For landscape contractors, especially those providing maintenance services, the down pressure on pricing isn’t new, it’s just worse, says Green Industry business consultant Rod Bailey. As he explains, the market has long viewed landscape maintenance as a commodity. Add to this perception the economy, along with increased competition, and landscape contractors need more than a sharp pencil. They need a whole new way to look at doing business.
Another longtime industry consultant, Frank Ross, agrees. “How profitable a company is depends on its price structure, sales volume and ability to control costs. When price is removed from the equation, then sales and cost controls naturally assume a higher priority. Companies have to sell more at a lower price or reduce their overhead, or do both. They have to start thinking out of the box.”
Recognize That Every Situation Is Different
Both Ross and Bailey emphasize that one size doesn’t fit all, meaning every situation is different. “There are many ways to increase sales volume and reduce costs,” Ross points out. “Owners have to find the right combination to fit their companies and markets.”
“No matter what this combination is,” adds Bailey, “choosing the right one requires being innovative and proactive. Owners, for example, may have to spend money upfront to optimize long-range operating costs, or maybe have to become more creative with their service offerings. Getting rid of small strips of grass, employing ‘tear drop’ mulching areas around trees instead of circles, and modifying plantings can reduce maintenance time and costs. Then, contractors have to stick to their current customers like glue, and talk with them early on about value and how their company can help reduce maintenance expenses.”
More Solutions Than Just Cutting Labor
“Select a solution that’s good for you,” Ross re-emphasizes. “And don’t go halfway. Make a statement and settle in because it will likely take three to five years for the economy to turnaround. This is serious business, but there are solutions.”
Some solutions are more difficult than others. Layoffs, reducing benefits and freezing wages are tough but often necessary moves. As Ross explains, when customers won’t accept the price you’re asking for your service, they’re essentially saying, “We are not willing to pay for your standard of living.”
There are other moves one can take in lieu of or in addition to labor initiatives. At this past October’s Green Industry Conference (GIC) in Louisville, Bill Horn, vice president of Denver-based Terracare Associates, and Bruce Moore Sr., president of Eastern Land Management in Stamford, CT, talked about some of them.
Customize Service Offering
“Determine what clients value and focus on that,” says Horn. “It’s easy to use the cookie cutter approach, to treat every job the same way, using the same equipment. In this industry, companies traditionally had a standard template. They pruned so many times a year, mowed so many times and fertilized so many times. That’s all changed now. You have to ask clients what they want, and avoid spending hours on something they could care less about.
“Being proactive with individual clients also provides an opportunity to educate them about ways they can save money by employing innovative water management strategies and modifying their landscapes to reduce maintenance costs,” Horn adds.
“The industry has matured over the last 30 years,” Moore says. Agreeing with Bailey, he notes that pricing pressures have been building over the years and that more progressive companies have already been looking for efficiencies and practicing value engineering with clients. The economy has further squeezed companies, requiring owners to be creative to stay profitable.