Lawn and landscape professionals are optimistic by and large. And, why not? They’re entrepreneurs who are doing what they love to do: working outdoors; building and maintaining beautiful green spaces; and growing financially successful businesses that create solid careers and healthy green spaces.
They’re positive about bringing the vision of residential clients to life by creating spectacular outdoor living spaces and sustaining the curb appeal of commercial properties and HOAs. This is more important than ever in the changing hybrid work environment.
Despite persistent labor challenges, most contractors are feeling good about 2023 and say they will meet and likely surpass budgeted goals. Next year is what contractors are worried about and they’re working on contingency plans should the economy fall into a recession.
The diversity of the professional green industry can make tracking trends and patterns difficult to pin down.
The Harvest Group has been in your shoes, and in this month’s column, three members of the group share their predictions for the second half of 2023.
Nearly mid-way through the year, 2023 is not all that different from a year ago. Some key things that stand out, according to Ed Laflamme, LIC, are:
- Work backlogs are not quite as large for extra work or new work but still a bit greater than pre-COVID.
- Design/build companies are not getting as many jobs but what they are getting are much larger than even last year.
- Landscape maintenance companies are getting some pushback on price increases and customers are beginning to look around often at the expense of quality.
- Supply chain challenges are easing up with equipment, vehicles and materials but are still not normal and a bit hit and miss. Sometimes contractors have to settle for brands they don’t usually purchase.
- Crew level job applicants are increasing, but not by much.
- Contractors are trying to keep prices “tight” for basic work but increase enhancement work as much as the clients will accept.
- This year, maintenance contractors are focused on cost increases and multi-year agreements when it’s renewal time.
- Snow contractors everywhere are trying to get seasonal pricing with “limits” for excessive snow instead of the typical inch pricing because of erratic snow years.
Jud Griggs, an expert in design/build, says this segment of the landscape industry had strong backlogs coming into this year and are booked into early fall. Residential contractors in particular are benefiting from strong demand that built during the stay-at-home pandemic days.
However, new leads seem to be slowing down according to many design/build contractors, although the quality of leads is still good. Residential clients are still interested in major renovation projects with budgets starting at $150,000 and in some cases approaching $1 million.
On the supply side, plants are still in short supply – especially larger specimens and large evergreen material – and service from re-wholesalers is spotty. Only partial orders are showing up on delivery trucks and quality is inconsistent. The demand is still outstripping supply, forcing astute contractors to look for alternative supply options.
With the unemployment rate still in the 3- to 3.5% range, many contractors are finding some good new crew level hires. While they still could use more people, they are having better luck filling some of their most glaring needs on the crew level than in the past two years. Experienced project managers, account managers and salespeople are still difficult to find.
What many landscape business owners want to know is, are mergers and acquisitions still a big deal for the landscape industry?
Alison Hoffman, the Harvest Group’s M&A specialist, says there is still plenty of interest and activity in the green industry M&A market. Private equity buyers are still buying, the big consolidators are still buying, and new entrants have joined companies like Mariani Enterprises in the residential markets.
The consensus among advisers is that prices and numbers of deals peaked in December 2021 but transactions – especially for quality companies – continue to be strong.
The landscape industry is learning how investors increase value for the companies they own. The best companies of all sizes can benefit by implementing new value-creating strategies. These may include:
- Vendor relationships with technical support and information provided by vendor management software with a focus on supply chain management.
- Data analytics for decision making.
- Cash management focus and improvements in company’s processes, staffing and technology.
- Sales team support via CRMs and automation of marketing support.
Bottom line, lawn and landscape professionals can thrive through anything the economy and the environment throw at them as long as they offer service diversity and know their numbers.
Explore the May 2023 Issue
Check out more from this issue and find you next story to read.