Recession is a dirty word in most minds. The economy is shrinking, businesses are cutting back and people have less money to spend. It seems like these words are in every news paper, in every news cast and found within news sites of every kind. Just yesterday I read an online story about a local automotive dealer (and former client of mine) who had filed for bankruptcy. Yes, your local economy is affected during a recession.
This year is going to be a challenge. Well prepared companies will adjust their business plans for the changes just around the corner. What can you expect from 2009 as an owner or manager of a landscaping company? More importantly, what can you do to prepare your firm to be a big winner during a tight economy?
My predictions and observations are based on my personal experience operating a landscape company during the recessions of 1987, 1991 and 2001.
There are three trends you are sure to face in 2009.
- Existing clients and prospects will be more price sensitive.
- You will face increased competition during a downturn.
- Your response to these challenges will allow you to survive or force you to quit.
Let’s discuss how to respond to these challenges.
First, clients and prospects are more price sensitive. Guess what?&&People are always price sensitive! You must be competitively priced in order to win bids and secure contracts! There is always a company lurking in the shadows who could do the work for a lower price than you! Your job as a business owner or manager is to understand your costs of doing business and accurately price your jobs to always be competitively priced and profitable for your firm.
You overcome the challenge of price sensitivity by understanding your costs of doing business first. Preparing an operating budget that accurately forecasts your overhead expenses is your first assignment. Using this operating budget you develop an estimating process that precisely forecasts the materials, labor, equipment and sub-contractors to do the job. Then you mark-up your direct costs to recover the overhead expenses and earn yourself a fair profit. The lesson, know your costs!
You face increased competition during a downturn. Being competitively priced is still not enough. You must be an effective sales person. Regardless of the economy prospects give you the same hurdles to jump. Almost anyone can improve their sales performance if they will focus on three areas: 1) qualifying prospects, 2) building a winning presentation and 3) learning how to overcome common objections.
It is easy to qualify your existing clients. If they pay what you ask, on time, they are qualified! If you have trouble getting them to pay, they are no longer qualified! Qualifying new prospects creates a bigger challenge. I suggest that you qualify prospects with a well planned series of questions carefully woven into the initial contact or interview. Qualify clients by asking: how they found your company; when they need the project completed; where they are located; what is the scope of the work required: and yes&.find out what the budget is during the first interview. And yes!&.You can get a budget out of a prospect if you use the right questions!
Once the prospect has been qualified, building a winning presentation means that you present your firm as the best possible choice to complete the project. You establish a script of what to say, what order to say it in, and address the common objections prior to the client raising these objections. When you have a sales system to follow, the sales person has more confidence and is prepared to overcome the common objections like: your price is too high, I will have to discuss it with my husband (wife, business partner, the committee, etc.) or we cant afford it right now. You will always deal with the objections, regardless of the economy. The lesson, become a better sales person.
Your response to the challenges in a tight economy determines survival. But guess what, challenges are always present. Ultimately, your future is determined by the choices you make. You can choose to diversify. Learn how to offer more services to your existing clients. Choose to serve both residential and commercial clients. Choose to attend training courses or purchase books to improve your estimating and sales skills. Choose to review your expenses and stop spending money on things are not necessary. Choose to operate your company in such a way to keep your costs low and your productivity high. The lesson, you can be in control of your future!
In 1991 my company lost 40% of our lawn maintenance contract business during a 30 day period. One large commercial client went bankrupt. Two others rebid their work and we lost the contracts. I remember thinking to myself, “This is how companies go broke.”
Facing the reality of my situation, I quickly responded with a marketing plan to diversify and replaced the lost work within 30 days. I invested in productivity enhancing equipment and reduced time wasting events like daily loading and unloading of trucks thus lowering my cost of operation. I invested in marketing efforts to increase the number of prospects calling my company. I invested in myself, attending every training course offered and purchasing audio training materials for drive time education. I got better as a business manager, sales person and marketing professional.
The good news is this: my company survived the downturns of 1991 and 2001. We grew to become a multi-million dollar firm. The best part is that we learned some priceless lessons along the way. We survived because we made changes within our company. We adapted, we innovated and we insulated the firm from the outside pressures with simple, but powerful business tactics.
Your choices determine your actions. Your actions determine your results. I recommend that you choose to control costs within your own firm. Invest in equipment that can make you more productive. Invest in training to help you become a better sales person and marketing professional. Learn how to build an operating budget and use it in conjunction with an accurate estimating system. Teach your employees how to do everything you do so things don’t bottleneck around your skills. You will survive and thrive as the economy improves!
This article was originally written by Tony Bass, President of Super Lawn Trucks and Tony Bass Consulting in January of 2009. He can be reached at 866-923-0027 or tony@superlawntrucks.com
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About Tony Bass and Tony Bass Consulting:
Tony Bass founded Tony Bass Consulting in 1998 to help businesses in the green industry succeed. As a consultant and through his entertaining keynote speeches, seminars, workshops and educational materials, Bass translates seemingly complex business procedures into easy-to-follow roadmaps and guidelines that sharply reduce the time and stress involved with doing things right. The results include better, more motivated employees, superior business practices across the board and the precious time required to shift from reactive to proactive thinking. Bass bases his counsel on 20 years of green industry experience, including founding, growing and ultimately selling his initially small landscaping business for a seven-figure profit. For more information on seminars, consulting services, or to purchase books and audio training products online, visit www.tonybassconsulting.com.
