Landscape Management, September 2009

THEBENCHMARK KEVIN KEHOE The author is the owner manager of Kehoe Co Contact him al kkehoe@ earthlink net Mid sized battle pricing pressures I ts hard to make money these days bur its particularly challenging for mid si ed companies those in the 1 million to 5 million annual revenue f3n6 C AgbTcssi c pricing by players large and small is squeezing the middle where overhead usually is a larger pcrccnmgc of releIlue Addressing this pricing o crhead problem is a matter of surviv ll for some For the rest its at least a maner of reassessing their business plans Survival and success for the rest of this year and nexT for mid sized companies requires focus tenacity and no small llllOlint of courage to implement changes How tOl lgh is it This year CQIll1l1cn ialmaintcnance oonmct retention has d lined from typical 90 rates to 80 an l lowcr in many markets In the past few wecks alone I e witnessed commercial maintenance jobs going for half of laSt years prices And in the residential design build segment mid si1 ed jobs once everyoncs bread and butter have disappeared leaving a few lar C johs and sevcral small ones This has caused budget shortfalls of up to 15 in revenue As dcmand dries up and supply increases prices drop Commercial customers seem willing to try anyone who l 111 provide a low price trig Cring surprise cancellation notices that upset cash flow Residential customers arc seeking multiple bids and negotiating everything lengthening sales cycles and reducing margins To sUfyi e landSlaJlC lOmpanies must play defense and offense equally ag Tcs jn ly IvVhilc COSt cutting is key its often only a short tenn fix In commercial maintenance go after mid sized jobs Few are effectively and consistently calling on this part of the market and its large 32 lANDseAPEMANAGEMENT NET SEPTEMBER 2009 Besides most companies already are lean in st lffing which is the primary overhead cost Defend your livelihood Get in front of your commercial maintenance customers to understand their budgct pressures and propose contract adjusullcnts in se rvices and frequency of delivery to address price concerns Then pick your b mles where you need to rebid to ret lin the work You might necd to buy some jobs JUSt to keep them And you will need to let some go to save your margins On the residential side a c1erate your design mu closing processes to tighten selling cycles Too man jobs are lost when CUSlUlilCrs have tillle to entertain multiple bids Focus sales staff on making price lOncessions early in the process ro get si gnatures and deposits Score big in the mid market In commercial maintenancc go after mid size jobs Few are effectively and lOnsisrently calling on this part of the market and its large Leave the large jobs to the low biddcrs for now Ralllp up your sales staffs new appointment altivity Double your estimating lapacity by using part tillle and production staff for measurcment and data input Go aftcr the middle of the residential market as well Mid market homeowners are easy to find by ZIP code Usc monthly direct mail and flyer CAmpaigns with coupons and specific offers for maintenance projeCts for fall lnd winter promoting value purchasing instead of pleasure purchasing Examples include lawn renovations dr linlgc fixes cree fCmoval and irrib l tion improvements In an elOnomy like this when the customer owns the power to drive pricing winning new sales while ret lining key business is important not only financially but also for momle