Contractors deal with new financial realities

By Arthur Skolnik
Contractors Sector Group

The housing market has been all over the place the last number of years. First, it is rising from the dead and pulsing with new life, then parked in neutral, with continual predictions of its pending decline. But, even in times of recession, people will still buy luxury.

Most landscape professionals, who I know, offer the same sentiments. One of them reflects a sense of optimistic caution — like walking on thin ice. No one is looking to break any sales records, but there seem to be dollars out there ready to be spent on landscaping and home remediation.

Two major anomalies compared to the prime years are: 

1. Clients are scrutinizing design and pricing more than ever by obtaining parallel quotes (the same design priced by other installers) and;
2. Larger jobs are being split into smaller segments, each over the next one or two years.

Regarding  #1, years ago I was mentioning to a very experienced landscape business owner that I felt I was very good at selling jobs. I told him that even when I was bidding against another contractor or architect, I very often won the job.

He wasn’t impressed and his comment opened my eyes. “You’re not charging enough,” he said. He was right. From that day on I changed how I looked at pricing jobs. And even with the tough times, I didn’t budge on price. If clients couldn’t afford to have high quality design/build, I couldn’t compromise on price.

I learned long ago that costs associated with doing business don’t change in lean years. Although the ‘hit’ ratio (jobs we bid on and won) was lower, there were so many prospects to bid on, I didn’t lose any sleep.

Some clients bought designs and employed relatives, friends or brand new landscape companies who charged much less for installation. On several occasions, when I heard (and was surprised at) how much we were undercut, I warned clients to keep my phone number handy. We do repairs!

Regarding issue # 2, I’m not fond of tackling jobs which have been split into segments. Going back to complete a project next year means the sum of the parts will cost more than the original whole. But I too am a homeowner, so I understand that for some people this is the only way to digest the cost of some jobs.

Drop me a line if you see other differences in the market this year. How did you adapt your rules to the new game plan? How much has your bottom line been affected, if at all?