A new generation now leads Billy Goat
Editor’s note: The lawn, garden and landscaping industry has undergone dramatic changes over the last 40 years and so has Billy Goat Industries in Lee’s Summit, Mo. The company, founded in 1967 as a subsidiary of Clipper Manufacturing, became independent in 1969 and focused specifically on leaf and litter removal either by blowing or suction. Today, Billy Goat offers equipment for debris management, but also specializes in lawn renovation and specialty mowing products. Nearly two years ago, the company also changed hands with founder Bill Coates retiring and turning Billy Goat over to two of his sons: Will Coates, who is president and majority owner, and Drew Coates, who is a minority owner and is in charge of project management. When the brothers took over, it was right in the middle of economic turmoil, but the company survived and is now growing again. “Hats off to my father,” Will says. “He left the company with a very strong balance sheet. Because of that, we were able to make some decisions and do what we needed to do without being crushed with debt.” Will recently spoke with Rental Management about the importance of the rental channel to Billy Goat’s success as well as the latest trends in lawn, garden and landscaping equipment. An edited version of that conversation follows.
RM: There was a time when rental stores could rent lawnmowers, but that business is gone and rental businesses moved to offer more seasonal equipment. Then landscape service businesses boomed with many owning their own equipment. Now, there has been a recent shift back to renting this sort of equipment. What do you see as the trends in lawn, garden and landscaping equipment and how is Billy Goat taking advantage of them?
Will Coates: There is a macro trend and a micro trend. The macro trend, in my mind, is the astute rental dealer who understands that his clients are much more geared to productivity — I’m talking about the professional in this case — so they are investing in equipment that gives their contractors a much better return. The contractors can be a lot more productive and earn more money on the job as long as they have the tools with the uptime that is so critical. If they have tools that give them the uptime, the contractors can realize they are better off renting than owning. The perspective we take on the world is that if we can make a machine more productive for the contractor, but at the same time, make it intuitive for the homeowner and not a daunting piece of equipment, we’ve doubled the opportunity for rental, whether it is a homeowner looking to rent it for a day or a weekend or whether it is a contractor looking to rent it for a full week. Because the products we look at are so highly seasonal, there are two other things that are happening on a micro level. Contractors have downsized. They are trying to get more productivity out of the equipment they have and yet at the same time they want to offer robust services. Instead of tying up their capital or a line of credit by buying equipment and having much of it sit for a good portion of the year, they are better off renting it. The second micro issue concerns homeowners who may have outsourced all of these services — overseeding, aerating, power raking — to third parties and now they have taken back the lawn care chores. As a result, they start doing the work or employ teenagers, and need information on how to operate equipment and become more self-sufficient managing their own property. Billy Goat provides rental stores with both seasonal videos and “how to” guides to support this trend.
RM: How has the equipment changed to meet those needs? You mentioned making contractors more productive and making machines that are easier to use. For example, Billy Goat now has a self-propelled overseeder. How has technology changed to make this possible?
Coates: I would say hydrostats are no longer the sole domain of the ZTR [zero turn radius] manufacturers. I can clarify that by saying the hydrostatic manufacturers were so focused on a very high growth market. ZTR mowers were growing 15, 20 and 25 percent year over year over year. There wasn’t much interest in pedestrian equipment. We’re beginning to see them waking up and seeing new opportunities. Hopefully that will continue and we can offer more reasonable solutions in terms of cost. Hydrostatic solutions out there can be overkill for the weight of our equipment. Also, every person here at Billy Goat who has a hand in the development of our new products is not only a user but a tester to a degree. All of us have a perspective. All of us understand what we don’t like and what can be improved upon.
RM: How has Billy Goat changed in terms of the products you offer?
Coates: We certainly have evolved. I wasn’t with the company at the time, but to hear my dad tell it, the first big American Rental Association (ARA) show Billy Goat had was in 1970 in Houston when we introduced our first lawn vacuum. There clearly was a need for that kind of product. Rental dealers saw the opportunity and bought a lot of them that year. We were predominantly a debris company — leaf and litter removal, either by blowing or by suction — but we recognized we couldn’t build a company that was so seasonal with any kind of critical mass, so we had to look at other opportunities and seasons that gave us a broader portfolio, better cash flow, better productivity, better demand or resource utilization and a more compelling business case to our partners, whether it be lawn and garden dealers or rental dealers. In 1995, we first made a decision that we were going to expand beyond vacuums and blowers and move into other niches. Our first product was a brush cutter in 1995. That was an immediate hit, especially in the rental market. We followed that up in 1997 by looking at lawn renovation products because that offered us a true spring opportunity. Realistically, what we were looking for is equipment to be used in the spring, summer and fall, which would give us good exposure through at least 10 months of the year. We now operate in in three niche areas — debris management, lawn renovation and specialty mowing products.
RM: You have mentioned rental a few times. What percentage of your equipment is sold into the rental channel and do you see that growing in the next couple of years?
Coates: I definitely see it growing and not because the pie is getting bigger, but because we are looking at categories with a fresh eye and there are new customers who may become available to us because of those decisions. It is so hard to answer that question as a percentage of our business because this year is an anomaly. We had certain targets for this year and we thought they were aggressive. We just blew past them and didn’t stop. We doubled those targets and then some. The hardest part of understanding this year is whether or not what we’ve seen is sustainable. If companies plan as if this year is the new norm that may be dangerous. We want to build a healthy, sustainable and profitable portion of our business because rental has been, is and will continue to be an important part of our overall business. I give my dad a lot of credit early on when he saw the value of diversification. Retail lawn and garden is our largest channel, but we do also do a lot of export and paving supply in addition to rental. Rental is our third-largest category when you combine national and independent rental dealers as a group. You also asked about where we see rental going. The reason for our success in the rental market is how we look at our customers. We are hands on and we want feedback. What I think is completely misunderstood — especially in the lawn and garden category — is whether or not the customer who rented your power rake, for example, will ever rent from you again. Power raking, aerating and overseeding are chores. What rental companies fail to recognize is that they may have a machine that can do a job, is durable, doesn’t throw belts and lasts season after season, but does anyone ever measure the sense of satisfaction that customers get from this equipment? Does the rental dealer recognize the customer who returned the equipment may be beat dead? He may not rent an aerator again because he remembers how whooped he was last time he used it. If we can make chores easier for rental customers and they can talk positively about using a piece of equipment for a job, now rental dealers have advocates instead of individuals who view jobs as chores. Billy Goat is working to change the paradigm from “have to do” to “want to do.” When the rental dealer invests in equipment that people want to use, that’s the opportunity for maximum return on investment.
Neighborly lawn care
When asked if his home has the best looking lawn in his neighborhood, Will Coates, president, Billy Goat Industries, Lee’s Summit, Mo., simply says, “In fairness, yes.”
While he uses Billy Goat equipment to maintain the property, Coates also admits that he doesn’t do all the work himself. “We do a lot of photo shoots and video shoots over there, so I don’t leave it up to myself entirely. We do have some professionals taking care of our yard, too,” he says.
Being his neighbor also has some perks when it comes to lawn care. “I take equipment home all the time to my neighbors and let them play with it. If they can’t run it in two or three minutes and it’s not intuitive for them, they are in my ear to say, ‘If you make this easier …’ They can tell me real quickly if it is going to work or not,” Coates says.
“We had a brutal summer last year and it killed off a lot of turf grass, so I brought home one of our new self-propelled overseeders so my neighbor could do a portion of his lawn. When I came back to get the piece of equipment a day later, it had migrated all the way down the block. The machine didn’t have decals or instructions, which proved to me they were able to tell each other how to run it. One of our No. 1 criteria as a design group was to make the overseeder intuitive. I recently attended a party where the same guys that used the machine were asking me to come over and take a look at their lawns because they were in such good shape. Now, we have apostles versus someone saying, ‘I would use an overseeder, but it’s just too hard,’”
Now that the overseeder is self-propelled, Coates expects that the technology will be a “base level platform” for other Billy Goat products. “Let’s take the ‘chore’ out of the chores. Things like overseeding are hard jobs to do, so why on earth should someone have to push around a machine that can just beat you up,” he says.
Left, Will Coates, president, Billy Goat Industries