It was a shock when I read the Lawn & Landscape State of the Industry report and was reminded it was September of 2008 when the recession began. A full 5 years ago! Much has happened to us all since then.
Concerning is that 5 years later we are still wallowing in a weak economic environment with painfully slow growth. So many people are adapting to our new economy and accepting that what they now see is all there ever will be. Young people especially have become rather constrained and pessimistic about their futures. America needs a renewal.
Green Industry contractors went through a serious bout of rebuilding their businesses. Everyone had to change and some didn’t make it. Because you are reading this, it’s assumed you survived. In 2013 90% of landscapers are reporting they are profitable. 10% say they will lose money, which going back in time there has always been about 5-10% of landscapers who lost money in a given year.
One thing is different. When asked what issues are the most concerning, number three on the Lawn & Landscape list was stress. Stress was a new issue first cited in 2012. Owners are feeling the pressure of the daily battle to maintain profitable operations and deal with new challenges like rising energy costs and the unknown of the Affordable Care Act.
For a landscape business times are not toxic like 2009 and 2010, but they are not easy either. Owners have their plates full of serious issues. When asked to name the top 3 most troubling worries landscapers said;
- Fuel prices
- Consumer confidence
- Stress
Rising costs are not being overcome by price increases to customers. Which means landscapers are working hard to be more efficient with their labor and materials to preserve their profits. While a painful experience the recession has made most landscapers better business people.
A few perennial issues remain on the table. Labor is still the big one. One would think there would be plenty of decent people to hire, but then one would be wrong. With high unemployment landscapers still cannot find decent workers. Lawn & Landscape asked if only one issues could be fixed which one would landscapers choose. Finding good workers was the clear choice.
The cost and time requirements of the Affordable Care Act is weighing heavily on owner’s minds. Not so much that they have to the work and pay the price, but after 3 years of talking about it nobody knows what suppose to happen. Landscapers, like everyone else, just want to remove the uncertainty.
The ACA is expected to impact new hire attitudes. Obviously people who have in the past rejected health care insurance will now be forced into buying it if not provided by an employer. So it may become necessary for employers who have not offered healthcare coverage in the past to do so. Otherwise, new hires will see a dramatic decrease in their discretionary income. Health coverage may be an important enticement to attract good workers. Some landscapers are looking to keep their head count below the 50 person level to avoid ACA requirements. This is not an easy task and may cripple a company’s ability to grow.
Landscapers for the most part are optimistic about 2014. Most believe they will grow revenues. Only 7% said they do not think sales will grow. 70% also report they will be making investments into new equipment.
50 economists were asked recently about their predictions for a downturn in 2014. 13% said they expect it. The warning signs are present for some sort of slowdown. It appears right now that if it happens it will be mild and short. Economists overwhelmingly predict we will get through 2014 OK and enter a 3-4 year growth period.
Even with most predicting a decent year, it doesn’t hurt to be prepared. As always cash is king so make sure you have the cash to get through a bad year. A little contingency planning will help. Know what you’ll do if things take a dive. Your actions of course will depend on how much of a dive we take.
One fact that has kept us moving forward is consumer spending. Throughout the recession there have been moments consumers closed their wallets, but generally we have been spending in line with the increases in our incomes. That is expected to continue. Debt levels have risen however do not think consumers hungry for higher spending.
Residential building is a bright spot for us now. Looking back, our economy built about 2 million homes a year before the recession. Build rates dropped to 500,000 and are now hovering in the 1 million range. No we are not back to the boom times. We are though in a sustained slow growth mode that is expected to continue.
Commercial building is not so happy a picture. Occupancy rates are still too low and demand is not picking up. Commercial property development is not expected to grow much for the next couple of years. Commercial property owners are seeing better profitability.
2013 is coming to a close. Landscapers are profitable, have more backlog, have grown into new services, have become more efficient, and see growth ahead for 2014. All in all an uplifting report even with the issues to be overcome.
Water and Energy Savings
You have heard the manufacturer hype, you’ve seen the ads and reports, you watched as your peers adopted new products. Allow me to hop up on a soap box. . . . .
The products now available that help a property owner save water and energy are real! Please look at them. Let me talk about two easy ones;
ET Based Irrigation Controllers:
Study after study has shown that a traditional irrigation controller will over water. Numbers vary by region and season, but start at 20% and go up to 60%. This is a no brainer. If only 20% of the irrigation water can be saved in a typical season, the property owner will pay the cost of an ET based controller in 1-2 years. After that it’s saving in their pocket. Why would you not offer such a product? Even Consumer Digest magazine has rated ET controllers as a Best Buy.
LED Landscape Lighting:
Another no-brainer. LED lighting offers a huge energy savings. You hear numbers ranging from 30-50%. Again, if only 30% of the energy costs can be saved, the cost of LED is meaningless. Add to that the time and cost saving benefits for you, the installer, and LED is a clear winner. Another great benefit for your customer is the long life and better lighting ability.
Just saying, look at the new technologies and make sure you are not passing up a great customer benefits and profit generators for yourself.
