ILLUSTRATION: CHRIS PHILPOT
SURVEY METHODOLOGY
The 2022 Benchmarking Your Business Survey was designed jointly by Lawn & Landscape and Readex Research, and fielded from Dec. 13-22. The survey’s 597 responses represent an estimated population of 18,000 individual landscape contractors. The margin of error is ±3.9 percentage points at the 95 percent confidence level. Some charts do not total 100 percent due to rounding and because not all answers are included with some questions. MEDIAN: The number in the middle where extreme outliers are removed like respondents with extremely high or low revenue. MEAN: The average of all respondents
Ryan Wolfe
President, Valley West Landscapes, Portland, Oregon
Ryan Wolfe
A tumultuous political climate in the Pacific Northwest over the past two years, compounded with the pressures of inflation and supply chain issues, has had a noticeable impact on the business Wolfe says.
“New increases, along with new laws and rules that have been instituted here have blindsided us left and right,” he says. “Those are getting instituted into the budget as we go.”
Despite this, the design/build and maintenance company reached around $1.5 million in revenue in 2021 and experienced 25% growth. Yet, if it wasn’t for inflation, Wolfe says that growth would’ve been even higher.
“There hasn’t been a lot of direct impact,” he says. “The only thing we’ve done due to inflation is hold off on large purchases and heavy growth. We’re probably going to keep it that way through 2022.”
Wolfe says the difficult political environment can be tough to oversee and requires increased attention to detail.
“More regulations require more management on our part to make sure everyone out there working is following the rules,” he says.
Additionally, increased material costs have caused Valley West to raise prices and wages.
“Our prices have increased anywhere from 15- to 30%,” he says. “It’s kind of a crazy increase.”
Wolfe cites an increase in everything from lumber to steel, PVC piping and copper.
“With materials we used to get updated pricing once every few months and now it’s once every week because some things are increasing anywhere from 6- to 20% weekly,” he says.
Wolfe says having to increase prices cost the company a fair amount of new business in 2021.
“We probably lost about 25% of new work that we typically would’ve had if there weren’t such hefty price increases,” he says.
Plus, these sudden price shifts have made budgeting problematic, Wolfe adds.
“Budgeting has been really difficult and very reactive,” he says. “It’s not like it used to be. I used to be able to predict pretty well what our costs, and our income, would be a year ahead. And it’d be pretty on mark. Now, we’re not as close.”
Increased prices also mean increased wages for Valley West employees.
“We give the guys what they want at this point,” he says. “Our overall labor wage increased about 15%.”
That was up substantially from years’ past, where Wolfe says typical wage increases were more commonly in the 3- to 8% range for the company’s staff of 28.
At the end of the day, if crews aren’t happy, and compensated nicely, they’ll go elsewhere Wolfe says.
“Our guys are paid probably middle to higher-end for the state of Oregon,” he says.
Even through the price increases, Wolfe says customers have been loyal and very willing to pay the higher bill, especially as demand for design/build projects has skyrocket since the pandemic began.
“I don’t think anyone could’ve known COVID would go on for this long,” he says. “People are really understanding, and receptive to price increases. The one positive aspect of COVID overall is most people are just happy to get a call back
“People are nicer since going through the pandemic,” Wolfe adds.
Ted Glaser
Owner, Summit Lawns, Lincoln, Nebraska
Ted Glaser
As a lawn care company, Glaser says he’s thankful inflation hasn’t hit his business as bad as others in the industry.
And while fertilizer costs and other expenses are higher, he says the biggest impact inflation has had is labor increases.
“The raises we’ve had to provide to maintain our staff and be competitive in the market has been the biggest pinch we’ve felt in all of this,” Glaser says.
Wages are up 10-15% depending on the position, Glaser says.
“To be competitive and go out and recruit employees, we had to be offering higher pay than what some of the guys who’d been with us for a while were currently getting,” he says. “To make things right, we had to bump their pay first before we could go out and advertise higher pay.”
But advertising higher wages has been met with mixed results.
“The labor struggle is a real thing,” he says. “It’s an interesting dynamic where you have a lot of applicants but not a lot actually show up for interviewing.”
Glaser says his company is working diligently with recruiting companies to find qualified help well before the season starts.
This ongoing labor struggle also led Summit Lawns to raise prices significantly last year.
“We’ve never made it a habit to consistently bump our pricing every spring for existing clients, but we should have,” he says. “However, every year we do adjust our pricing for new clients.”
And the company picked up 900 new properties in 2021. But it was also the first year existing customers saw a price hike.
“So we bumped our pricing back in February for the anticipation of the year, but we did it again in June and we did it pretty dramatically,” he says. “On that one, we did it companywide across all accounts.”
According to Glaser, some customers saw increases of 15-30%, adding he wanted to be completely transparent with his clients.
“We drafted a letter saying, ‘It’s no secret right now with the economy that every industry is dealing with staffing issues. We want to provide you with competent people in your backyard, so to provide that we had to increase our pricing.’ It was just a quick little one-page letter,” Glaser says.
Only 10 people decided to cancel services with Summit Lawns over the increase. Glaser says the letter was met with a lot of understanding.
“This is the best time in history to do a price increase because the media is doing all the legwork for us on why it’s necessary,” he says. “Inflation is such a buzzword right now, no one questions it.”
Even with the increases, the company closed out the year at $1.9 million in revenue and is expecting to reach the $3 million in 2022.
Things have been so good, Glaser says they’ve stopped pursuing more maintenance work and are focusing on other offerings now.
“We are going to be introducing perimeter pest control as well as plant health care,” he says.
Steve Booth
Owner, Booth’s Landscaping, Kenai, Alaska
Steve Booth
Up in Alaska, Booth says he’s taking all the problems with inflation in stride.
“I talked to my supplier last week and prices will go up 10-15% on just normal stuff,” he says. “But fertilizer is going up at least 40%.”
But tracking costs and forecasting is critical to maintaining a trusted relationship with his customers Booth says.
“We keep track of our expenses down to the penny,” he says. “Because I need to know my costs.
“I’m supposed to be experienced, and I’m supposed to know how much this stuff costs. I can’t go back and ask for more money. It doesn’t work that way,” Booth adds.
Booth says he expects to raise prices for certain services but doesn’t anticipate an across-the-board increase. His full-service lawn care company provides everything from install work, to grounds maintenance, hydroseeding and more.
Booth’s Landscaping also has a dedicated staff of eight employees and keeping them satisfied is a top priority for Booth as the labor market in Alaska is extremely tight.
“I can’t just go out tomorrow and find a landscaper,” he says.
Booth says he starts new employees out at $20 an hour. Bonuses and raises are also instituted often as well.
But Booth thinks it’s not just the money keeping his crews loyal; it’s being part of something bigger.
“Sometimes money isn’t an issue, but a lot of the times it is,” he says. “It just depends on the person. I’ve had people quit me at $65 an hour and on the other hand I’ve had people stay for way lower wages and they love their work.”
Having such a small staff is ideal, Booth says, in making his employees feel valued and appreciated.
“It has its advantages,” he says. “My people aren’t treated like a number. I take everything on an individual basis. I can’t have a rule that applies to everybody.”
Another thing weighing on Booth’s mind is rising fuel prices. Something that has impacted the business before.
“Fuel prices are a big factor,” he says. “The new equipment we buy uses more fuel.”
If costs continue to climb, Booth says he might institute a fuel surcharge to help offset the increase.
“We’ve done fuel surcharges before if they’re needed,” he says. “It’s always a temporary thing.”
The most frustrating element of the it, Booth says, is that there’s nothing he can do to circumvent it. Fuel is a vital part of the business.
“If we need fuel, we go get it,” he says. “It doesn’t really matter what the price is, we still need it.”
George Milkie
George Milkie
Owner, Milkie’s Lawn & Garden Center, Johnstown, Pennsylvania
Up until 2021, Milkie says his business was unscathed by inflation. But not now.
“There were increases in all expenses from insurance, to fuel, to materials, to shipping, and you name it. It’s like a runaway train right now,” he says.
Pricing jobs has been extremely challenging Milkie says, as material costs are constantly changing.
To ensure the job gets in under budget, Milkie is urging clients to pay ahead of time.
“When we sell a job, we give the material cost and tell people if they want a guaranteed price, they’re going to have to prepay to land the material. Even though it might be four to six months until we do the work,” he says.
Milkie adds that his company has been backlogged, as they are short of help. Which mean wage increases for the employees that are still onboard. Milkie’s Lawn & Garden has an employee base of about 30.
“To keep employees satisfied, wages have had to increase,” Milkie says.
So, with increased labor and materials, Milkie hasn’t had a choice but to continue raising prices. During the current snow season alone, he says the company raised residential rates by 10% for snowplowing.
“I didn’t have the guts to go more, but I should have,” Milkie says.
And he expects another increase this coming season as fuel prices continue to rise.
“There isn’t anything we can do short of raising our prices, and it just becomes a vicious cycle,” he says.
But striking the right balance of raising prices but remaining competitive has been tricky.
“We can only price what the market will bear,” he says. “Our rates are extremely low because our cost of living is extremely low…We have to fit within people’s anticipated budgets and expectations, or we’ll lose work.”
But even with all these challenges, 2021 still wound up being a banner year for the business.
“Ironically, we had a record profit year,” Milkie says. The company did an estimated $3 million in revenue.
Milkie says he doesn’t expect any of the inflation-related challenges to subside soon, but also notes that this can’t last forever.
“I don’t know what the answers are,” he says. “It’s hard to plan a budget based on so many unknowns right now.”
Bob Wambach
Bob Wambach
Landscape designer, Proscapes, Madison, Wisconsin
Bob Wambach knows the inflation rate rises and falls, but he wonders if costs for materials will come down with the next economic deflation. He guesses that won’t be the case.
“You have all these giant companies reporting record profits, and somehow all of that gets kicked down to small businesses at the end,” he says, adding that if inflation is around 7%, it’s baffling that some of his products are 80% more expensive. “If we’re pairing it down specifically to inflation, it’s kind of the cost of doing business. It’s going to go up, going to go down. It’s hard to nail down really because everyone wants to blame inflation, supply chain issues.”
Wambach works in the landscape design and sales departments at Proscapes, a largely residential hardscaping company in Dane County, Wisconsin.
He acknowledges there have been so many factors like COVID-19 and the slow labor market that have all converged at one bad time. Proscapes had to raise prices seven times last year as material shipments started running up unusually high bills.
Proscapes will do more early buying than ever before. They’ll also buy 20% more of what they used last year with materials that suppliers are flagging as possible issues this season.
Raising prices hasn’t necessarily correlated with rising wages for employees, though Wambach says the company has established higher than usual pay as a result of trying to remain competitive. The company offers salaries, starting many new workers out at $16,000 and bumping to $23,000 in less than three years based on career training.
“We pay more than the average Joe because we want full-time people,” Wambach says. “Our five most productive foremen have been here an average of 10 years. We want to be on the top of whatever the other people are offering.”
Wambach suggests keeping calm over the rising costs of doing business – losing composure won’t help anything, he says. In 23 years operating in the industry, he’s seen a “thinning of the herd” when times get tough like this. He believes it’s best to just stick it out.
“We’ve dealt with a lot of stuff over the last two years. I want to prepare for it but I don’t want to run around like my hair’s on fire,” he says. “We’ll weather it just like anything else.”
Colby Kirwan
Colby Kirwan
Owner, Kirwan Design & Landscaping, Wagner, South Dakota
When Colby Kirwan recently priced out a grass seeding job on a five-acre plot of land, he had to do a double take.
Usually, he’d expect to charge the client about $1,200 for the service. But when his cost estimator spat out $8,000, he was initially shocked. It had estimated $6,000 as the pure price for grass seed itself.
“I started looking and said, I guess that’s the price now,’” Kirwan says. “It’s sticker shock for people.”
Kirwan says his company, Kirwan Design & Landscaping, offers all kinds of services, primarily because clients in the rural area would have to ask for contractors from far and wide to complete an array of tasks. They primarily complete residential work, and Kirwan says it’s hard to gauge how the inflation rate is affecting his customers. Ultimately, he’s seen his clients still spend the same amount of money but are just finding less bang for their buck.
“If a customer’s got a $30,000 budget, they’re going to spend $30,000 one way or another,” Kirwan says. “If all you can give them is pavers and a fire feature for all that, they get less for their money.”
Most clients have been understanding, and Kirwan says nobody’s gotten mad at him. One of the benefits of living in a rural community, Kirwan says, is that people are generally less hostile and know one another a bit better.
Even still, Kirwan says he’s found himself trying to be flexible with job costs to save them money.
“Nobody’s gotten mad at me. It’s not my fault,” Kirwan says. “I’ve done what I can to work with them to do A or do B to offset costs or do something to make it make sense.”
One area that has been problematic for Kirwan is raising wages “outrageously” for his four employees. He doesn’t know if it’s inflation that has caused this spike in payrate; all he knows is that the same newspaper ads that used to get 10 phone calls now get one or none. He used to pay unskilled workers $10-$12 an hour, and suddenly, just one year later, Kirwan says he’s paying employees $15 an hour.
“I couldn’t even find general shovel users, let alone any kind of experienced employees,” Kirwan says. “Whether that was COVID or what that was, I have no idea. Maybe time will tell. I find it hard to believe when the government’s giving people checks that people show up for a job interview.”
Timothy Keilman
Owner, TEK Services, Kansas City, Kansas
Handling lowballing competition has always been an issue for Timothy Keilman and his two-man shop, TEK Services, but inflation has made the contest almost unwinnable.
“Guys just go underbidding, underbidding, and it’s like, ‘come on guys, where do we draw the line?’” Keilman says.
TEK Services offers both commercial and residential maintenance services, only using subcontractors for chemical lawn care. And most of Keilman’s clients have been long-timers, as he’s been working in the landscaping industry for over 40 years.
Even with those well-established relationships, Keilman feels like he can’t raise his prices any more than he already has. Meanwhile, unlicensed applicators or people working landscaping as a side hustle only are charging low prices that can’t be profitable for Keilman.
“Every cop and fireman in this area has a lawn service on the side,” he says. “When it’s a sideline job, you don’t need as big of a profit.”
To mitigate this competition, Keilman has signed his clients on for multiple-year deals. It’s a good deal for both sides, he believes: He won’t need to go renegotiate every year and the clients won’t have price increases thrown at them annually.
He’s had some bad experiences with those negotiation processes, so it’s better that he doesn’t need to do it frequently, Keilman says. Lately, he’s seen companies come back to him and say “this competitor is offering $50 less, can you match that?” Inclined to keep the client, Keilman matches that, but the price just keeps falling as his clients opt to negotiate with the lowballers.
Keilman has gotten in the habit of letting some of those clients go – at 63 years old approaching retirement, he believes it’s better to just let them walk than keep stressing dollar amounts with them. But he’s noticed more clients than usual are trying to negotiate like this, and more companies are springing up that aren’t hindered by the same overhead costs he has.
“We’re stabbing each other in the back,” Keilman says. “I’m all for fair competition, but we’re stabbing each other in the back.”
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