While I do consider myself to be an optimist, I'm also a realist. I was hopeful that Congress would adequately address the fiscal cliff situation at the close of 2012, but knew deep down that they really wouldn't. I'm also hopeful that the rate of growth in the landscaping industry will return to mid-2000s-like levels this year, but realize that's not going to happen, either.
So I have to ask the question: How do you succeed in a slow-growth market? That's an important question because we remain in a slow-growth market (2-4%). Yes, we've come a long way and are back to 2007 sales levels, but it's still relatively slow going for the industry as a whole.
But it's going, nonetheless, which is why fewer contractors (15%) are citing demand for landscaping services as among their biggest challenges this year. Finding reliable workers to satisfy demand seems to be a much bigger issue (36%), along with competitive pressures (28%) and rising costs (21%). (Data based on open-ended feedback to our fall 2012 reader survey.)
So back to my question: How do you succeed in a slow-growth market? I think you focus on those things you can best control: how you service clients, nurture employees, deploy marketing efforts, and manage your overall operation. What you don't do is overly obsess with things like low-balling competition, wildly fluctuating fuel costs and an over-reaching federal government. You recognize these as challenges, of course, but then you shift focus back to how you can best mitigate their effects.
Strategic business owners seek to align their biggest challenges with their biggest opportunities. Doing so keeps them focused on making progress in areas that will best allow them to gain competitive advantages and steal market share from their competitors, which is what the fast-growing landscape companies are doing these days.
Here's a good example based on one contractor's response to our survey:
Biggest Challenge: A lot of the new guys in business are pricing lower than the more established guys are. There are always flyers going around for lower pricing. It seems like the price of lawn service is going down instead of going up.
Biggest Opportunity: Our employees must always try to please the customer while on the job instead of saying "we'll have to come back to do that."
Here's another good example:
Biggest Challenge: Getting paid in a timely manner. Commercial and federal jobs pay on a 45-to-whenever basis. Everyone else is on a 30-day basis. High cost of insurance and taxes is another issue, not to mention a guy and a pickup who has no insurance and probably doesn't pay taxes.
Biggest Opportunity: Less up-front spending for materials. More of a "get it when you need it" inventory approach. Renting equipment instead of buying.
In both of these examples, the contractors recognize serious threats to their businesses. But their focus is on what they can do to neutralize these threats. Failure to do so can create another serious threat that many business owners can never overcome: themselves. Don't be one of those business owners this year. Good luck!