This year has turned out to be a boom year for most green industry contractors. Phones have been ringing off their hooks ever since the first hint of spring and good weather. Just about all facets of the industry are at pre-recession levels. However, the question is: “How long will this boom cycle last?”
Just as water seeks its own level, the economy seeks equilibrium. What goes up cannot keep rising forever. At least this has been our economic history for almost 100 years. While the overall trend is positive as our economy creates and sustains more and more wealth (capital), there are constant boom and bust cycles as the general economy grows.
Too many entrepreneurs ignore these cycles and do not see them as being a good thing – a winnowing process of sorts. They expect the economy to perform like a roller coaster that eternally climbs and never drops.
If you plan properly, you can counter the busts and ride the booms to prosperity. Just as a roller coaster climbs, dips, twists, turns and drops, creating an exhilarating experience, so too can proper planning turn the ebbs and flows of the economic cycle into a constant wealth building experience. Those who plan properly go on to a bigger and better future. Those who don’t often lose their cookies – literally and figuratively.
Strategy for success.
I recently hosted a brainstorming session (see page 10) in the Raleigh, N.C. area. It’s a M.A.D. meeting where we focus on mergers, acquisitions and divestitures.
The meeting primarily revolves around the M.A.D. process and creating a company that has value to prospective buyers. In order to create value, a company has to create sustainability. This means it is able to counter the economic cycles and create wealth for its owners in both good times and bad. It is constant and dependable streams of cash that buyers are looking for.
While no one segment of the green industry is bullet-proof, some get bullet-riddled in a recession. For instance, in a downturn, the first few markets to flush down the toilet are residential installations and commercial home production lots, followed by general commercial installations. Government installation projects are somewhat resilient until they become hyper-competitive when commercial and residential installers with no work jump into it, which is usually about a year into a recession.
Once this happens and the economic pie begins to shrink, companies jump into the maintenance market.
It’s almost too late to change your market course once you’re in a recession. The smart thing is to build a sustainable company while the economy is robust. Smart contractors build on a foundation of repetitive service work. Providing a “full-service” spectrum to residential and/or commercial customers is a good place to start.
You should then try to expand your chemical application lines. Irrigation service is also an excellent area to grow, as is Christmas décor. Tree services and pruning should not be overlooked due to the necessity to prune such for both safety and aesthetic reasons. Enhancements for both residential and commercial maintenance clients should be vigorously pursued as well as fine gardening for homeowners.
It’s not that you want to ignore installation projects. Just be aware that, like the blitz in football, if you live on installation projects alone, you’ll die by them. If all you do is installation projects, it’s not a question if you’re going to get burned, it’s a question of when.
Someone once said that the seeds of an organization’s destruction are sown from within. How true. The good news is that you choose which seeds to sow. You can choose to plant the seeds that lead to long-term sustainability and that counter the economic roller coaster or you can fail to diversify and suffer the consequences.
Roller coasters are specifically designed and built to provide a safe and exhilarating experience based upon gravity and numerous twists, turns, dips and drops. Economic downturns are not. Just as there is no eternally climbing roller coaster, there is no such thing as an eternally growing economy without cycles that go “Boom!” and then go “Bust!” The good news is that you can choose to grow consistently through these cycles if you plan properly. It’s up to you. Choose wisely, my friends.
Explore the October 2015 Issue
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