By Jeffrey Scott
Until recently coping with impossible deadlines and over rapid growth was the biggest problem the region's landscaping industry had to contend with. All that changed, however, with the arrival in the gulf of the economic downturn. Jeffrey Scott, president of US-based firm Landscape Success Systems, advises how to survive the turmoil.
While the global economic slowdown is just now starting to impact the Gulf, its force in the US has been felt for some time. Construction projects have been cancelled or put on hold, new inquiries have slowed, and employees have been laid off.
Jeffrey Scott, president of US-based firm Landscape Success Systems, a company that helps landscape practices to manage their business says it is wrong to think that by dint of coming at the end of the construction process that the landscaping industry will somehow be immune from the economic downturn.
"The industry as a whole took it for granted that growth would never be an issue, and this was a mistake," he says.
"The industry itself is not resilient. It ebbs and flows with the building industry - though there are sub segments which are more resilient, for example, tree care and landscape maintenance.
The key for resiliency is in the particular company's strategy. Having a mix of business is important; a mix of recurring revenue versus new-project revenue. Having a mix of lead ‘sources' is important, and not just depending on one particular source.
Having strength of relationships within your target community is key, not only to keep projects flowing, but also to understand what is happening within your community. Having a sophisticated marketing plan, especially in down times is crucial; this was ignored for years and now many companies are suffering. And lastly, having a stellar reputation will help make you resilient."
Typically attracted to the industry because of a passion for the outdoor and/or gardening, landscape professionals are often under qualified to cope with financial difficulties, says Scott, while professional training tends to focus on developing technical abilities rather than business knowledge.
DiversificationA downturn will affect designers and contractors differently, says Scott. "Designers often have less overhead, but they also are even more dependent on ‘new projects'. This makes their business more fragile. Designers have coasted for years on the growth of the industry, now they must learn how to think like marketers and business developers," he says. "Some designers will expand into design-build or design-project manage i.e. they will have fewer projects and so they will try to make more money on the projects they do get."
"Contractors have more overhead, but they can also diversify and do many things: project management, maintenance, new product/service offerings, plus they may try to expand into design.
Despite assurances from developers in the region that the recession will blow over in a three month period, Scott says he advises his clients to think in terms of a three-year timeframe. "Don't believe the media that it will blow over," he says. "Restructure your business and focus your marketing (and management) plans, so that you can last, and grow, through the recession.
This means for some, taking on more maintenance; for others, becoming extremely creative in their marketing approach. A down time is the perfect time to grow market share, by increasing your public exposure, through advertising, public relations, networking, events, etc. Now is the time that forward thinking companies will grow share of mind and market share."
"It is really an opportunity for the company looking to get out there, start direct mail etc. The company that does more things, gets more exposure, will likely pick up market share. Sure you want to survive, but it's a great time to think about growth in terms of building market share of your company." Lessons to be learnt
In every downturn, there are lessons that can be learnt from previous periods of economic instability. Study of how the industry has fared during previous recessions identifies a number of key trends, says Scott.
"First, there is low-balling and price cutting that goes below the actual cost of doing business. Then, the unstable businesses will go out of business, with or without being bought up. The more stable and aggressive firms will grow market share, by either dropping prices, or by increasing marketing exposure, or by buying out smaller companies."
Scott says the main piece of advice he gives his clients is to get paranoid and build relationships with customers. "The most important advice I give my consulting clients is to become paranoid and get as close to your customers as you can. Doing so will help you gain more business from them, will help you retain them as clients, and will help you gain referrals from them. I advise all my clients to call up and visit and build closer relationships with their clients," he says.
One of the most important things to do during a downturn, he says, is to act like the worst case scenario has already happened. "Run your business as if you are already in a downturn. Identify "good costs" and "bad costs" and eliminate the bad costs and bad investments, and increase the good costs/investments. Also, a downturn is a good time to innovate. So look for customer needs that are not being fulfilled, and find new ways to fulfil them."
Jeffrey Scott is president of Landscape Success Systems, and author of ‘The Referral Advantage: How to increase sales and grow your landscape business by referral'. www.JeffreyScott.biz