An aggressive business plan, loyal partnerships and a tenacious attitude allowed Tory Schwope, owner of DCA Outdoor, to assemble eight brands in this post-recession era. His story contains calculated risks, forward thinking and the resolve to go against the grain.
Tory became an entrepreneur at age 16, when he started a landscape business. He’d previously dabbled in horticulture when his dad, a mechanic by trade, and his uncle operated a hobby tree farm, a place where Tory spent many weekends helping. Before the age of 10, Tory decided he wanted to operate a nursery for a living. His dad sold the farm, but the spark was already lit, and Tory was determined to get back into the nursery business.
By the age of 18, Tory started his first crop of trees on some land that he leased from one of his landscape customers. He’d plant up to 5,000 trees during his spring break each year while he studied horticulture and business at college. At graduation, his trees were ready for the marketplace. That was the beginning of KAT Nursery. After a bit of “hustling and scraping, so to speak,” the business got some traction and excelled, he said. KAT eventually morphed into a Kansas City, Mo.-area landscape distribution center. Between 2001 and 2007, KAT added $1 million in sales each year.
“We grew really fast. And by 2005, we had built a pretty good-sized distribution business following the philosophy of just-in-time delivery,” Tory says. “By 2007, KAT was one of the larger landscape distribution centers in Kansas City.”
In 2005, Tory bought land in Missouri and re-established Schwope Brothers Tree Farms, growing B&B trees. It was a nod to his family’s hobby farm.
Tory modeled his business to primarily supply the distribution market, which he says is “the most efficient way to operate a nursery.”
“If you grow 85 different hydrangeas, for example, and market to contractors, big boxes, and IGCs, that increases the complexity of your production and increases your marketing expenses,” Tory explains. “The demand on customer service is incredible, and the demand on shipping makes the management of the operation much more complicated.
“Distribution is much more predictable. That market moves through a huge amount of product, and they’re more communicative. We consider them partners because they buy as many trees from us as they can, and they let us know about market demand and prices in the marketplace. We build their numbers into our production plan.”
Riding out the recession
By 2008, the U.S. economy was in a major recession, and for the next two years, the industry “imploded.”
Instead of a tuck-tail-and-run philosophy, Tory saw the recession “as the opportunity of a lifetime.”
Tory was operating a relatively small tree farm at the time, and being in the rewholesale market with KAT, he saw how severely growers were cutting back production. So Tory did the opposite and dramatically increased tree production.
“In 2004, we had planted 6,000 trees. By 2009, we’d planted more than 90,000,” he says. “All through the downturn we were planting a lot of trees. Future sales are determined by how much product you put in today. Once you start planting fewer trees, it’s really difficult to turn that tide. Trees are a long-cycle crop, and we knew the market would come back someday. I didn’t think of it as a gamble. At that point, it really didn’t matter. You were going to make it or you weren’t.”
Tory looked to his partnerships he’d built with suppliers and customers.
“This whole industry is about partnerships. We picked partners going into the recession, and we picked them for a reason. We had to stick with them and go through all of it with them,” he adds.
In the fall of 2010, one of Tory’s neighboring wholesale competitors announced they were closing the business and told Tory they planned to cut the price of all their inventory and sell it to landscapers. Tory asked the ownership to reconsider, and that he’d come up with a better plan. He developed The Great Big Tree Auction, and for 10 consecutive weekends, Tory and his competitor sold trees in the retail market. They generated revenue not only from sales, but from planting services and shipping costs.
“We were selling between 800 and 900 trees each weekend, and customers were driving from Omaha and Des Moines to come to the auctions,” Tory says.
The auctions brought in much-needed cash flow, and more than $1 million in cash was generated from tree sales.
“It was all about cash flow. We needed cash to pay bills and pay employees. We couldn’t sell those trees on the wholesale market,” he says.
The auctions also allowed Tory to tell the story of how the recession was affecting the green industry when local news channels showed up to cover the event.
Because of Tory’s aggressive business plans during the downturn, both KAT Nurseries and Schwope Brothers Tree Farms experienced significant growth.
“When the market began to turn three for four years ago, we had a lot of good quality inventory,” he says. “We have stuff for sale at Schwope Brothers that no one else has.”
KAT now has three distribution facilities, including a second Missouri location and one in Ankeny, Iowa. At the start of 2016, Tory acquired Colonial Nursery, a 44-year-old retail garden center located in Blue Springs, Mo., a Kansas City suburb. Rebranded as Colonial Gardens, Tory plans to create an agritourism destination at the garden center and has created a master plan that was approved by the city late last year. Plans include a café serving local fare, an open-air space for special events and a farmers market, a nature trail, and a pick-your-own orchard.
In the summer of 2016, Schwope Brothers acquired Anna Nursery in Cobden, Ill. The 400-acre, 90-year-old nursery was rebranded as Anna Evergreen.
In December 2016, Tory pulled off what he calls “the deal of my life” with the acquisition of Brehob Nursery, a 45-year-old wholesale nursery and landscape distribution center in Indianapolis.
“The Brehob family had built, in my opinion, one of the premier nurseries in the country,” Tory says. “I told John Brehob I was interested in buying the company, and he was clear that he would only sell the business to someone who had a solid, established operation.”
Brehob toured Tory’s operations and met his team. Tory worked on the deal for 18 months.
“It was so cool to see a guy who built a family business and take it to the market and entrust it to us,” Tory says. “And I did the deal without meeting any of the Brehob employees or talking to their customers.”
At the same time, Tory created DCA Outdoor, a parent company to all the brands he was operating. The DCA Outdoor umbrella includes three production companies: Schwope Brothers Tree Farms, Anna Evergreen, and Utopian Plants; two landscape distribution operations: Brehob Nursery and KAT Wholesale Outdoor; a retail operation: Colonial Gardens; and two service companies: Utopian Transport and PlantRight.
Besides building up plant inventories and different brands across the supply chain, Tory also gathered an executive team that resembles one from a Fortune 500 company.
“The idea with three acquisitions was to have a business that was big enough to build a central office staffed only with business people,” Tory says. “Investing in people is the next step in the evolution of this industry.”
Tory hired a chief financial officer, a director of sales and marketing, a director of transportation, and a director of human capital (formerly known as human resources).
“This industry needs more professionals. We have to automate to be more efficient and to be more profitable, which puts more emphasis on knowledge and professional development,” Tory says. “This market should allow for a much more professional workforce.”
Tory threw out the old “human resources” label and came up with “human capital.”
“I view the people component as our biggest bottleneck to growth in this industry,” he says. “The term ‘human capital’ gives HR more teeth. We’re constantly talking about how to recruit, attract and develop our people to do what we need.”
Tory also plans to hire a director of technology.
“It’s going to take young people who are excited to do something new to be the innovators we need in this industry, and we’re sorely lacking in that now. We must invest in people,” he says.
Although Tory has always put an emphasis on truly knowing his customers and their needs, he said the recession drove that lesson home.
“I think very few growers actually know who their customer is,” Tory says. “They have this formula that they want X percent big boxes and X percent retailers and X percent landscape contractors. It goes back to efficiency and how we grow for the distribution market. At Schwope Brothers, we’ll do $11 million in revenue with two people in customer service and inventory. That’s because we really know our customers.
“We get orders, we allocate them and we ship them. We have about 70 customers [at Schwope Brothers] and we’re growing fewer SKUs instead of more. A more organized and consolidated industry is a more successful industry, and supply and demand will take care of the rest.”
For more: www.dcaoutdoor.com