Preparing for a landscaping recession

PREPARING FOR A LANDSCAPING RECESSION

What does it mean for the lawn care and landscaping industry when banks are failing, consumer confidence is lagging, companies are coming out with mixed corporate earnings, and high inflation continues? These are all leading indicators for a pending recession even though it is not guaranteed. So what does this mean for our industry if we do see a recession? Many of your customers may lose their jobs (unemployment will jump to 8-12% or more), some customers may push off larger landscaping jobs and others may increase DIY projects all impacting your bottom line. While this article lacks time machines, crystal balls, and any form of financial advice, it provides sound steps to prepare and weather the potential storm.

Build a cash reserve

One of the most important things a landscaping business can do is to build up a cash reserve to help cover expenses during a recession. This can be done by cutting expenses where possible and setting aside profits during good times.

Don't Buy. Fix It.

When your truck breaks down or your mower loses an axle, avoid taking on any high-interest loans or lease payments. When possible, try to fix it yourself or keep old equipment going for the next 12-24 months.

Avoid Future Cash Obligations

Avoid any software companies asking for 1, 2, or 3+ year commitments. Stay nimble and when possible look for companies offering reasonable month-to-month options.

Diversify revenue streams

Landscaping companies that rely heavily on large landscaping or hardscaping services are particularly vulnerable during a recession. Diversifying revenue streams by offering new products or services or expanding into new markets can help mitigate this risk and keep your recurring maintenance customers. While less than the larger projects, the smaller revenue stream may be important to weather the storm.

Monitor expenses

During a recession, it's important to keep a close eye on expenses and look for ways to reduce costs without sacrificing quality. This may involve renegotiating contracts with suppliers, software companies, reducing staff or hours, or finding other ways to trim costs.

Focus on customer retention

During a recession, customers may be more hesitant to spend money, so it's important to focus on retaining existing customers. This can be done by providing excellent customer service, offering loyalty programs or discounts, and communicating regularly with customers.

Plan for the long-term

While it's important to take immediate steps to prepare for a recession, it's also important to think about the long-term health of the business. This may involve investing in new technology or infrastructure, developing new products or services, or exploring new markets.

While surviving a recession is always a challenge, the good news is they typically only last 6-18 months meaning this season and the steps you take today may be critical to the future of your enterprise.

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