Doug McIntosh is an avowed capitalist. So, it’s not surprising to learn that one of his main focuses in running McIntosh Grounds Maintenance, a fourseason service provider working around Ann Arbor, MI, is money. His goal, though, isn’t to simply accumulate as much of it as possible. Contentment—for his family, his employees and his customers—it turns out, is his true motivating force and has guided his decisions since starting his business nearly 40 years ago.
That business management mindset likely came from his approach to life in general. "I truly believe that in life, and especially in business, the key is contentment. It’s contentment, not complacency – there’s a big difference between the two. Complacency is when you just get stuck, you get lazy, you give up, you just settle. Contentment is enjoying and appreciating and taking advantage of where you’re at right now, and then you’ll be happy in the next stage, and then the next stage, and then the next stage."
From the beginning, says McIntosh, "My goal was never to take over the world. Not that I was opposed to it, but I never wanted to be the biggest in town, or be the one that everybody else looked at, or have the most trucks, or try to grow 50 percent every year or anything like that."
To draw on a landscaping analogy, McIntosh compares the company to an oak tree, which grows slowly and steadily and ends up being strong and solid. Sometimes fast-growing trees don’t establish good root systems, or are susceptible when turbulent winds come, so they don’t last, he points out.
In retrospect, McIntosh says that slow-and-steady approach has helped the company to become successful, in part by avoiding common pitfalls like becoming over-committed or overleveraged. But at the time, he says, "I didn’t know it would make us successful – it was just truly my mindset."
McIntosh sees business ownership as the ticket to two goals: "I wanted to provide a good income, and I wanted to have opportunities. The opportunities were endless. I’ve always just been so excited about that aspect of running a business: you can do as much as you want to do."
McIntosh points out that the odds against a small business making it the first year, 5 years, 10 years, are astronomical. "And I would be willing to bet a lot of money that 90% of businesses go out of business for one of two reasons: the owner can’t handle stress or money, or both," he adds. "I went through five years of college business school and we never talked about either one. But from day one of being in business, you’ll encounter stress and money challenges. It’s a roller coaster: In the morning I might get the biggest contract I have ever gotten, and in the afternoon, my longest-tenured employee might quit. I mean, it is tough—it is really, really hard to own a small business."
With that in mind, McIntosh makes decisions with an eye toward providing greater control over the money while limiting, whenever possible, the stress of running the business. "I can control the money—I’ve found lots of strategies for that. Controlling stress is a work in progress," he acknowledges.
It was only after three years in business that McIntosh first turned his attention to winter work. "Snow was not my thing!" he says. "At first I just did it because I was asked to [by my lawncare customers], but eventually I started to see snow as a real opportunity."
As the business grew (McIntosh Grounds Maintenance now has about 20 year-round employees. The team swells to around 30 plus some subcontractors for winter events), it morphed to focus exclusively on commercial in the winter. "To drop all of our residential snow customers was a big step for me, because those are the people that I’d been with for 30 years or more in some cases. But it was probably one of the best snow decisions I’ve ever made."
The decision came after McIntosh sat down one summer and actually analyzed the numbers. "This should have been as clear as day to me years before, but it just wasn’t, because I wouldn’t let myself realize it: 10% of our winter income came from residential, but that represented 90% of our calls. ‘The county just came by and plowed my car in;’ ‘can you plow the end of my driveway again?’ ‘You forgot my back steps.’ ‘You didn’t get wide enough on my driveway.’ " McIntosh realized that by releasing those residential customers he could easily replace that 10% of income without the hassle of service complaints.
A number of years ago, McIntosh implemented a new pricing structure to help mitigate risk (also translating to reduced stress) in his relatively low-snow market, opting for a mix of seasonal and per-push contracts. "In the last two years, we’ve only had four storms," he says. "But both years we have made money. If we were all seasonal contracts, we would have crushed it the last two years. I would have made so much money. But if we would have had 100 inches, I would have been out of business."
The moral of the story in this instance, and all aspects of running a business, says McIntosh, is that you need to have discipline. "I’m thinking about hitting singles and doubles and being in the game tomorrow. If you focus on hitting home runs, you strike out a lot."
And McIntosh says he wants to win, both for his family and for his employees. "I have an obligation to 19 families that work for me, and so my obligation is to be in business next year. How can I make sure that happens? I have three goals: one, long-term customers; two, long-term employees; and three, make a profit. And the profit doesn’t have to be killer. It has to be fair to where my customers feel like it’s a win-win, translating to increased contentment for everyone."
McIntosh feels that the way some companies typically identify and evaluate themselves financially is wrong. "The one number people want to brag about is the top line on their income statement: we’re $2 million, we’re $5 million, we’re $50 million. But if you buy something for $9,999,999 and sell it for $1 profit, you’re a $10 million company in the eyes of society. But the reality is you made $1."
Similarly, a company might report growing from $2 million to $4 million a year but they might have lost a lot of money or had a small profit margin: "If you have a $10 million company and you make 4% profit, which is average for small companies, that’s $400,000. But if I have a $3 million company and make 20% profit, that’s $600,000. I made 50% more profit, did one-third of the work, had one-third of the customers, had one-third of the employees, had to make only one-third of the sales, and took one-third the risk."
Instead, McIntosh encourages a focus on the bottom-line: "Those are the companies that have it figured out; that’s what’s really relevant: if you’re making money or not."
So how do you make money in business? "Most consultants are going to disagree with this, but I think efficiencies are more important than sales," he says. "I think if you’re really good at something, you’re going to get sales organically. To a certain extent, you do need sales, there’s no doubt about it; but you’ve got to spend less than you make, or it just doesn’t work."
Doug’s wife Doreen, who is the company’s chief financial officer, shares a similar philosophy of spending wisely in order to bank and invest the savings. "Doreen and I fight really good!" McIntosh jokes. "We’ve fought about everything in the world, but never about money."
McIntosh Grounds Maintenance was able to avoid carrying heavy debt even when the company was relatively new. Smart money management helps make that possible, he feels.
"In the early years of business, we were living on the edge," McIntosh admits. "We had debt, but we always operated pretty lean." But by 2008, the company was able to pay off its debt and has been debt free ever since.
McIntosh says he’s talked to owners of some very large companies and often hears them talk about "good debt" and "bad debt." "But when I hear debt, I don’t even need to hear good or bad. I think two things: stressful and expensive," he says. "Again, my goals are to make money and reduce stress. If your goal is to make more money, then don’t do things that are expensive, which adds debt. And if your goal is to reduce stress, that’s what debt leads to. If you owe somebody money, it’s stressful. What if it doesn’t snow? How am I going to pay for these things?"
McIntosh disputes the idea that debt is absolutely necessary in business. If a company needs a new $50,000 truck, for example, the owner might do a lot of research and drive around to six dealers just to get the price down to $48,000, he notes. "But then they don’t think twice about financing, which will cost them an extra $8,000 in interest." The way to actually make the truck cheaper is just pay for it with cash, he says, predicting the responses: "Well, that can’t happen. Who has that much cash?" "It’s called planning and saving," says McIntosh, adding that saved money will generate more money through compound interest.
Striving to operate debt-free isn’t the only way, he reiterates. "I’m not even saying it’s the best way. I’m just saying it’s worked extremely well for my family and my business."
Building financial foundations for the McIntosh team
Whether it’s in the business or personally, Doug and Doreen McIntosh are big believers in the power of thinking long-term about money. Basically: If you can make/save a little bit of money every day, you’re going to have a lot of money by the end of the year.
Doug McIntosh says that he’s alarmed by statistics showing that more than half of Americans couldn’t come up with $500 for a medical emergency, and that more than 70 percent are living paycheck to paycheck. A lot of that comes down to not planning and not understanding how money works, he says. He’s tried to help ensure his employees have greater knowledge of both.
The company hosts regular "Winter Book Club" events, where everyone is required to read something (often it’s a magazine article), and the group discusses it. The topics typically relate to life and money. "And from that I’ve started doing some financial talks, and bringing in some financial advisors," says McIntosh.
Along the way, he’s also learned about some of his employees’ money struggles. For example, he found out that some of his employees didn’t even have bank accounts; they were cashing their paychecks with check-cashing outfits that took 10 percent or more. "I realized that I needed to get more involved in helping my employees," he says, adding he offered them the opportunity to ask questions or for advice. "Guys just started showing up at our office after work, asking if they could bring their wife with them. They started cutting up credit cards they weren’t able to control themselves with."
McIntosh proudly shares that one employee paid off all of his debts, is married, and now has a savings account. Four employees saved up and purchased homes. "They had never learned before that these things were possible," says McIntosh.
When hiring new employees, McIntosh says he focuses on conveying the message that in their position, they should be able to do two things: buy a house and take a vacation. And if you can’t, it’s probably not really a career. "So I give you the opportunity to do those two things; it doesn’t mean you will. You might be terrible with your money. You might make plenty of money but squander it all away. That’s on you, but you’ll have the opportunity."
All employees also have the opportunity for retirement contributions. "We offer a 3% match from day one," says McIntosh. "But you have to put your money in first; because if you don’t care about your retirement, then I don’t."
Shipshape shop reflects McIntosh's financial focus
McIntosh Grounds Maintenance has been based out of the same site in Milan, MI, for 25 years. "We bought nine acres and built a yard, built a shop, and then built a house separately, so we sort of have a little compound here," says owner Doug McIntosh. "Some people wouldn’t want to live where they work, but I wouldn’t have it any other way. My wife and I both work in the company, so it works so well for our family."
Still, as the company grew and space started getting tight in the shop, the couple talked about potentially moving the business to a new location. "We dragged our feet for about three years. We had so much equipment that we were bursting at the seams, and we had to store stuff outside. Then Covid hit, and we were shut down for five weeks. My son and I decided to start clearing some wooded land on our property to build an expanded facility. We added 6,100 square feet, including second floor offices, to our existing 2,400-square-foot shop."
McIntosh is a firm believer in organization. "I’m very anal about everything being in its place. Everything has to be labeled. And if it doesn’t have wheels, it shouldn’t be on the ground; it’s got to be on a shelf." The new facility gave him a chance to optimize the layout and organization for efficiency. In fact, again with a focus on finances, McIntosh calculated that if the improved efficiency of the new building saves each employee 12 minutes per day (no more moving one piece of equipment to get to another, no time wasted looking for something that now has a dedicated space), the building will essentially pay for itself in 10 years.
Outside, they added bins to store salt, mulch and other materials. "That reduces my stress. I don’t have to wait in line to get salt in the middle of the night. And if I can store salt here, I can buy it when it’s cheaper and then it’s always here when I need it. Again, it’s a move that reduces my stress and helps me make more money."
While functionality was the foremost priority, McIntosh is especially proud of the appearance of the finished product. "It’s the most beautiful shop I’ve ever been in. We even built an indoor basketball court for the guys. We made it so multifunctional. We now have great company parties, just because we have such a great facility." Contentment.
Patrick White has covered the landscape and snow and ice management industries for a variety of magazines for over 25 years. He is based in Vermont. Contact him at pwhite@meadowridgemedia.com.