I did an interview with Landscape Management Magazine at the GIE this past week. The asked me to comment on the state of the landscape industry. It felt a bit like commenting on my solution to Middle East politics with two minutes notice. Nonetheless I marched into the interview and this is about what I said.
The State Of The Landscape Industry Is...
It’s “Good not Great”. Yes, the rising tide seems to be floating most boats, but not enough are taking advantage of the good times from a cash-generation perspective.
Yes… revenues are up but profits in too many cases are not… at least not enough. Now is the time to make profits and make hay when the sun shines. (Welcome to the Kevin Kehoe cliché festival.) But it is not happening.
Back To The Future Landscape Industry
The same thing happened in 2003 – 2007. Companies had no problem selling in that robust economy but for far too many their costs grew even faster (the same is happening now)…
The net result was no additional cash generation and in too many cases cash was consumed, debt was accumulated and balance sheets were weak when the crash came… Companies suffered for years. You do not want to do that again.
Why Things Are Good For The Landscape Industry
- Economy is better. But don’t fool yourself it is not great. It looks great compared to how lousy it was. But when this pent up demand gets spent and the buyers are tapped out… look out.
- Consolidation is good. The Valley Crest and Brickman merger is great. First it means that real capital is flowing to the industry. Witness all the PE and investment companies looking to do deals.Earnings multiples are up. Even better there is some exodus of talent from the merged entity who are now available for hire. They are TRAINED and experienced managers from two very good companies.We should see the emergence of several large regional companies as a result and solid growth of top one and two players in every market.
That’s the good news.
Why Things Are Bad For The Landscape Industry
- Talent is scarce. Labor, Foremen, and especially Account Managers are in short supply and MORE expensive than ever. This singular constraint can result in “outkicking the coverage” and ruining a P&L.Recruiting has become a full time occupation for any company over $3MM in annual revenue. You have to do it.
- Supply. Success breeds success… and competition… This is all good except when it comes to suppressing prices. Prices are no longer going down, but they are not keeping pace with cost increases in almost everything else.Now is the time to become more selective with the work you take on. In simplest terms, you want customers that will pay a little more, appreciate your work, be somewhat lower maintenance, and pay their bills on time.
That’s the bad news.
Consider Good And Bad When Planning For 2016
For me that’s the state of the industry in a nutshell. In my opinion these threats and opportunities should inform your business planning and budgeting for next year.
Schedule Demo
