Snowed under? Merchant bankers?

It looks like we are entering our second week gripped firmly in the icy hands of the big freeze. As I write, we still have at least four inches of lying snow and still more to come, I believe. A vision of crisp, winter loveliness.Certainly in the summer, I wouldn't trade my job for anyone, and even through the dismal dampness of autumn and shorter days, I still love being hand in hand with the seasons and all that they throw at us at whatever time of year. However, as we head into the second frozen 'working' week, I am concerned for all of us landscapers who don't get paid if they don't get to work. The very nature of our trade means that we are quieter in the winter, but as the recession really starts to bite, I wonder how much is seasonal, how much is the economy and how long can small companies continue without an income if this cold weather continues for too much longer?This is only compounded with the Press full of bank bonuses being paid out despite the horrendous losses thay have made. Will we as landscapers have the banks scurrying to help us? Will we still get our lovely juicy bonuses despite having no income? I think not. Some will be fortunate to survive with their businesses in tact, some will benefit I have no doubt, but many will have to make significant and not always advantageous changes to their lives. 2009 looks set to be a taste of the 'Brave New World' we must all expect from now on.

I often have the opportunity to talk to board members, new board members and tenant management organisations in development and offer advice that we have learned from. While one common piece of advice is to encourage them to take training as one of their core activities, another is that TMOs should build up reserves to function for three months without allowances. This is because many do not and when in dispute with the local authority more then one have ran into difficulties because they have either not done risk assessment, or failed to factor this possibility in.

As part of any business plan I would always suggest factoring in the possibility that there could be extended periods of no money coming in. Probably not as long as three months, but certainly a 4 to 6 week period beyond what might be expected within the normal flows of your particular market. Unfortunately it is a piece of advice which needs to be worked on over a period of time, and not when the problem is on your doorstep.

Replies

dgeorgea February 8, 2009 at 3:46pm

I often have the opportunity to talk to board members, new board members and tenant management organisations in development and offer advice that we have learned from. While one common piece of advice is to encourage them to take training as one of their core activities, another is that TMOs should build up reserves to function for three months without allowances. This is because many do not and when in dispute with the local authority more then one have ran into difficulties because they have either not done risk assessment, or failed to factor this possibility in.

As part of any business plan I would always suggest factoring in the possibility that there could be extended periods of no money coming in. Probably not as long as three months, but certainly a 4 to 6 week period beyond what might be expected within the normal flows of your particular market. Unfortunately it is a piece of advice which needs to be worked on over a period of time, and not when the problem is on your doorstep.
Richard Boyd February 8, 2009 at 8:03pm

Chin up folks, most of our clients are pretty vibrant and nearly everyone I talk to is pretty optimistic for 2009. So far this year looks like being our best year yet (fingers crossed), however, if you would have told me that in October I would not have believed you. Behind the scenes we've been working hard and it is paying off.

Look at your USP’s, how you can add value without it costing you too much and look to ways that you can present these treasures to your clients.

Lead the market, don’t follow it, find ways to give clients more, they will talk and you will benefit.

Look for suppliers who can provide the same product for less, network with complementary services, add value and you will succeed.

2009 will be a good year if you work at it and show your clients why they need your company rather than a competitor.
PRO

Phil Voice February 8, 2009 at 9:41pm

I follow world financials fairly closely and I followed a commentator who explained that the stock markets rallied on bad news at the end of last week when technically the indicators are still extremely bearish.

I fully expect the Dow Jones to try and test 8000 again but there is more than a chance that the bottom has been reached (although do not take this as investment advice)
Graeme @ BGS February 9, 2009 at 11:33am

Going slightly off topic, I know of five small companies (three being landscaping related) which are having trouble with the RBS by calling in their overdrafts / bank loans.

Now this is the very bank that we the tax payers owe 70% of by a £20bn bail out and yet they could still pay out £1bn in staff bonuses.

I fear the banks are running scared and going after the people they know they can collect from by forcing them to sell their homes and loose their businesses. The ones I am aware of will be forced to close down with the loss of over 30 jobs. Doesn’t this go against what the government is trying to do to pull this country out of the recession?
Guy February 9, 2009 at 11:47am

I think that as landscapers we need to stick to what we are good at- i.e. building gardens- and not get too embroiled in micro and macro economic speculation. It is obvious that we are suffering from a severe recession that still has a long way to go yet before we see any green shoots of recovery. Parts of the economy are vibrant though. As a consequence there is money out there so we should continue to see business coming in albeit it from clients that are not being affected by the current crisis. However if I were to get into speculation about what is going to happen watch the price of oil. Its cheap as chips now because demand has dropped, but once we get over the current crisis watch what happens as it rockets again. Major oil fields are reporting bigger depletion than expected and oil exploration projects are being put on hold. That means that when demand picks up again oil will hit the roof. Well that's my foray into global economics over and done with now back to landscaping....
Ofelia Harrington February 9, 2009 at 12:38pm

It's all about knowing your market and always looking outside of the box. When I started with AMA the primary business was working for builders new installs, model maintenance, power wash, erosion. Since the real estate market had been hard hit here in the U.S. it was time to position the company in other areas. I have added government contracts, roadside mowing, large acreage mowing, clean ups. Due to this change we will be in a 80% growth for 2009. So to say the least I am very happy. I also just found out we were just awarded a 300K contract for 2010. Our growth for 2010 is already positive. Everyone stay positive and network,network, network.
Graeme @ BGS February 9, 2009 at 1:04pm

Well done Ofelia – sounds like you made the right move and it will be a cracking year for you.

Likewise we have moved direction slightly with our client base and services and have so far over 40% increase in advance bookings for 2009. There are lots of opportunities out there we just need to hunt them down and not be afraid to go after the bigger contracts.
Cat Fereday February 9, 2009 at 11:24pm

Phil - there always has to be a bottom to any market - unlike gravity, what goes down must eventually go back up.