Backing away from the edge

As residential construction boomed in northern Nevada, so did business for Bugica Landscaping & Excavation.

The Reno-based company was so busy and growing so rapidly, in fact, that it nearly plunged into bankruptcy a year ago.

Today, as executives of the family-owned company believe the ground is solid under their feet again, they're still shaken by the near-disaster that accompanied Bugica's Landscaping's rapid growth.

The problem, in a nutshell: "I was too good at not saying no," says co-owner Tony Bugica, the son of founder Gary Bugica.

From 2000 through 2004, the company routinely doubled its its revenues from landscape installation and maintenance every year.

Management systems, however, didn't double in sophistication. Bids were sketched out by hand on a one-sheet calculation, a calculation that seriously underestimated the size of the company's overhead.

Purchasing systems didn't keep up with the growth. Neither did inventory systems. The company had exactly one cordless telephone.

"It just went crazy," Bugica says. "We never knew where we were at." Despite 100 percent annual growth in revenue, the company was consistently unprofitable.

By early 2005, the craziness began to collapse. Vendors threatened to cut off deliveries. Accountants urged the Bugica family to file for bankruptcy protection.

Instead, they decided to hire Bob Mack, a former telecommunications executive and one-time residential customer of Bugica Landscaping, as general manager.

First on his agenda, Mack says, was the fast development of management controls and processes so he could find the problem areas.

One quickly appeared: Bugica's costs for materials were out of line, partly because the company made purchasing decisions on the basis of friendships with local suppliers.

Mack began buying direct from Oregon and California nurseries. He shopped harder for other materials, ultimately cutting the materials cost in half within a year.

"We have had vendors that could have cared less about our situation," he says. "We have also had vendors that wanted to see us succeed and were willing to stick it out with us. They will have our business for life."

Adds Bugica: "We're not good old boys any more."

Other aspects of the business got a similar hard look.

In June 2005, Bugica Landscaping used 12,000 man-hours of labor. Now it typically uses 8,500 a month even though it's added staffing for a customer service department.

The company got disciplined, too, about ensuring that it didn't take on unprofitable work. Even though revenues of about $5.8 million this year will be down 10 percent from the previous year, Mack projects the company will be profitable for 2006.

"We can take a step back and realize that 10 percent in revenue didn't do anything for us," says Bugica.

The biggest change: Bugica no longer chases contracts in production subdivisions, but instead looks to focus its work in the custom residential and commercial markets.

The company today employs more than 110 employees working from a fleet of 49 vehicles.

Along with the financial challenges faced by Bugica, the company like others in the region has struggled to find qualified workers.

And like others, Bugica is refocusing its efforts on training in an effort to grow its own skilled workforce.

For all the changes in management and operations that Mack brought to the company, Bugica says the most difficult was simply letting loose after 32 years of family ownership.

"The biggest thing," Bugica says, "is taking your pride, setting it off to the side, and letting people help you."


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