Below is data on software and technology spending from our 2017 and our 2020 expenditure surveys to show how buying patterns have changed or stayed the same in the past three years. While most of these items in the 2020 survey show consistency from the past 12 months to the next 12 months, drones and robotic mowers are the only item to increase. In the 2017 survey, the only item to show growth was design software. We did not ask about drones and robotic mowers in our 2017 survey. 2020 Expenditure Survey data was collected in late January of 2020 and the 2017 survey was collected in June of 2017.
Hittle Landscaping in Indianapolis has long offered irrigation, but President Scott DeNardin says it was previously a “hidden, embedded service.” Some clients didn’t even know they offered it, and the department only fixed problems as they arose rather than keeping track of their systems and clients efficiently.
Two years ago, the team set out to make irrigation an actual division at the company. They figured this would help them organize the team better, boost their brand and legitimize their ability to do irrigation jobs well. There were only a handful of other irrigation competitors in Indianapolis, so better establishing themselves could’ve led to being the leading voice in the area. Plus, potential and current employees might look at the irrigation division and determine that there’s more career paths to actually grow within the business.
When they started, Hittle hired a few workers with irrigation and management experience to join the team of 15-18 people. Hittle didn’t receive their H-2B workers this year due to COVID-19 concerns, but the team is still hovering around a dozen employees.
“What you don’t measure, you can’t grow it, you can’t define it, you can’t hold people accountable,” DeNardin says, adding that the irrigation division has been an excellent recruiting tool. “It also helps to attract and retain employees by having a division versus just having this unnamed, unseen role within the company. I think it’s brought a lot of energy and opportunity.”
Roughly 24 months later, and there’s been no regrets – in fact, leadership at Hittle Landscaping believes irrigation has the potential to blossom with their company, especially with technological advancements that only make life easier. Other landscapers nationwide feel much of the same: that despite COVID-19, the irrigation market is staying strong.
“There’s a large area of the new controllers and the technology that we’re going to start capturing,” says Eric Bensinger, Hittle’s irrigation field manager. “It’s a huge part of the business and growth of our division that’s just going to explode.”
COVID-19 is the elephant in the room when talking about how business is going – the coronavirus triggered sizable economic chaos, and the landscaping industry was not immune to that. But in Loveland, Colorado, Jackie Colson says her company hasn’t missed a beat. Colson Sprinkler & Landscaping’s sales are right on par with where they stood last year, and Colson says she never shut down her business for COVID-19.
While she sought out guidance from her state representative, she determined that according to the state’s guidelines, her business was essential. They work outside and could communicate with clients over the phone, who were often quarantined during the springtime. Colson says this may have actually played to their advantage in some ways.
“If anything, having people at home to see the disarray in their yards has made yard projects much higher on the priority list,” Colson says. “We kicked off the new year with a beautiful $8,000 waterfall install.”
“If anything, having people at home to see the disarray in their yards has made yard projects much higher on the priority list.” Jackie Colson, Colson Sprinkler & Landscaping
In Virginia, Dave Schrader’s Bio Green Outdoor Services saw a moderate dip in sales this spring – he estimates it was roughly a $300,000 hit when accounting for both his lawn and irrigation side of things. But as the governor’s orders allowed them to continue operating as usual, Schrader says the irrigation market has already started to rebound and his current sales aren’t far off where they were last year. There were several customers who said when COVID-19 started they’d delay their services, and now Schrader’s in the process of asking them if they’re ready to begin again.
"I'm always very hopeful,” he says. “We're about even from June last year which is the first time that's happened in a few months."
Back at Hittle Landscaping, Ryan Dippold helped his teams implement safety measures but never felt it impacted the workflow too significantly. The director of landscape maintenance says his employees came through a company checkpoint any time they came to the office, but logistically, it was also all about keeping employees apart as best they could during commutes.
“Really, it boiled down to how many people we could put into a truck and having enough resources to send two guys in a truck and send our crews out in two trucks. Historically, we’d just send them in one,” Ryan says. “The COVID-19 piece has definitely affected all of our business, not just irrigation.”
Meanwhile, Bensinger acknowledges that the pandemic is overall a negative – both for business and for public health – but he echoed Colson’s belief that having clients home made things easier in some ways.
“The COVID-19 piece has definitely affected all of our businesses, not just irrigation.” Ryan Dippold, Hittle Landscaping
“One of the more interesting things that happened because of COVID, which was more unintended, was that the service side of it was actually a little easier because scheduling wasn’t as hard,” he says.
One other perk: Schrader points out that the Virginia traffic has been much lighter since the pandemic began, even today as things open back up.
"Getting around has been pretty damn easy,” he says. “That's still the case, so I still think there's folks who feel a little unsafe. I’m cautiously optimistic, I would say."
Investing in technology.
Though this year will ultimately end with financial difficulties for nearly every company, one investment that will remain strong for irrigation businesses is in technology.
“The main thing is just the technology with these controllers,” he says. “From the service aspect of it, you don’t need to be home, so it shortens our time out in the field.”
Bensinger likens the smart controller technology to a “bar app” on the clients’ phones. They could whip out their phone and show their buddies that they can control when the water comes on and off in their yard. Plus, the technology allows them to play around a little more with their customizations. They can label zones whatever they want in some apps so they can easily track what areas are getting watered, for instance.
And, in the cases where clients go away for the winters, Bensinger says Hittle can keep track of the clients’ systems for them. It allows the company to also be proactive about fixing problems in the system like leaks that could lose clients money, notifying them about their issues before the client even notices.
“Customers are ‘warming up’ to the smart irrigation system clocks with WiFi.” Jackie Colson, Colson Sprinkler & Landscaping
“(The technology has) been very well embraced,” Dippold says. “Some of the bigger sites, because of cost (are a little reluctant) … but technology keeps advancing every year where that won’t be a problem. People love it.”
Colson says that some clients have a hard time understanding all the fancy irrigation technology, but overall, she’s receiving far less pushback and more overall interest in learning more. She views the technology as a way to educate the clients on how to maintain healthy lawns.
“Customers are ‘warming up’ to the smart irrigation system clocks with WiFi,” Colson says. “People who travel like that they can program their clocks while away. One gentleman has a very large yard and likes how he can change zones from his phone while walking around in the yard.”
For Schrader, clients have certainly warmed up to the technological advancements in irrigation. He says roughly 75% of their new sales over the last few years have been from their “ultimate smart system” package, which includes the smart controllers, high-tech sensors and more.
"We've always tried to stay on the cutting edge,” he says. “We tend to be a pricier system in our area. We've always wanted to offer a system that's focused on saving water."
Adopting and integrating liquids – both brine and exothermic blends – into an ice management strategy addresses several key factors that influence not only profitability, but also the ability to succeed in a highly competitive market.
At the end of the day, one way to look at snow and ice management is we’re actually selling labor. And the less time our crews are concentrated on snow and ice activities that don’t produce results, the bigger the influence on our margins and in the savings we can pass on to customers through competitive pricing.
One of the things we love about liquids is we can get in front of a snow event a couple of days in advance and pretreat properties while our staff is fresh and rested. In fact, we can apply liquid treatments two-and-a-half to three-times within the costs of one rock salt application. Therefore, we’re able to manage the event a lot better from a labor and operational standpoint while reducing our dependency on bulk rock salt.
It’s important to note that liquids are a weather game and you must consider how temperature and moisture will impact performance. We typically apply product pre-event at a 50% rate, which allows the product to crystallize inside the pavement where it will be the most effective.
Likewise, it’s our experience that a liquid pretreatment can melt upwards to 1 inch of snow before diluting and becoming ineffective. Again, in a tight labor market, strategic liquid pretreatments alleviate some of the strain on labor. Since liquids afford us the ability to extend the amount of time before we must react to an event, we don’t have personnel waiting around to fight the storm. We can let it snow for an hour or two before dispatching and deploying people to their assignments, which lessens the amount of time they’re active during an event.
Liquid pretreating affords us the ability to jump on an event and get product on the ground where it can resist the buildup of ice at the pavement surface. Ice buildup is what makes snow and ice professionals – and their clients – vulnerable to slip-and-fall claims. Strategically managing this at an event’s onset lessens that risk for your clients, their constituents, and ultimately for the contractor.
Again, it’s important to monitor temperatures and precipitation rates to properly assess the effectiveness of your liquid application before, during and after a winter event.
A liquid approach increases our ability to manage a storm more effectively, and as a result, reduces our dependence on bulk rock salt. Most snow professionals have experienced material shortages at one time or another along with record pricing for scant product. Integrating liquids into our strategy allows us to significantly reduce our dependency on rock salt.
Likewise, liquid applications are more targeted and direct than bulk salt spreading practices. In addition, the technology and equipment used in liquid apps applies product at a much more precise rate than bulk salt running out of a spreader and bouncing and rolling when it hits the pavement.
Finally, a lot of attention has been directed toward the negative impact chlorides have on the surrounding environment – including damage to building infrastructures and green spaces. Liquid products balance out the safety aspect of what we need to do, reduces some of the litigious risk we face, as well as reduces the amount of chlorides we’re releasing into the environment.
For example, we manage snow and ice on a very large and complex live-work-play property in suburban Cleveland. While using rock salt as the primary ice management tool it was not unheard of to have to replace upward to 30 trees and ornamentals damaged and killed by winter chloride use. As the contractor, we’re on the hook to replace the plant material lost to winter services. After the switch to liquid and the ability to better target and control applications, we haven’t lost any of the plants.
Jerry Schill is the president of Schill Grounds Management in North Ridgeville, Ohio. He is a frequent Snow Magazine contributor and a 2011 Leadership Award recipient.
The booming market for mergers and acquisitions in the green industry has been slowed down by COVID-19, but it hasn’t been shutdown. Will it get any worse? And what will the market look like when the country’s economy recovers?
We reached out to five M&A professionals in the green industry to answer those questions and more. The information in this article is taken from interviews conducted around March 31 and follow-up interviews conducted between April 20-22. The original story can be read by visiting bit.ly/mergercovid.
Q: How is COVID-19 affecting mergers and acquisitions activity?
Greg Clendenin: Across virtually all industries, M&A activity has slowed down, especially in terms of new transactions coming in. With the green industry being labeled as an essential service (and it is), it has not been affected as much as others. However, that is not to say that it isn't significant.
Brian Corbett: While activity is still lighter, with more daily talk of being past peak outbreak in many key areas and the opening of the economy, it seems all walks of life, including buyers, are more willing to engage in conversations. Specific to the green industry, we have spoken with all the main buyers and they are all committed to their businesses and long-term growth objectives. We are advancing several transactions forward and while we do not expect the pace of the process to mimic pre-COVID timelines with continued limited travel, etc., we do see things moving forward.
Ron Edmonds: During the first three weeks of March, we mostly saw buyers (along with most everyone else) looking internally and, after ensuring the safety of their own teams, re-evaluating what the impact of COVID-19 on their access to capital, investment strategies and processes. We continue to have many investor inquiries. While dealing with bankers is a challenge right now, since many are overwhelmed by the stimulus programs and also troubled loans, some incentives apply to businesses doing deals now – like the provisions that have the SBA making six months of payments for borrowers apply to new borrowers through September 27, 2020, in addition to existing SBA loan borrowers. That is potentially very meaningful.
Jeff Harkness: We have seen a slowing approach from buyers on funding deals only during the late March and April COVID-19 pandemic. Most of our clients and strategic buying groups have operated and performed remarkably well during the last 30 days. Essential status, paycheck protection funds and great leadership has driven solid performance despite some short-term uncertainty. In the meantime, our remote meetings, packaging and conversations continue as most groups believe there will be some impact on performance in Q2 but they’re still excited about acquiring our top companies.
Tom Fochtman: M&A has not ground to a halt but pretty close. We need positive movement with the COVID-19 situation in order to get our economies going again and that includes buyers purchasing landscape companies again. Ceibass has told most if its clients to hunker down, focus on best practices, keep your team intact, make money so that they produce a highly profitable 2020. For the companies that we either have to market or were close to taking to market, don’t plan on it happening in 2020. It may, but don’t need for it to happen this year. It’s more important to produce a good year that they will be rewarded for, most likely in 2021. All of this assumes landscape remains essential in most states and that landscape companies are able to produce solid revenue.
Q: How has this affected any deals you had in progress?
GC: It has not affected transactions that we have in process either in the valuation or in the process continuing. Some deals in terms of the process may be affected when the process gets to a point when travel is desired by the buyer, but I see some deals closing without any travel. That can be done without any real negative impact on the deal related to travel restrictions. Technologically, we live in a small world. The transactions more at risk are the larger ones where the buyer may want to be on-site before the closing and that is understandable on the large deals. Some buyers will be willing to complete due diligence via email and video and audio conferencing and then close without being physically together with the seller.
BC: We pulled one specific transaction but are working behind the scenes to ensure we are at the front of the line when things have truly opened back up. We ran a small but highly competitive process so while we will certainly revisit conversations with the group we’d locked up with, there are other interested parties for them and for any good company. We are moving several transactions forward and are finding that for the right companies in the right markets, there is still a great amount of interest.
RE: We believe the deals that we have in process are likely to get done, but they are getting slowed down. Things are continuing to move forward and picking up a bit as companies move beyond initial shocks and the economy prepares to restart. I also have clients actively working in business plans to start new businesses.
JH: We have actually seen an increase in interest from groups looking to enter the industry. A couple current deals have pushed closings back 60 days, and there has been increased diligence regarding customer segments and short-term forecasting. Still, we have not had buyers leaving opportunities, nor experienced a slow-down in communication.
TF: My most recent example is currently moving forward. We are under a Letter of Intent and in due diligence. I’m speaking to potential buyers about our clients, but the market won’t really pick up a lot until people can travel. Interestingly we are going to see a shift with a lot of what was normal face to face go virtual. I think we could get to a point where a transaction can be consummated without buyer and seller meeting prior to closing. Not sure when that occurs but sooner than later. The M&A landscape is adapting just like other businesses are or will learn to in times of a pandemic.
Q: Do you think this will slow down the M&A long-term?
GC: Short-term, there could be a drop in the multiples of revenue and EBITDA that we have become used to in recent years. New accounts coming onboard are slowing and that will hinder the growth and profit of companies and those things obviously have an impact on valuations. But, as I said, that is short term. This industry is driven by need. Landscapes will continue to need maintenance. It will be back as strong as ever and M&A activity will come back as well. Now, having said all that, some companies are still experiencing significant growth and profit increase. I have two clients that are having exceptional performance year-to-date. One was up 49% in the first quarter over same quarter last year and the other was up 52% in March, and April is also going very well for both companies.
BC: The good news is that all of our clients have been deemed essential and are working. Now the key is to see how well they hold up financially. Assuming their financial performance is up, flat or close to, it will be a great selling point that the industry and the services provided are in fact essential to the economy and thus can withstand recessions and worldwide events like COVID-19 better than others. If this holds true, we’ll have a strong case that while there might be a very short-term discount in the midst of unprecedented economic disruption, that the best-in-class companies that we represent still have tremendous value.
RE: I think things will be slower for all of 2020, but there will be many signs of life. Some historic buyers will continue to be overly cautious, but others are pushing forward. The bubble has not burst – at least not yet.
JH: There is still a tremendous amount of dry powder (capital) that needs to be deployed. We will continue to have a very favorable low interest rate environment and access to financing both from commercial lenders and alternative financing sources (i.e. – private credit/debt funds and certain underlying dynamics which have been driving M&A in the industry to this point will continue. Market chaos breeds opportunity. The recent reduction of interest rates to near zero will help fuel deal activity, especially on larger transactions with market leading companies once the impact from the coronavirus begins to wane.
TF: I do not. The landscape fundamentals are still very strong, especially the reoccurring revenue nature of landscape maintenance and in particular, commercial maintenance. This rather sudden and unintended recession, by most economists’ accounts, is not projected to be that long – maybe up to 18 months. Unless COVID-19 rages and can’t be controlled, and unless it does not work itself out as predicted, I think the M&A markets in general will return to normalcy and be very active. This might even create a little bit of a frenzy once buyers can travel and get transactions in their pipeline.
Financial buyers do not like being idle. They have committed money that needs to be invested.
Q: What advice do you have for companies who were looking to buy or sell?
GC: If it is time for you to sell, then don’t stop the process. It doesn’t mean you’re going to sell now or when valuations are temporarily down, but the acquisition process takes some time. Go ahead and get those things done that you will need to do, with the advice of your advisor, so when it is time for you to close and close on the price and terms you like, then you will be ready to complete the process without starting from the beginning. During this temporary challenging period, press on.
BC: Hopefully by now everyone has figured out how to operate safely within the guidelines that have been put forth and communicated to their teams and their clients exactly what they are doing. Now, we need the focus on isolating the effects of COVID-19 in terms of financial performance. It will be critical to demonstrate where your company was before the outbreak and widespread closure of the economy, what you did in cost-cutting and other moves to protect your client retention, revenues, earnings, etc.
Only companies with good data, systems and tracking will be able to do this in specific terms. We feel this will be very important rather than taking the easy way out and assuming buyers will just understand that it was COVID and thus not ideal circumstances.
RE: There is always demand for good businesses, but it is even more important than ever to make sure you are ready to go through the scrutiny that will come with a business sale process. This is a great time for business owners to do some self-evaluation and identify those areas they can work on to make sure that buyers will consider their business very desirable. One of the things that I discovered years ago, especially during the Great Recession, is that there are always more buyers than sellers. That doesn’t mean it may not get harder to get deals done or that valuations may not fluctuate, but there are buyers. Take advantage of opportunities to pick up talent that might come from market disruption.
JH: Seek professional advice so you can have all the facts in an emotional time. Valuation, deal structure, balance sheet impact, taxes and net cash to sellers can be measured – so can forecasting future opportunity costs, EBITDA and value. We know all the players. Get educated, then develop a clear plan for next 1-3 years including some contingencies. While there is some uncertainty ahead such as pending elections, potentially higher taxes, labor challenges and some slowing in the economy, there still is significant opportunity. Don’t guess. Get a plan.
TF: It may not happen for them in 2020. Those companies should stay the course, focus on building and growing a profitable enterprise and stay focused. If need be, use whatever governmental stimulus is available and work their plan. If they were trending positively, they need to show another year of progress and good profitability and progress on any new initiatives that they might have undertaken.
Cream of the Crop features a rotating panel from the Harvest Group, a landscape business consulting company.
In this day and age, most business owners have been beaten to death with the importance of optimizing your website for search engines. You most likely receive emails weekly or even daily from marketers and scammers claiming to get you to the “top of the list” in a short time. Most technically savvy business owners also know it’s just not that simple.
There are a lot of different strategies to optimize your website. While it’s important to draw traffic across the nation, or even world, at the end of the day, you want local buyers. I’m often asked, “How do you optimize your site for local traffic vs regular SEO?” That’s a good question. Here are five local SEO tips that even the technically unsavvy can act on:
1. Set up your Google My Business profile.
This is one of the easiest opportunities for local search traffic. Google is great at walking you through everything that needs to be completed, even for a novice computer user. Stay active with your Google My Business (GMB) listing, update hours for holidays, submit your blog posts and post photos for visitors to see. This is also how you will manage and respond to your customer reviews which makes up a huge piece of your local business reputation.
2. Sign up and use a local listing management tool.
You can find a number of online tools to complete your business listing in databases all over the world. Have you ever wondered how your Amazon Alexa can tell you where the nearest gas station is? While search engines try to find businesses locally, they also link to worldwide databases. This is just one small example, but you want your information everywhere! Check out these two tools to boost your listings: Yext Local Listing Management - Yext.com and Moz Local - https://moz.com/products/local
3. Create content aimed at local users.
One of the biggest issues I see with websites is the message companies use to market themselves. Landscape contractors are notorious for putting a picture of their nice company truck on their home page. But, how does your customer identify with that? Wouldn’t it be better to picture a family enjoying their outdoor space? Or, picnicking on a beautiful green lawn? Your written content should be phrased around your target market as well. If you service commercial clients, use words like property manager or facility manager in your text. For residential, reference homeowners, parents or families. Make sure your website is inviting and speaks to what the client wants vs. a show-and-tell about your business.
While regular SEO is important, you also want to spend time doing the things online that attract local traffic since those viewers will be clients.
4. Work with local partners and suppliers to cross link/cross promote on your websites.
Networking has been a proven sales and marketing tactic since the stone age, and things have not changed with advancements of computers and the internet. Use partners you work with to perform some cross-marketing. Don’t just create a page with their address and number; instead, write a blog about the quality mulch your supplier provides. Or include a partner’s page that discusses some of the warm and fuzzy stuff about another local business and your long-term relationship with them. People love to keep business local if possible, so use this to your advantage.
5. Engage in social media.
While I personally don’t enjoy social media, it’s an indisputable method to improve the online presence of companies. I usually recommend creating a culture around social media: have a photo on social media to engage customers and prospects, connect local suppliers and businesses that you work with and post about unique things that you do as a company, especially when it concerns your employees.
Make sure you take great photos when posting to social media or your website. A photo is worth 1,000 words, and you want them all to be positive. It no longer takes fancy equipment or grueling photo editing software for great results. Use a new iPhone and order a cheap lens off Amazon. Adobe Lightroom is a simple tool to use, and the auto adjustments are usually decent or at least better than not doing anything.
Contact Chris Darnell at firstname.lastname@example.org