Expected growth will justify new equipment purchases, while increased maintenance budgets ensure landscapers can stretch their fleets.
An equipment wish list – that's what Blake Crawford asks his head managers to submit every September, right before budgeting for the next year kicks into full gear. Another riding mower? A skid-steer loader? A new truck? Hand-held equipment?
Leads at Crawford Landscaping in Naples, Fla., put their "wants" on paper at the end of the busy season, and equipment needs are assessed based on the anticipated cash available for equipment purchases. "This year, we are probably going to embark on an aggressive budget for our shop maintenance," says Crawford, CEO of the firm.
Making machines last costs money – but it's one way to stretch equipment dollars. And at Crawford Landscaping, where three full-time mechanics are employed, keeping up with a strict preventive maintenance schedule has preserved the brand-new equipment purchased in 2004 when the company launched.
During Crawford Landscaping's first few years, when growth was averaging 35-40 percent annually, more dollars were allocated toward equipment purchases. Over time, maintenance became a greater focus. The firm brought on a mechanic once it reached 10 crews and about $3 million in revenue.
"It made sense to bring in a mechanic that could maintain the load, and put a computer system in place to track preventive maintenance – that has been significant for us," Crawford says. "Our equipment goes through a lot down here in Southwest Florida with the heat and humidity, and we're operating every day of the week."
Maintenance is a more significant focus today for many landscape firms. And, as companies figure out ways to pump more hours from their iron, they are still making equipment purchases to accommodate growth and replace machines that are ready for retirement. Dealers are offering attractive financing programs; and the used equipment market is robust. Rentals are also on the rise, and these are easier to budget for than purchases, says Jarod Hynson, president, Earth, Turf & Wood, Denver, Pa. "You don't have to pay insurance or maintenance on rentals, which can be a huge expense if you purchase the equipment," he says.
Despite a flat year for many firms, equipment is one key area of the budget where landscape contractors will spend. "You have to continue to invest in equipment – if you remain stagnant and aren't constantly looking at what's new, that could bite you down the road," Hynson says.
The Buy Side. Lee Buffington didn't curb equipment purchases in 2010. "Equipment has been a big thing," he says of the company's ability to increase productivity by 150 percent since 2008. People are one factor, but the machines they operate and the technology they use to get the job done sharpen the saw at Turf Tamer in Northern Alabama.
In 2011, Buffington added four dump trucks, a box truck, a self-loader for tree care, a leaf-vacuum system, four new riding mowers and more than 50 pieces of hand-held equipment. "We were able to buy a lot in a one-time shot and really negotiate those deals down tremendously," he says.
The new equipment fulfilled increase customer volume. Buffington says clients are still spending money, though the sales cycle is much longer. "And we get spurts where it seems like we are selling like crazy for a month or six weeks, and then I don't know what it is – it dries up for a little bit and people slow down to make a decision," he says. "We have had projects lay on the table for six to eight months trying to get decisions made."
In the Northeast where Lawn Dawg is based, Jim Campanella says he'll take a different approach to equipment budgeting for 2012. This year, he decided to curb equipment purchases and stretch vehicles that had reached the company's 150,000-mile retirement mark. This certainly saved the company a large capital outlay, but it heightened safety and maintenance issues. "Fortunately, we didn't have any events, but the risk was higher," he says, noting the Nashua, N.H.-basd firm boosted its maintenance budget in 2011.
Lawn Dawg is planning on purchasing upward of 20 vehicles in 2012. It might have been better to spread out these purchases, but considering the volume the firm expects to do next year, the budget warrants the expenditure. "You have to buy the equipment you need," Campanella says. "If there is a truck parked in the lot, that's a problem – and you don't need extra bells and whistles, but you do need to buy the equipment necessary to get the job accomplished and deliver quality customer service."
Mickey Strauss, president, MSM Landscape Services, Sylmar and Ontario, Calif., purchased brand-new equipment when he launched his start-up four years ago.
"We have bought as we needed equipment," he says, adding that he has found deals on large equipment by purchasing repossessed machines. This is how he secured a skid-steer loader. "We saved ourselves at least half the cost," he says.
While dealers are running low or no interest financing on equipment, Strauss still finds that looking in the used market, at least for large-scale equipment, is a better buy.
And as Hynson notes, rentals do not require maintenance or insurance, which is why he budgets 50 percent of his equipment as rentals. Plus, there's more selection at rental yards today than a few years ago. "Because the construction market as a whole has taken some serious hits, you have equipment rental places that are not seeing the business they were before, so they have had to cut back on rates," Hynson says. "I think you can rent better now than you could three years ago."
When making purchases, Hynson looks for versatility. In particular, he appreciates his trucks, which have a switch-and-go system that allow him to change truck bodies. He has three of these trucks, and eight interchangeable bodies. "That allows us to not have trucks sitting that we don't use," he says of outfitting trucks to accommodate job site requirements.
Tuning up Technology. The industry is getting smarter every year – this speaks to productivity-driving technology such as GPS systems, software, hardware and all that non-iron equipment landscapers are investing in to improve revenue per man-hour.
John Newlin, president, Quality Sprinkling Systems Services, Cleveland, added a hand-held GPS system this year that can locate irrigation valve boxes, controllers, backflow devices and underground wire. "This will separate us from the herd," Newlin says.
Hynson is making an investment in upgraded design software and another server for his office. "We let (technology) go by the wayside for a couple years, and we finally said, 'We need to stay on top of this,'" he says. "We need to spend more money in this area. Our field equipment is where we want it to be, so we'll spend the time and invest in the software now (before winter) so we have four months to perfect it before March hits."
More for Maintenance. Equipment repairs are down 25 to 27 percent since Joe Chiellini, president, Ameriscape Services, Tampa, Fla., upped his mechanical workforce to two and a half service technicians. He says that's a lot of specialty labor for a $4 million company – he budgets $40,000-$45,000 a year for this labor – but when he reviewed numbers and figured out how much he was spending on equipment repairs, the investment in professional prevention was well justified.
Plus, to be sure equipment is properly cared for and lasts longer, Chiellini focuses on training his crewmembers. The company's director of training focuses on equipment usage, emphasizing that mowers should not be "jumping curbs" and teaching field personnel to edge out beds, which means less weed eating (and fewer labor hours). "We are serious about keeping our equipment in top condition," Chiellini says.
Plus, Chiellini notices that keeping equipment in shape is good for employee morale. "Problems are taken care of that night," he says. "If a mower breaks down, the crew gets it back the next morning."
Turf Tamer has a full-time fleet facility manager that works from 2 p.m. until midnight, five days a week. This person performs daily maintenance on mowing equipment and trucks. That means sharpening blades, washing machines, checking the oil and tire pressure. He also fuels vehicles and machines.
"That not only saves us in labor from having many people in the organization fueling, but it also reduces fueling mistakes, such as putting straight gas into a mixed gas machine," Buffington says.
Plus, dedicating one person to fueling all equipment makes one person responsible rather than 20 employees, which made managing fuel cost more difficult, he says.
Strauss controls fueling by assigning the responsibility to supervisors, who fill machines and vehicles when they visit job sites. "That requires the supervisors to get out and see the job," he says.
For maintenance routes, field employees must bring trucks back to the yard and a supervisor will take the truck out and fill it, Strauss says.
At Lawn Dawg, a branch manager was recently promoted to the role of purchasing and maintaining equipment. This person attends the GIE+EXPO and focuses on checking out new equipment. "He works the outdoor demos and he's on every piece of equipment, looking at truck and body designs," Campanella says.
New equipment purchases were in the budget for 30.8 percent of landscape contractors in 2011, and 46.9 percent expect to increase spending on equipment in 2012.
"Equipment is where I'm directing my funds now," Newlin says. Along with that, he'll focus on education and sending employees to more conferences. And, as long as customers "don't get spooked again" like last year, he believes his equipment will be quite busy going into 2012 and beyond. "There is a lot of opportunity out there."
The equipment your crews take out into the field every day is the lifeblood and economic driver of your company. If it’s sitting broken or unused, you’re losing money. In the chart below, we’ve outlined what landscape contractors and lawn care operators spend every year nationally and regionally on major pieces of equipment, as well as other business essentials like GPS software, chemicals and hardscape materials.