety culture is created on its own, versus intentionally being created by the leadership team.
Not having the expertise and/or training to recognize the potential hazards that you come across daily.
Employee selection is problematic. We all know the challenges the current labor force has, but hiring just to fill a spot on your team will cause problems and result in more injuries.

Q – Is there a common theme with all the severe injuries that you’ve seen within the tree care industry?

A – When we see serious injuries, they usually either come from a lack of training and/or experience or from not having the proper equipment. Unfortunately, many tree care operations don’t see safety culture as an important enough part of a successful business and don’t focus on it.

Q – What are 3 things that all tree care companies should make sure they do to prevent/minimize injuries within their company?

A – The top 3 things that I recommend tree care companies focus on to prevent/minimize injuries would be:

Maintain your equipment.
Implement planning and training around your safety efforts.
Eliminate climbing if possible.

Q – In your opinion, what is the most important component to have a culture of safety within a tree care company?

A – Safety is a people business and unfortunately, accidents are a people program. Safety must start within a person. A safety culture is created initially by the leadership individuals and then supported by every person throughout the organization. This combines with the DNA of the overall company operations and will have a direct affect on the success of the company.

If you ever had doubts that you are not doing everything you can to get your employees home safe each night, reach out to a member of the ArboRisk team today and discuss how becoming an insurance client will help you achieve your safety goals or enroll in our Thrive Safety Package to get one-on-one help.