Landscape Management, October 2013

BUSINESS PLANNER 2014 WEB EXTRA LANDSCAPEMANAGEMENT NET OCTOBER 2013 18 ILLUSTRATION ISTOCK INTERNATIONAL INC continued on page 20 Q HOW DO I GET READY FOR A I began last years article about business planning with the following statement Painfully aware that any prognostication or prediction might be off base any plan you make has to be based on critical assumptions The key planning assumptions I made for 2013 last year were Labor costs will rise I was correct The H 2B program is in shambles and theres a growing labor shortage that will continue to put upward pressure on labor costs This is still a valid assumption for 2014 Pricing will remain flat I was right Customers are resisting increases of pricing despite the increases of labor and fuel costs Yet theres room for price increases in enhancement and construction work Grounds maintenance pricing will likely remain relatively flat This is still a valid assumption for 2014 Interest rates will remain low and gas prices will be flat I was accurate about interest rates until recently The rate increase will be a problem in 2014 only if the increases stall the nascent recovery of real estate prices and investment which they wont We somewhat missed the fuel price increase The national per gallon price of 361 is 22 cents higher than last year this time 65 percent The forecast is for gas prices to continue their upward trend We can depend on this because fuel prices are driven more by politics than supply and demand Better computer systems will allow for revenue growth without increased overhead costs I dont know how to measure this exactly but with a few exceptions it hasnt happened to the extent it should While its a valid assumption making it happen has been a challenge Overheads continue to rise Therefore my general planning assumptions for 2014 include Labor supply will fall and costs will rise Pricing will remain flat Overall economic activity will be sluggish Interest rates will rise Fuel prices will rise Overhead will rise in employee related expenses such as workers comp and health care There are two key strategies to address these assumptions and work into your budgeting process revenue and labor strategies REVENUE STRATEGY Be aggressive with early renewals to maximize retention Customers especially in the homeowners association segment are feeling the budget pinch Id plan for overall 88 percent to 92 percent retention This means if you have 1 million in maintenance contracts plan for the potential of 100000 in losses Plan for this and sell to make it up Be aggressive selling new contract work for spring 2014 and enhancement work for this fall now Budgets need to be spent this year but may be installed next allowing a backlog buildup for 2014 Big landscape companies in every market are investing in salespeople who have goals to achieve This means theyll be calling on your customers Flat pricing not much in the way of contract increases will be important but market presence and salesman persistence will be more important Invest in your sales effort Be more aggressive raising prices and margins on your enhancement bids To read Kehoes article from last year visit Landscape Management net 2012 11 14 how to preparefor next year Lead R un Grow BY KEVIN KEHOE