Jim Huston: Analyzing old predictions and making new ones

Columns - Industry Voices

Every month, our columnists give their take on a common topic. Last month they tackled social media in the green industry. This month they revisit some predictions they made earlier this year, and make some new ones for the rest of 2011.

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June 16, 2011

Jim Huston

The political pundits and polls tell us that there is an economic recovery taking place. Since Jan. 1 of this year, I have personally been in the offices of more than 50 green industry contractors preparing their 2011 budgets, reviewing their company structure and adjusting their pricing. I have also helped dozens of other green industry contractors who have attended my workshops to prepare their budgets for 2011. In addition, I have been in 43 of the 50 states since Jan. 1.

If there is an economic recovery taking place, I haven’t found it yet. However, I’m an optimist. I have seven more states to go and I may find it in one of them.


The first half of 2011
So far in 2011, it’s more of the same. Very few green industry companies throughout the United States are experiencing or planning for significant (more than 5 percent) growth in revenue. If they are planning for growth, it is in the maintenance and services sectors, not new installation projects. Flat and lackluster are perhaps the best way to describe the current economy.

But there are some bright spots. While the larger installation ($50,000 plus) projects are down considerably in numbers – overall installation work is down approximately 50 percent from pre-recession levels – small enhancement projects or extras have increased significantly. Contractors need to adjust to this trend and take advantage of it.

High-end fine or estate gardening is another bright spot in the current economy. Many of my clients are creating or expanding such services. This is not merely maintenance with a fancy name. Maintenance is “Toyota” and fine gardening is “Lexus.” You need to treat and market them differently.

Lawn fertilization, to include general chemical and/or organic applications, is strong. The second home market is recovering – not necessarily rebounding – as the wealthy recover what they lost in the stock markets two years ago. This market should continue to expand.


The remainder of 2011
I do not see any significant improvement throughout the remainder of 2011. Unfortunately, the current pattern will probably carry over into and through the end of 2012.

A recent article in USA Today forecast that we will see the peak of the residential foreclosures in 2011.The glut of remaining foreclosures combined with the lack of available credit for small businesses and the stringent (almost extreme) general credit conditions for all sectors will probably suppress any significant growth in the foreseeable future.


Conclusion

Hang on and hang in. A small business entrepreneur has to be somewhat schizophrenic. What you see happening on the stock exchanges is not necessarily what is happening in small businesses throughout the United States. And it is small businesses that lead our economy out of a recession.

Until the current glut of residential foreclosures are processed through, our economy and reasonable credit is restored for both small businesses and markets in general, I do not foresee much improvement for green industry contractors.

In order for these two areas to improve, we need to see significant change in the policies coming out of Washington. Such changes will probably not occur until 2013.

I tell my clients to hang on and hang in for another year or two. I also tell them to review their product and service mix and to expand into lawn care (fertilization), chemical applications (weed, mosquito, pest control, etc.), lawn maintenance, Christmas decorations, lighting, fine gardening, the second home market and irrigation service work. I also tell them to adjust their methods and to pursue more enhancement and small installation work. You should do the same.


Jim Huston runs J.R. Huston Consulting, a green industry consulting firm. See www.jrhuston.biz; mail
jhuston@giemedia.com.