How the Coronavirus Can MAKE or BREAK 2020 For Your Landscape Company!

Hey, everyone, it's Mike Andes, and you're listening to the Landscape Business course podcast today. We have a pretty important topic we're talking about today, and that is the coronavirus and the impact it's going to have on landscaping business owners and the lawn care community at large. So if you're watching this in five years, might seem irrelevant, but it's definitely going to be useful if you ever have an event economically that is really historical and changing the landscape and kind of a black swan event and out of the blue, perhaps what you can do, whether it be a recession, a downturn, something like that, that comes into play, what you can do about it. So I am going to be texting out some information this week, probably two or three times throughout the week as there's developments happening. And so make sure you text the number on the screen there, just text the word landscaping to that number. And I'm going to be posting a few things as we are doing some testing with some marketing. But. So the coronavirus, if you aren't aware or watching this down the road, is a virus that started in China back in December of 2019. And here we are a few months later in 2020, March, and the United States has declared a state of emergency in the entire country. A lot of travel has been banned. People have. Assemblies of people have been canceled. And we are in Washington State. We're really the MO that is the state with the most deaths. And where those people are dying is actually probably about an hour and 10 minutes drive from where we're at right now. And so we're definitely in the middle of it. And so we probably have the most effects. I know some people, maybe in the south or even on the east coast, that's not in New York. And those areas, you might feel like there's absolutely no effects whatsoever. This is still a really important topic because if an economic crisis does happen, if recession does occur because of all of this, and it's possible these are things you still need to know about because it's going to affect you. Perhaps the coronavirus hasn't. But if we actually go into recession and even as of last Friday, going into a state of national emergency, it's definitely going to affect you. And it might be a month or two down the road, it might be a year or two, but it's definitely something you should know regardless, even if it doesn't affect you. So that when a recession comes, not if, but when it comes, you know what to do. And so this is something that we talked about at last year's conference, landscape summit 2019, a large part of that entire conference was dedicated to like the next recession, what to do in it. And so a lot of these things, some of these things we're talking about today directly correlate with that. But depending on your location right now in the United States, as I'm speaking about this, I'm in contact with all the franchisees as well as a lot of just landscape owners, people on the Facebook group, people texting me asking what they should be doing. Because in some areas, especially on the west coast and over towards New York area, literally the amount of leads have been drying up. People are not asking for new services, they're not asking to get back on the schedule. And so people are getting worried and it's completely understandable. And so with, you know, I have a gym as well as, you know, the landscaping aspect. So I'm really kind of in enjoying, I am. There's a lot of data I'm able to get from the gym and then from, and then translate it to Augusta lawn care and the landscaping industry. So for example, the gym is like very much affected by what's going on right now because you have a place where people gather and that's how the virus is transmitted, people coming together and you have people. So at gym people come together, they sweat, there is people exhaling, inhaling a lot. There's you know, all of this that's going on with the circulation of the air, all this stuff. And so we have had people cancel. We've definitely had no one be signing up for the past week. And so and definitely a lot less people coming to the gym. But some of the things that I'm learning is things that are confirmed that we talked about years ago at Landscape Summit and that is recurring revenue is going to be far more economic and recession proof. And so what I mean by that is this, when it comes to the landscaping aspect, we are very close to the epicenter here in Washington state and we have had nobody so far cancel services because cancel recurring mowing services, I should say because of the coronavirus directly. We've had a couple people cancel one time projects but nobody has canceled their recurring services because of, of the coronavirus. That being said, have we been getting new leads? Yes, we have been. Do I know if it's less than usual? I don't really know that because it's more than we've ever had. I just don't know what the, you know, what the opposite would look like. We're still getting more Leads than we ever have before in the past. But definitely there's pockets and places. Like Ezra was saying on the Facebook group, someone else was saying they are over in Tennessee, I think and they're having the same kind of effects. No leads coming in, no new. And so this is what's going to happen in my opinion. I think the over leveraged companies are definitely going to be affected right now. People that went out in the winter and bought really new, brand new fancy equipment, brand new trucks, they're going to be affected because they were counting on a strong economy to generate 20, 30, 40% growth this year in their business. And now that's not going to happen. It might be 10% but it's not going to be enough for them to pay those big monthly payments. And so this goes back to what we Talked about in 2019, Landscape Summit is like when in the time of peace you prepare for war. In the time of peace you pay off debts, you deleverage, you get lean, you focus on efficiencies. So that when these times come, this is what's going to prove what companies are built on systems, which companies are lean, efficient and are built correctly versus the ones that have been overleverage, that don't have systems, are not efficient, do not have systems in place to have their employees being efficient. These are the things, these economic times is what's going to separate the good from the great. This is what's gonna separate the people who should not be in business versus the ones that should be and the ones that haven't been or that shouldn't be. They've been doing okay because the economics have been so well. Everyone's growing, lots of new developments. The baby boomer generation's getting older. There's plenty of money. Well, guess what? Now the baby boomer generation that's retired and has the money, but they're gonna start contracting, they're gonna start holding money a little bit closer, they're gonna go out and get a couple extra estimates. Even if they need the lawn services, they're gonna go out and bid those to try to get a lower price because now their 401k just got slashed last week by 25, 30%. Like that really can affect somebody. And so some of the things that we're really watching is number one, recurring services not being affected as much. Install projects, design, build. If that's something you really focused on in the past, you might need to diversify and on more maintenance and recurring services just to pay your bills and keep your guys busy. Another thing that's going to come about by all of this is there's going to be layoffs. Like, you've already seen it in the travel industry, in, like, the cruise ships, in airlines. You're seeing massive tech companies telling all their people to work from home. But when the revenues hit, like, go way down, when sales go way down, they're going to have to start cutting people. And so you're going to see this is going to change the labor market, in my opinion. This is gonna really change the way that the labor market has been going in terms of being really, really low unemployment rates. I feel it's gonna go up a couple percentile if this continues, if this coronavirus continues. And again, if you're watching this in three years, this is nothing new with coronavirus. This has to do with an economic recession or time of downturn when we've been used to it being so good for 10 or 15 years. And so I really feel that, like, recurring service is gonna be. It's not going to grow as much this year. Instead of growing 34% this year, you might grow less if this thing continues the way it's going. But if you're on recurring services and serving the population that is willing to pay more, I feel like the people who actually hurt the most in this, when this sort of economic pressure happens, is the people that's charging low prices. And you're like, that does not make sense. They should be the ones that are better. That's not what's going to happen, in my opinion. Because the person that is paying more money and is willing to pay for a premium service, usually they're the one insulated from this type of economic event. They're the ones that have enough money to keep services. The person that's always looking for a bargain and looking for cheap prices, they're the ones that are going to go mow the lawn themselves. They're the ones that are just going to let the grass grow or let their grandkid mow on the weekend. The person that is willing to pay more for a premium service, they are not going to go and take lawn care and slash it because they know that if they're 75, 80 years old, they should not be mowing their lawn. It's literally unhealthy for them to do so. They could hurt themselves. It's a leading cause of death for elderly people. It's in their best interest to keep you mowing the lawn. And if they're willing to pay a premium price for a premium Service and premium value. They're the ones least likely to cancel services when economic times shift because they're insulated from it. Usually they have enough money to get through these sort of times. It's the people that want the services but are price shopping all the time. They're the ones that are gonna cancel services right now. So this goes back to how you build your business in the time of peace is what's going to determine how you do in the time of war, like when times are bad. Right now, if you've been building your marketing on discounts and price shopping and getting those people you've been getting, trying to get people where you have really great entry prices and trying to get them, you raise their prices after a year. I've seen this time and time again in the treatment industry where people have, you know, treatments for $20 per treatment, but in year two, they count on some level of people converting into $50 and $60 per treatment or 100 or 200. And they just try to get people in this bottom, rock bottom price. Those people are going to get cut because they're not gonna be able to get anyone to convert to that higher price during these economic times. They're gonna get hurt. The people that are gonna do well are the people who stick to their prices. They have higher premium pricing with premium service, with premium team members, with premium website and professionalism. These are the people they're going to win out because the type of customer that is attracted to them is the person that's going to be insulated from this sort of economic meltdown. I'm not saying that this is an economic meltdown. It's the potential of having that, whether it be a recession or unemployment rate going through the roof. Like I said, this is going to change the labor market. You're going to have a few more options. Now if you have been struggling to find people, this is where you can get creative and start thinking, okay, who in my area? Because I'm gonna talk local stuff now, like down to exactly what you're going through. Who in your area, if you have a big employer, maybe they just lay a bunch of people off. That's your time to strike. You can get some really great people for a low hourly wage. Maybe they're just looking for a year or two years worth of work to kind of get through a certain time and get back in that same line of work. Or maybe it's time for them to transition. These are great opportunities to find great employees. When the labor market is gonna have this weird in it. And again, the coronavirus could stay around for a few weeks and everything everyone forgets about it. Or we could be looking at this into the summer. And it's going to completely change this year for a lot of landscapers. And we're going to see massive shifts in this industry. If this lasts four or five months, we're going to see massive shifts. The reason for that is because the install project work is going to get very competitive. A lot less jobs are going to be for installs because people can put off installs if they're looking at putting a patio in putting. But yet their 401k just got slashed $200,000 last week. Trust me, they're okay with putting the patio off. That's discretionary income versus if they're 80 years old. It is not discretionary whether or not the lawn gets mowed. Cause they live in an HOA and the HOA dictates it has to be mowed every week. So these are the things you gotta be thinking about. How do you make yourself recession proof? Okay. Focusing on retention is very important right now. So I mentioned the gym and how we really had a. The leads dry up. We haven't had any new customers. So what are we doing? We're focusing on retention even though there's less people in the gym. We're not cutting our staff, we're not cutting training. We're trying to keep. Even though we're going to lose some money on keeping trainers involved, we're trying to make sure that our retention of the people who do stay, the 99% of people who do come to the GYM or the 99% of people who do stay as members. And maybe our daily visit rate gets cut in half, but we make sure we retain them. Alright? So we've lost about, like I said, 1% of people at the gym have canceled and canceled their membership. But we want to make sure that we focus on retention. Like how do we keep it from going from 1% to 5%? We've got to focus on retention. So right now a lot of you are going to have a lot of effect on new customers. People deciding to start using mowing services is going to decrease. What you need to focus on right now is focus on retaining the customers that you do have. Giving them more value, checking in with them more creating that bond and relationship with them more, doing a free property analysis, doing a couple extra little things for them to retain them as a customer. That's what you gotta focus on right now. Okay? You cannot lose 30 40% of recurring revenue. Right now, you're gonna have to start laying people off. You're gonna get in a bad spot if you have leveraged and you do have loans. And so you've gotta focus on retaining your customers. Don't worry so much about new leads not coming in. Focus on not having your existing customers leave. So you got to produce value, you got to raise the value. We talk about the price value equation that teeter totter. Right now is not the time to think about price, how you raise value more right now. Professionalism, giving them free property analysis, making a communication with them via email, video phone calls, checking in on them. These are things that produce value to retain the customers. So right now at Augusta Lawn Care, we're spending a bunch of money this coming week because we're gonna test out customer acquisition costs across multiple platforms and compare it with the coronavirus versus without it. Like, we do not know what's happening right now. This has not happened in the United States before, where people are literally quarantined themselves. People are staying at home. Like, does a mailer work better now? Because people are at home, and they literally can't go to work, and they're looking through every single piece of mail. Is it better? Or are they so glued to their TV and their television and all the news that's happening that anything in the mail just goes in the trash, and it's like, byproduct. And they're not thinking about buying anything right now, let alone lawn services. So I don't know. We're gonna test that out. Same thing with Facebook, same thing with Nextdoor, Same with all these other platforms. We're tested out pretty heavily this upcoming week. We're spending about $15,000 in marketing just to test and see what those numbers are. Because I know that while most people are gonna go on the defensive right now, that's the time to do the opposite. Whoever goes opposite against the grain wins. Whoever's buying into the stock market when it goes down, they're the ones who become millionaires and geniuses two or three years later. And so the people right now that are saying, oh, you should not expand, you should not go try to build your business and grow it this year. That's not what I'm saying here. I'm not saying, like, don't focus on new leads. I'm saying focus on keeping retention. But that does not mean don't stay on the offensive as well. And so I really feel that there's gonna be an opportunity here, because as these Bigger businesses stop spending money on advertising because their stores are closing, because the airlines and the travel industry is going to kaput. They're literally laying people off for a month, two months at a time. Because of that, the ad products that they're using are gonna go to nil. So Instead of paying $1.50 per click, you might pay $1.30. So these are things that I'm really interested in, like does the cost of the acquisition of the customer go down? Because now these bigger players are not pumping money into those markets and into those ad platforms. Is every door direct mail more effective? Is social media more effective? Are people at home now and they have more time to scroll through and are they on your website and gonna spend an extra 30 seconds instead of just quickly going to the contact page? I don't know this. We're testing it out a bunch this week. If you text me, I'm gonna probably put a couple posts out of stuff we're going through and we're testing and seeing what's working right now while people are laid off and people are working from home and people are glued to their devices and seeing what's happening. And they are worried about a whole lot more important things than lawn care and mowing. And is this an opportunity? Can we strike right now? I really truly do believe that where there is crisis, there is opportunity. And so as we're in a crisis, whether it be economic, whether it be health, I do believe there's opportunity from a business standpoint, from a community giving back standpoint. There's so much opportunity here when we go into crisis. And so the people that lie low and the people that just like cross their fingers and hold their breath, they're the ones that usually don't make it or they come through and they just glad to be alive. The ones that actually think about creative solutions right now are the ones that come out on the other side and are exponentially better. Their businesses are better. They've been able to give back. They've taken the crisis and they've seen the opportunity, the opportunity to give back to their community, the opportunity to grow their business, the opportunity to take advantage of lower customer acquisition costs, the opportunity of taking the attention of the consumer. These are things that can be done when crisis comes. And I truly believe that this is going to lean out competition. This is something I've talked about for years. I'm looking forward to the time when the people who have been wannabes and just been showing and very showy in this industry, they're going to get cut out if this thing extends four or five months. And it's going to happen, whether it be this year or in five years and there's a recession, the next time we have an economic downturn, it's going to really separate and lean out the competition in this industry. I truly believe the people watching this podcast, watching these videos, listening the podcast, these are going to be the people on the right side of history that are running lean operations, that do have systems, that do have things in place that are not going to put them at risk. When the leads do dry up and when the projects don't stop, do stop coming. If you're leaning 60, 70% of your business right now on projects, cleanups, install design, you need to start thinking about, how do I grow that arm of maintenance? Maybe it's not super profitable, maybe you don't enjoy it, but it's going to get you through these economic times of crisis. And in crisis is opportunity. And I really look forward to what happens in the next week. This is not something I'm happy about. It's not something I'm excited about. There's a lot of pain. There's a lot of people very worried. A lot of. I think there's gonna be more collateral mental effects to people than the physical and economic effects. The amount of people that are just so anxious and stressed out right now, and whether or not I believe the coronavirus is a thing or a conspiracy, I don't really care. I'm looking at what's happening in the marketplace. How do I react to make sure that this crisis doesn't kill me and it becomes an opportunity? This crisis does not need to kill your business. It can be a leverage point and a springboard for you in 2020. And regardless if you're watching this in five years, the next recession can be a platform by which you build your business and you do not contract. You've been listening to the Landscape business course. I'm Mike Andes. Until next time, be great, because nothing else pays.