|By DENNE GOLDSTEIN|
Few green industry providers have been untouched by today’s economic environment, and landscape construction companies are among the hardest hit. With fewer building projects in sight, companies are responding in different ways. Some are streamlining operations and putting their efforts into more creative advertising and marketing. Others are significantly changing their business plan.
Moving into the maintenance sector is one option. It isn’t easy—and it’s definitely not for everyone, but for companies that have the personnel and personality to take on this challenging field, it can make all the difference.
Homestead Landscaping, Bondeville, Vermont, found this out firsthand in the late 1980s when a construction boom exploded in the area. The company had a perfect plan to grow its business. Homestead took on numerous new accounts, signing on with multiple developers to install landscaping at its new developments. The company was positioned to capture a huge amount of local business, and profit.
Then disaster struck: many of the developers suddenly went under, and Homestead lost a staggering amount of money. The company found itself in trouble, because its business partners were in trouble. Houses sat on their lots, half-con structed, untouched for months, and Homestead went for several years with few new installations. Financially, the company should have been teetering on the brink of oblivion. But it survived.
There are compelling reasons to take a look at maintenance services. In 2009, construction sales dropped to virtually nothing, but maintenance contractors pretty much held their own. Unlike construction, maintenance isn’t considered discretionary spending; people have to maintain their property. These trends have made a number of landscape construction companies take a hard look at adding maintenance to their services.
Rick Doesburg, president of Thornton Landscape, Maineville, Ohio, says adding maintenance was a critical move for his company. “In 2006, we were 100 percent design/ build. Now we’re about 50/50 (maintenance and construction). Twothirds of our business was residential development—that just doesn’t exist anymore.”
“Maintenance saved us,” says Tamatha Blanchard, current owner and president, then bookkeeper of Homestead Landscaping. “Especially commercial maintenance—we might not have been doing installations, but people needed us to main tain the landscapes they already had.
The money from those jobs is what got us through.” Today, maintenance, together with snow removal, comprises about 50 percent of Homestead’s business.
While maintenance may not have seemed like a natural fit with Doesburg’s background, he’s not complaining. His company is here and it’s healthy. “I’m a landscape architect, that’s what I love,” says Doesburg. “But I’m certainly very happy with maintenance now.”
He entered the market by purchasing another company. “I smelled this change coming back in 2007. I knew we needed to find other sources of business, so I purchased a small maintenance company. They had some equipment and a small number of jobs. That got us in the door.”
Since then, Thornton Landscape has shifted resources and moved personnel around to rise to this new challenge. “We’re still doing design/ build,” says Doesburg, “but there just isn’t enough out there. We had to replace a lot of that business with something, and we chose maintenance.” His maintenance clients are primarily commercial and include several homeowner associations (HOA).
No quick fix
Buying another company, like Doesburg did, can be a smart way to move into the maintenance sector. You have the revenue coming in and you can get some good crews and equipment. There are some real positives there. But it’s important to understand that it’s not a quick fix.
It takes some serious number crunching to come out ahead in a new venture like this. Make sure you understand your numbers and know what you need to generate— per day, per month, per year. A lot of people go out there lowball to get the job. This is a recipe for trouble.
One thing you might want to consider is hiring a consultant to help you get started. There are many consultants in the green industry, so choose carefully. Find one who you can work with. Do they have the expertise in the maintenance end of the business?
“About the same time we got in volved with maintenance, we requested help from Jim Paluch (president, J.P. Horizons, Concord, Ohio), to learn LEAN management,” says Doesburg. “This helped us hone in on our efficiencies. It helped us understand that there’s more than one way to cut grass in a community. You have to study the site and learn the most efficient way to do it. In some cases, two guys are better than three. In others, five may be better than three. It depends on the job.”
One option among many
Adding a new division is just one option among many strategies for surviving an economic storm. Wayside Landscape Services, Asheville, North Carolina, does approximately 70 percent of its business in design and construction, and about 30 percent in maintenance—primarily for properties they’ve installed. So far, they haven’t felt a need to change that mix, despite the fact that Andy White, president, says this economic downturn feels different from previous ones.When it comes to his maintenance customers, today’s economy is giving White reason to sharpen his pencil. “In this economy, you have to be willing to negotiate,” he says. “Some people are telling me they don’t have the budget to do certain things anymore. I don’t have to be told that twice. You have to use open communication to see if you can work with them.”
That doesn’t mean negotiating away profits simply to keep money flowing in. “Some potential customers come in and offer a set amount,” says White. “They want a quality job at a dollar amount I just can’t deliver. You have to be able to walk away from that.”
More customers, more opportunities
The most common way to increase your customer base is through wordof-mouth referrals. Once a client knows and likes your services, he can recommend you to his neighbor, who recommends you to his brother, who recommends you to his neighbor, and so on. The problem is that this is a passive way for you to generate business; the effort falls on your customers. They’re the ones that have to actively recommend you. How can you get them to do this? Simple—provide the kind of service they will want to recommend.
“We rely on our ability to service customers, and out-service our competition,” says Blanchard. “Out-servicing the competition can be a surprisingly simple thing to do. Talk to any group of consumers and you’re likely to hear many of the same complaints about service providers: they’re late, if they show up at all; they don’t call back in a timely manner, if they call back at all; they don’t come out for emergencies.”
A contractor who shows up every time, on time, and calls back quickly is sure to make an impression. Naturally, you’re extremely busy, and customers realize that, but a little extra effort towards returning phone calls promptly, for example, will go a long way towards making a good impression.
Aarons Greenscape, Winnebago, Illinois, started off in the late ’80s with just $500. Today, the company is worth hundreds of thousands of dollars. It couldn’t have gotten there without active marketing. “You can’t grow without selling, and just putting an ad in the phone book doesn’t get sales,” says Aaron Fulrath, owner. While it’s important to have an ad in the phone book, Fulrath is right: marketing doesn’t end there. So what can you do?
Marketing, marketing, marketing
The key to most businesses is marketing, and the landscape maintenance business is no exception. A little creative thinking, to make your company stand out from the rest, can go a long way toward attracting new clients.
Many contractors advertise in newspapers, a fairly efficient way of reaching large numbers of potential clients. However, newspapers also reach large numbers of people who have no interest in being your clients, and can be crowded with landscape contracting ads offering the exact same services you do.
“Everyone and their brother is in the newspaper. You can’t stand out,” says Fulrath. “We use the newspaper in a different way. We watch the real estate section for new homes sold, and then send out direct mail postcards to those homes.”
The more you think about it, the cleverer the concept seems. Because you can see how much the home sold for, you can now narrow your marketing efforts to only those homeowners who can afford your service. Plus, because new homeowners may be unfamiliar with the area, they probably don’t have service providers yet. You’re not wasting your money reaching hundreds of people who aren’t interested in what your business offers; instead, you’re spending money to reach people who have the highest likelihood of hiring you. “We’re cutting competitors off at the pass,” says Fulrath.
Sending out direct mail postcards or brochures to certain target neighborhoods can have a high degree of success. You’re lowering your costs by mailing to fewer people, instead of the entire city, while raising the likelihood you’ll see results, because you’re hand-picking neighborhoods that are the most likely to hire you.
As the Internet becomes a larger part of modern life, having a website is another way to generate business. Customers can shop around, at work or home, quickly and easily, to find the best contractor to suit their needs, without even having to pick up the phone. It’s convenient for them, and can cost you very little.
Looking as professional and established as possible is good advice overall, not just for your web presence. Get t-shirts for your workers, and have your trucks professionally lettered. Consider your truck to be a traveling billboard.
For K.C. Lawn and Landscaping, Inc., Kansas City, Missouri, the construction business has been good this year. “Our maintenance has actually been down some, but design/ build has been up,” says Zach Hinkle, president. He attributes the downturn in maintenance to increased competition from people laid off from other jobs. He attributes growth in design/build services to more strategic marketing.
Hinkle still thinks there are great opportunities in maintenance; it’s a matter of how you promote yourself and where you fit into the market. “It was troublesome this spring. It seemed like everyone I was bidding against was taking jobs so cheaply. It’s easy to put a lawn mower in the back of a truck and call yourself a lawn care company.”
He’s hoping to take a different tack, one that doesn’t include bidding wars. His approach is to position his company’s reputation as a high service, high quality provider. “You have to make sure you’re producing a quality product,” says Hinkle. “It may sound easy, but it’s not.
We stay in constant contact with customers. We pay attention to the details, including the appearance of our crew and trucks. The crew has uniforms, the trucks are relatively new and all our equipment includes our name.”
So if you’re looking to infuse new, steady business into your company, you might want to consider adding landscape maintenance.