Today's Consumer

While Gallup polls show 44 percent of Americans are worried about money and 50 percent rate economic conditions as poor, most contractors say customers are still buying, albeit they have become slower decision makers.

“When there’s downward pressure on our pricing and upward pricing on the things we buy, that’s pretty scary,” says Todd Williams, vice president and regional director of Denver-based American Civil Constructors. “Most people haven’t seen anything like that in their lives, and it doesn’t lend toward consumer confidence.”

This also means customers are shopping around more for best prices. But the good news is money is still coming in. “The necessary projects are still being done,” says Mike Biskup, president, Greenkeepers Lawn Service & Landscaping, Medina, Ohio. “People are mainly scaling back instead of cancelling, and they seem to be watching their budgets more because of unknowns in the economy.”

According to Lawn & Landscape research, 36.5 percent of contractors report residential customers scaled back construction projects, while only 16.8 percent say commercial customers did the same. Only 22.5 percent of contractors say residential customers cancelled programs entirely.

While customers are still spending, projects are getting smaller, some notice. Brandon Rushing sees opportunity with homeowners who did not overspend during the good years of real estate growth, but he says clients are more savvy, particular and conservative today. “We’ve seen our average job go from $16,000 to $8,000,” says the president of B. Rushing Lawn & Landscaping in Lorton, Va.

Residential customers who spent money despite tight cash flow are the ones who have been slower to pay, according to 34.7 percent of contractors, while 33.2 percent of contractors report the same from commercial customers. “Some people have been sending in their invoices with partial payments,” explains Lee Helmberger, CEO and owner of Lee’s Lawn Service in Omaha, Neb., adding this has increased his time spent on collections. “Our biggest obstacle has been cash flow related to putting forth money and waiting for the return.” Contractors are thwarting this by concentrating on jobs with the best profit margins and cutting back on wasteful spending and labor expenses. SOI