Spend smart

October 1, 2010 -  By

Landscapers avoid frivolous spending and focus on efficiency and vendor relations.

 

When it came to keeping crews outfitted with the right equipment to get the job done in 2010, landscapers on average maintained last year’s spending.

The National Federation of Independent Business calls it being in “maintenance mode,” replacing vehicles or equipment only as needed.

To carry this out, some have instituted policies to reduce excessive purchasing on unnecessary items. “We’re big on equipment because if you want to do the job right, you need the right equipment. But our policy is no new equipment unless it’s a must,” says Matt Griffin, president of Prime Lawn/Prime Design, Kingwood, TX, who spent $20,000 to $30,000 on equipment this year. “There’s really no need to go buy more if we already have what we need. And we have backup equipment available so if a machine breaks, we have something to replace it while it’s being repaired.”

Leasing or renting first helps Andy Felix solidify purchasing decisions. “We did replace a number of vehicles this year but haven’t really added anything major,” says the president of Foxboro, MA’s Tree Tech. “We’re kind of doing some wait-and-see to see what the economy will look like.”

Just as the economy impacts consumer spending, small business spending is also affected. “We’re really trying to conserve cash — there’s too much uncertainty right now,” admits Brian Golembiewski, president of Paramount Landscape in Tempe, AZ.

Others are avoiding incurring unnecessary debt loads. For Kirk Brown, business manager of Joanne Kostecky Garden Design in Allentown, PA, large equipment purchases are on hold. “We are being extremely cautious about purchasing anything that would increase our inventory holdings,” he says.

While some landscapers were able to keep current equipment running longer, others realized “stuff wears out. You can’t always wait to buy,” points out Chris Senske, president of Kennewick, WA’s Senske Lawn & Tree Care, who made approximately 70% to 80% of the equipment purchases he normally does this year.

Joe DiRoma agrees. “The bottom line with equipment is if we know we’re doing a job and we don’t have something, we’ll get it,” says the owner of DiRoma Landscaping, Lisbon, CT. “That’s just what you have to do.”

The NFIB September Economic Trends report concurs, stating that “spending (financed with credit or out of cash) for new equipment, expansion or for new employees must generate enough additional value to pay off the investment.”

“And if you want to be efficient,” Senske adds, “you have to replace stuff.”

Efficiency actually topped the reasons for buying equipment this year. Pacific Landscape Management replaced his walk-behind mower fleet with stand-on zero-turning radius riding mowers. “It’s a smart capital investment because they’re more efficient,” says Bob Grover, the Hillsboro, OR-based company’s president. “If you don’t keep your fleet upgraded, you end up paying the same amount over time in repairs. So it’s better to continue that investment now. It’s either pay me now or pay me later.”

In some cases, lawn care and landscape professionals feel equipment can be a better investment than people. “Adding crews and hiring more people can be a problem — finding good people, having employee problems, plus paying their salaries,” says Giuseppe Baldi, landscape maintenance manager, Baldi Gardens, Arlington, TX. “Instead, I think we’re focusing more on increasing our efficiency and using the same manpower but getting more machines.”

When companies have made purchases this year, improving vendor relationships to get the best deals has been a key strategy. Joe DiRoma tries to buy from the same two places because he thinks the more volume he can give them, the better offers he’ll get. “We have been trying to barter with suppliers a little more, asking them for the best prices,” says the owner of Lisbon, CT’s DiRoma Landscaping.

Christy Webber never questioned her vendors or their pricing before. But, this year, she took some time to shop around. Her usual vendors — places where she’d spent a lot of money in the past — weren’t “straight up with me,” says the president of Chicago’s Christy Webber Landscapes. “That was sad to find out. Because I didn’t shop around and question them, I wasn’t getting the best price. And it’s not just me – it’s happening to anyone who isn’t shopping around. This year, I shopped around and saved $35,000 overall – that’s someone’s salary. That’s a lot.”

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