The Times They Are a Changing

For those of you who are Bob Dylan fans this title needs no introduction. After being "behind a desk" for years, and now finding myself on the client facing and operations side of the business for the last season, I can say things certainly have changed. The opening of the song contains a lyric that bares repeating.

If your time to you is worth savin' , And you better start swimmin' , Or you'll sink like a stone, For the times they are a-changin'

After a long hiatus from the field, and as I enter my second season back, I have to reflect on some of the changes (positive and negative) to the industry. After a decade at my previous company I would say it took almost a full year to adjust to a new role, a new company, a new market, new direct reports and so on and so on. Simultaneously also reacquainting myself with how things "get done" in today's landscape industry.

I believe that we are witnessing a once in a lifetime economic reckoning, a continuation of the 2008 crash that was never really rectified and only 'papered over" with cheap money which created the largest bubble in history. As Peter Schiff has said "this bubble only needs a pin to pop it but it's going to meet a sledgehammer." This has had profound effects on our industry, some of which are still to reveal themselves. Whether you are a Keynesian, an Austrian or believe in Modern Monetary Theory the fact remains, the pressure is on.

In my previous role a large part of my job was to review and report on the companies financials and operational data to ownership and our team. I've always had an interest in economics and being accountable for a companies financials while simultaneously observing the economic impacts had a glaring effect on me. There are constant external pressures on a business and there are few times in history you can point to as truly blissful for any industry. What's interesting about the current moment is that everything is in play. We have inflation, a labor shortage, a supply and demand issue, a fuel cost increase, higher interest rates, what appears to be an impending recession and an ever increasing demonization of the industry due to its use of fossil fuels.

I am reminded of the quote "There are decades where nothing happens; and?there are weeks where decades happen"--Vladimir Ilyich Lenin, and it feels like we are in the period where decades worth of pressure are unraveling at a rapid pace. This moment is interesting as you must not only be accounting for the problems of today but also the problems of tomorrow, literally tomorrow.

I don't want to be all doom and gloom so I will take a pause on these thoughts for a moment and reflect on some amazing and welcomed changes to the industry. Our industry has been notorious for resisting change on the tech side. In the mid 2000's myself and two childhood friends took upon the task of launching the first online garden center. We would spend all day in an old paneled living room in the house that was HQ for the new business constructing a massive online store with over 3,000 items. At night we would play World of Warcraft and listen to music until the sun came up and then do it all again. Sadly the idea did not take hold as it was probably ten years ahead of its time. The industry wasn't ready for the same tech they use today via companies like Site One and Landscape Hub.

Technology has been the driving force for humans and without it our rapid advances over the last two hundred years would not be possible. While the landscape industry can be slow to adapt, the amount of cutting edge tech hitting the industry is much needed and much deserved. When I exited the field measuring a big site meant your entire team showed up to a site, it was split into sections, and you spent hours chasing a measuring wheel. Eventually the cold or the boredom would get to you and your measurements probably weren't "exact". Now we use digital measuring tools that do 90% of the work for us. It still requires qualification in the field but all that time wandering a property has been returned to us and we can use it to actually deep dive on estimates.

Another exciting change is the industry embracing the idea that spending as much on software or IT as you do on a mower is not a poor investment. The green industry runs on things that have engines in them. The idea of purchasing five to ten new mowers for a large company is easy to digest because without the mowers, we can't cut the grass. The same can be said for investing in a solid software stack. In the modern era your IT package is just as valuable as the trucks and trailers in your garage. We are also close to a "post-analog" moment in the industry. It used to be common to hear someone say "I'm not a computer guy" and dismiss the variety of tools at their disposal. Now because of smartphones, apps, integration and cloud tech that statement is almost a thing of the past. We are also seeing the next generation of landscapers enter the industry well aware of the software and tech available to them either through curiousity or even college level courses.

I remember working for a company in the late 2000's where we would complete a project and the owner would say "now let's try and figure out if we made any money on this one". Financial acumen is something I acquired late in my career however it is the heart of the industry, especially when some of us are operating on a profit margin so thin it requires an electron microscope to dial in on it.

Similar to the "I'm not a computer guy statement" the idea of not wanting to know or understand the "numbers" is becoming a thing of the past as well. Because of technologies that make data easy to access, compute and make decisions with quickly, everyone in the organization has access to data only a select few could see or understand just a short time ago. Financial acumen has also translated to the field where crew leaders and field managers understand the process of budgeting a job, having limited hours to perform tasks and what it means if we can't meet those hours. If everyone knows how the machine runs an organization essentially has a team of "mini" CFO's on staff.

Now, back to the doom and gloom. All of these pressures have forced companies to adapt to an ever changing landscape and make every effort to retain their employees and bring on new ones. This has translated into higher wages across the board for employees and this trend will likely continue as inflation appears to be with us for the foreseeable future. Has this translated into getting more revenue or services from the client? Not always. Clients in the commercial and residential markets are feeling the very same stresses and pressures on their bank accounts and budgets as we are. They too are trying to find ways to cut costs and keep care and maintenance charges within budget. It's a difficult problem to address a landscape/snow business is being squeezed from both directions.

What can be done? Clients operate on a budget, a predetermined amount they would like to spend in a given period on given services. One thing that can be done to maintain clients and still get pricing down is to adjust the scope of services. If a site is getting a large annual flower planting every season, it can be scaled back. If pruning is happening three times, perhaps it is scaled back to two. If lawns are getting four applications, while not ideal, three can get the job done. This strategy allows for the scaling back of overall costs while still maintaining relationships and providing a similar product.

Another method I have been reading about is the "profit first" or "net only" model. This involves shifting a companies focus from revenue goals to net profit goals. It means drawing a line in the sand and sticking to your bid even if it means you don't get the majority of the work you bid on. I think this is a sound model especially for this moment as you may not grow a large percentage of revenue annually, however your net profit in dollars would exceed the amount you would have made on the larger revenue and smaller net. I also like this approach as it achieves more revenue per hour per crew member so you can make the same net profit with less people. Something else I have been reading about is choosing a hill to die on with clients. Essentially saying that we know our costs and we will not do work for any less than that. "it's a bold strategy cotton, lets see if it pays off" I can understand it however it is difficult as this can chase away long time relationships however I also understand that we don't want to work at a loss either.

With all of this being said I do see the future for the industry as being an interesting one. The amount of capital invested into the industry continues to grow and now that battery equipment is starting to take hold we are seeing companies like Makita and Milwaukee building battery powered landscape equipment and making it mainstream. There is also the robotics and autonomous equipment which is quickly making its way to the forefront. While I dont believe this will completely solve the labor problems we have it will allow for a large part of the weekly mowing visit to be automated allowing for time to focus on fine details and horticulture. I do see a difficult adjustment period ahead as fossil fuel engines and equipment will attempt to be driven from the market while simultaneously the market not being ready to go full electric due to charging infrastructure and cost. There is also the added upfront cost and if the client will be willing to pay additional for the retooling companies have to endure.

As I started with, things certainly have changed. The inner nerd in me is very excited to see where all this new tech will bring us. While it may be a difficult time in the industry right now I think what awaits us on the other side will be a much cleaner, more organized and more sustainable way of doing business.