As with any other business, the global and especially national economy has a trickle down effect on the landscape industry. One big economic measure that affects all industries is inflation. Generally, rates of inflation around 3 percent per year are pretty normal, but when this past April inflation ran up to its highest rate in nearly 12 years, there is reason to take precautions. This means prices are increasing, especially for energy commodities such as oil and thus gas, as well as labor shortages, as companies are forced to increase pay. Also affecting the landscaping industry, the prices of used trucks and cars surged up 10 percent in just April, indicating that we may be in for some super inflation later this year. With that being said, we want you to be prepared as you take on this coming economic inevitability, so we put this blog together to better help you understand what you can do to not only weather the storm but be successful during an inflationary period.
Building up a Cash Reserve
Simply put, until your customers are able to foot the bill for increased landscaping and maintenance prices, you will need to be able to pay the bills. You can do this by selling off unused items or equipment, small or large. Remember, every dollar counts. Having liquid cash to be able to keep you afloat should you begin to suffer, is the necessary action you must take, to make sure that should the worst-case scenario occur, you are ready.
Gather your Supplies Now
As a landscape supply store, we too would be affected by inflation, inevitably having to raise prices in accordance with the economy. And we can promise you we wouldn’t be the only one, as all vendors increased prices to be competitive. To combat this, stockpile now, from mulch to rock, you can get it now at a cheaper price, and get one up on your competitor by paying a 20 percent higher price. Come visit us at Nature’s Mulch, and we would be happy to assist you with any bulk landscape supply purchases.
Cut out Unnecessary Spending
There are many ways to go about this, but we would recommend doing a company audit. Identify waste and inefficiencies, and make sure your systems are all in place so that you are not overpaying employees, making costly mistakes, or spending unnecessary money. Every dollar counts, so make sure you can track it all.
Increase your Prices (The Right Way)
If we begin to see rapid inflation, you cannot immediately begin to charge your clients an arm and a leg for the same service they have been getting for years. However, use small price increases to slowly bump up the price, in accordance with the true market value of your service. Additionally, you can begin to upsell extra services to current customers, such as lawn treatments, mosquito treatments, or irrigation installs. There are costs involved with the landscaping services you provide, so make sure you are charging adequately to cover those costs and make a profit.
Make them Pay
While this may sound ominous, you have to remember that your services are valuable and that no matter the economic conditions, your clients have an obligation to pay you what you are owed. If they cannot pay, they simply should not be using your services. Obviously, there are extraneous circumstances but do not allow yourself or your guys to sell yourself short, and leave money on the table.
Employee Retention
With a labor shortage more than likely, you need to incentivize your well-performing employees to stay. To cut unnecessary spending, you need to assess and get rid of those who are not up to par. You definitely want to avoid having to go through the hiring process in such a tough economic time. Treat your employees right, and they will reward you with loyalty and hard work. Great employees leave for a variety of reasons, but there are a few that seem to be more common. Lateral moves for better pay are most common, as well as being overworked, and looking for a better work-life balance. They could also have problems with the ideals of the company, or the company culture. They may even be uncomfortable with the financial future of the company, especially in an inflationary period. All of these issues are yours to maneuver through, and asking your employees how they feel is important in doing so. Survey your employees, and keep them happy. We often use the phrase “trim the fat”, removing excess, and keeping the hardworking muscle that keeps your company going.
Increase General Efficiency
Many landscaping companies lack the numbers behind many of their day-to-day actions. You cannot change what you can’t track, so implementing a routing system to generate smarter routes, or adding a GPS system to trucks to ensure employee efficiency are both great ideas. The installation of a general business management software that includes modules such as a CRM, payroll and reporting can allow your company assessment to be accurate, and for you to make informed decisions.