“With the current focus on inflation, everybody knows that everything’s going up. And it’s important for our industry to take advantage of that public awareness to make sure that we’re not the last guys standing when it comes to getting our share of the profits that we need just to stay in business.”
— Ken Thomas, principal with Envisor Consulting and LM columnist
Part II: More of the same for 2022
When it comes to what’s in store for 2022, experts say the story will be much of the same — a strong demand for services, a tight labor pool and supply-side pressure.
Miles Graves, regional manager for The Greenery, says the company has just completed its first round of 2022 budgets and forecasts. His region experienced a 15 to 20 percent increase in enhancement revenue in 2021 and he expects that to continue next year. The Greenery provides mowing and landscape maintenance, design/build and landscape installation and turf and ornamental care for its 90 percent commercial, 10 percent residential clientele.
“2022 is a booked solid,” he says. “Most people I’ve talked to, in the industry from a construction department say the same thing: ‘We’ve already got signed contracts for our entire budget dollars for next year.’ Now we’re deciding, can we ramp up to take on more work? The same is true for us and our construction division. We’ve already got some contracts for 2022 — 20 to 30 percent more than we performed this year.”
With this increased demand, Sam Gembel, owner of Atlas Outdoor in Flint, Mich., whose business consists of lawn maintenance, design/build services and snow removal for residential and commercial clients, says now is the time to raise prices for services. Supply issues are a major news story and it’s on the tip of customers’ tongues.
“If you wait a year out of fear, what’s going to happen is customers are going to say, ‘Well, you got it this long,’” he says. “They’re forgetting how everything’s going up. $4 a gallon for gas is just going to be normal, it’s not going back down.”
Labor, Gembel says, will continue to be a crunch on the bottom line for the foreseeable future.
“Labor will never be less than $15 an hour,” he says. “Our labor, fuel and insurance in the last two years went up 31 percent. We can’t go raise our prices 31 percent. But can we raise it 20 percent? Yes, we can.”
Gembel says that while some customers were hesitant to accept the increase, he took the time to explain the reasoning behind the increase — commodity price increases, labor increases and the need to bring on new technology. While Atlas Outdoor lost a few accounts, the disruption was minor.
“You’re better off charging more, losing some customers if people don’t feel the value is there,” he says. “If you lose customers, you’re better off because you can build back with better customers.”
Ken Thomas, principal with Envisor Consulting and a columnist for LM, expects the flurry of acquisitions in 2021 to continue next year.
“We’ll continue to see regional and national companies acquiring local leaders,” he says. “Which is good for the industry. It opens doors for smaller companies to step into those shoes and take a new role in leading those markets.”
Thomas doesn’t see an end to the availability issues that have plagued the industry for most of 2021 and this will be something businesses need to anticipate and plan for.
“We’re looking at backlogs and everything from trucks to mowers to even apparel these days,” he says. “We’re going to have to make do with some of the equipment we have for a little bit longer while we wait on that supply chain to loosen up a little bit.”
A bright side to 2022, Thomas says, is how positive a future the industry has for young people. Wages are at an all-time high, and the industry can be an attractive career for the next generation.
“That’s encouraging for young people who are looking for a career that’s not only rewarding but can provide the kind of financial security and growth that most young people are looking for today,” he says.
For Michael Mayberry, chief technology officer for Level Green Landscaping in Upper Marlboro, Md., 2022 will bring a focus on technology. Level Green plans to continue to test autonomous mowers and work with more companies to see how the technology best fits into the day-to-day operations.
“Next year is really a pivotal point where the ideas are coming out of production and into the real world,” he says. “So we’re going to try the mowers and a wide variety of different environments and really find out what works and what doesn’t. We’re certainly going to put them in fields to understand how fast are they compared to how fast our humans are mowing? How much time does it actually save us?”
Another part of his approach next year is to continue to educate Level Green’s clients and employees on how the company plans to integrate this technology. He’s emphasizing how the company will use the technology not to displace workers but to make crews run more efficiently. Mayberry says he plans to continue his proactive approach with clients, too.
“I’ve been doing a lot of lunch and learns this year with clients and potential clients to just talk about what the technology is and what it can do. Why it’s beneficial to you as a property manager, what the long-term benefits are going to be to your property and what the long-term impacts may be on contract pricing,” he says.
“Landscaping companies must own their messaging in 2022 to successfully manage growth. Customers are aware of the tight labor market and growing demand for landscaping services. Soon they will discover we are experiencing the highest inflation rate in over 30 years (6.2 percent). … It seems that 2022 could bring a perfect storm that will either reward or punish landscaping companies, depending on their preparedness for it.”
— Jeff Korhan, a Duct Tape Marketing Certified consultant and LM columnist
