The landscaping industry has been relatively flat since 2007. Thus, many contractors have had a hard time growing sales. Others have simply been afraid to, according to industry analyst Tony Bass of Super Lawn Technologies.
1. Fear and uncertainty
“Many contractors, especially those doing over $2 million in annual sales, haven’t been eager to really push growth,” Bass says. “They’ve learned this issue about cash. When you plan for 20% growth in a single year, and you have a 10% net margin, you break even from a cash flow standpoint. That’s not fun, so contractors are being much more conservative, planning for 5% or maybe 10% growth.”
Uncertainty over the health care mandate has also put some companies on a more conservative footing. “If you get up to that 50-employee level, you could be looking at a substantial increase in your overhead,” Bass points out. “That’s something you need to be able to account for in your budgeting and pricing.”
Smaller contractors are also being more conservative. The primary issue is credit. Some are having a hard time obtaining it. But in most instances, the contractor is simply unwilling to finance a bunch of additional equipment. “Guys have been really afraid of taking on debt,” Bass says.
As challenging as the past few years have been, things are expected to start improving—and to a certain degree have already begun to. Contractors should start thinking about growth again, devising strategies to capitalize on emerging opportunities.
2. Demographic shift
The second big trend has nothing to do with the economy, the weather or the construction business. It has to do with a shift in population. Roughly a quarter of the population is now over the age of 55. That percentage will continue to grow over the next decade. According to Bass, this is creating a burgeoning market for lawn maintenance contractors.
“These older consumers are the most likely to buy repetitive home maintenance services,” Bass points out. “There are retirement communities growing all over the country. They will need to hire contractors. Additionally, retirees tend to cling to their homes as long as possible to maintain their self identity, but they’re going to need help with maintaining the grounds.”
3. Now it’s about business
Back in the 1980s, ‘90s and even 2000s, new landscape companies were typically started by individuals with a passion for agronomy. That’s still true today, but not to the same degree.
“Larger and more organized companies are emerging at a much faster rate today,” Bass says. “This industry is reaching maturity in its policies and processes, which is evidenced by the number of franchises in existence today. So gone are the days where someone passionate about turfgrass goes out and starts a thriving landscaping business.
“Many of today’s start-ups are displaced executives. These guys understand planning, forecasting and procedures. They’re also aggressive when it comes to training, education, and acquiring the necessary tools to grow sales and profits.”
4. Embracing automation
One of those necessary tools is automation. Leading contractors are taking advantage of technologies like GPS, mobile time tracking software, customer relationship management software, 3D design software, social media, smartphones and iPads, and the list goes on.
“Contractors have come a long way with respect to technology, but still are not where they need to be,” Bass says. “Start thinking like someone who is trying to manufacture an automobile with robotics. I’m talking about repetitive processes that don’t require human interaction.”
For example, a free online tool at tungle.me simplifies the process of scheduling appointments and meetings with people both inside and outside of your organization. For example, let’s say you’re trying to set up a meeting with a client or potential client. Between the back and forth of emails, texts or voice mails, a lot of time can be wasted in trying to establish a meeting time. Furthermore, the likelihood of a miscommunication is fairly high. Tungle.me allows multiple parties to share calendars so they can quickly select an appropriate meeting time.