EDITOR'S NOTE: This week's special online features on the state of the landscape industry supplement our annual State of the Industry Report, which is included in the October 2001 issue and will be mailed to readers next week. Click here for a sneak peak of Lawn & Landscape's Top 100 companies of 2001.
Ask a landscape contractor how this year has been, and there’s no telling how he or she will answer. Some will say 2001 has been as good as any year. Others will relate that business has slowed but they still have to turn away work due to labor problems. At the same time, some contractors find themselves facing a new situation – a business slowdown.
All the while, assorted obstacles other than economic uncertainty litter contractors’ paths to success.
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Despite all of these drags on business, landscape contractors maintain a positive, albeit more conservative, outlook for the future. More than 56 percent of respondents to a Lawn & Landscape survey said their business would grow its annual sales volume compared to last year. While this number illustrates the industry’s continued health, this marks the fourth consecutive year this number has fallen. Approximately 64 percent of respondents to this survey last year reported that their businesses would grow.
Looking deeper into the numbers, those respondents who said their businesses will grow this year still expected growth of about 19 percent for this year, compared to 15 percent last year. This increase in growth levels would seem to indicate that the smaller, less-established firms are the ones having the greatest difficulty dealing with this year’s challenges. Meanwhile, the larger, more established companies, many of which experienced economic challenges in the form of the recession of the early 1990s, learned valuable lessons about operating in a down economy, and those lessons are paying off right now. In fact, many companies would likely grow even more this year if they could find enough employees.
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A common stumbling block lying ominously in contractors’ path to growth is the transition from a primarily residential customer base to one replete with larger, more desirable commercial customers. In 2001, nearly two-thirds of the industry’s sales came from single-family residential homes. |
About 14 percent of respondents expect sales to drop this year (compared to 11.5 percent last year), and they said sales would drop about 15 percent. Last year, respondents who suffered a downturn also predicted a 15 percent drop. Clearly, some consumers and commercial property managers are delaying or downsizing installations or reducing their regular maintenance service in order to minimize their landscape budget. Fortunately for contractors, new home sales and commercial building remained significantly higher than the levels of even a few years ago for much of the year.
In general, some contractors were surprised by the extent of the challenges this year brought, while most expected to have to work harder for sales this year. Lawn & Landscape research found that 31.6 percent of survey respondents said this year was worse than they expected, just slightly below the number who said this year was better than expected.
While no one wants to see fewer dollars spent on landscape services, many contractors have privately commented that a mini-recession could ultimately benefit the industry by forcing smaller businesses to either improve their management skills and level or operation or to shut their doors if they can’t remain profitable.
The author is Editor of Lawn & Landscape magazine.
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