Travels with Jim follows Jim Huston around the country as he visits with landscapers and helps them understand their numbers to make smarter decisions.
During any given week, I talk to 10-20 green industry entrepreneurs and visit the offices of two or three. As a result, I pretty much have my thumb on the pulse of contractors around the country. Discussions with these individuals almost always turns to what they see as their number one problem – labor. There simply isn’t enough supply of qualified labor to meet the demand that the market offers them.
When I talk with these entrepreneurs, most want me to share with them what other business owners are going through and how they are addressing the COVID-19 pandemic and current economic situation. Let me share with you what I’m hearing and seeing.
First, the COVID-19 pandemic and related economic turmoil, with few exceptions, haven’t diminished the demand for residential green industry services. In many areas, it has actually created a boom market. Many of my clients are experiencing the best start ever to their year. Commercial demand also remains strong. However, due to the economic uncertainty, the demand for maintenance enhancement work is down.
Second, while the demand side of the “supply and demand” economic curve is very robust, the supply side is suffering. The number one challenge that contractors tell me that they face is an extreme shortage of qualified labor to meet the demand for landscape, irrigation and tree care services. The experience of the following contractors is typical:
Dave Rykbost, president of Dave’s Landscape near Boston, tells me that he can’t depend upon the federal government’s H-2B program. The lottery method of choosing who gets workers and who doesn’t, guarantees that every three or four years you won’t get the workers that you need. How can you build a business on such a capricious program?
Greg Wrenn, president of Past The Gate Landscaping in the San Francisco East Bay area, tried to recruit workers from Puerto Rico. However, he found the government hoops in Puerto Rico were ominous and the workers that he did bring on-board were generally not up to the physical requirements of the work.
With 40 million Americans out of work, you’d think that hungry workers would be beating down your doors and filling out applications to get a job. Think again. Some might show up, fill out an application and even show up to work. Unfortunately, due to the physical labor involved, many only last a day or two, or until their previous employer calls them to give them their old jobs back. Hiring locals and the recently unemployed is like trying to fill a bucket with a great big hole in the bottom. It often creates a revolving door that consumes contractors’ limited time, energy and resources.
In some areas of the country, commercial and residential demand remains strong, while finding qualified labor is still a huge issue.
One solution that many of my clients have found useful is to obtain the assistance of either a part-time or full-time human resources (HR) specialist. Such a person, whether as an employee or a subcontractor, can help you on-board (hire) employees and implement an effective training program. They can also act as an “advocate” for your employees. This should not only lessen the workload for entrepreneurs but it should also increase productivity, reduce turnover and improve morale.
Another strategy is to recognize the inherent opportunity when you have excess demand and limited supply of a service or product. It’s called raising prices. This is especially true in today’s residential market. Sean Macauley, president of MountainScapes in Jackson, Wyoming, said it best when a builder-client complained to him about his high labor prices. Sean’s reply: “I don’t like them either, but if I’m going to make money, these are the prices that I need to charge.”
To use the vernacular of the day, “Today’s labor market sucks.” You all know that. However, it’s imperative that you recognize the inherent opportunity that such a market provides when demand is high. Take Sean Macauley’s advice. Raise your prices and be ready to respond to those who question or criticize your actions. Quote Sean if you have to, but be ready to defend your position.
Every market provides opportunities if you are prepared to recognize and act upon them. The current market is no exception. However, I disagree that the current labor shortage is a green industry entrepreneur’s biggest challenge. Next time, I’ll explain why.