As meteorologists can attest, predicting the future is challenging. With data and feedback from the field, forecasting can be reasonably accurate and provide critical insights for maximizing sunny conditions and preparing to hunker down for a storm.

Green industry experts predict a fairly sunny 2023 season despite concerns about a potential recession, inflation, and lending rates. IBISWorld forecasts the landscape services industry will increase by 3.1% in the coming year. That builds on the average 8.1% increase seen between 2018 and 2022.

Lingering cloudy conditions related to labor shortages, supply chain uncertainty, and gas prices have impacted the perception of the overall health of the industry. In the most recent Landscape Management State of the Industry Report, 68% of respondents described the market as “very or relatively healthy,” a 10-point decline from the previous year.

Here’s what you need to know about predictions for the coming year to develop a strategic plan that allows you to maximize the bright spots and prepare for any storms on the horizon.

1. Revenues Up, Profits Down

Lower inflation rates and slightly lower gas prices suggest the industry may experience a less wild ride this year compared to 2022. According to the Landscape Management report, data from The Herring Group’s annual Benchmark Report showed that the average growth rate for 2022 was nearly identical to 2021. 

Continued growth at that pace indicates substantial opportunities for higher revenues across the next several years. However, respondents to Benchmark Report revealed that while revenues were up by 20%, most companies realized lower profits, with 21% reporting losing money.

In a recent Ewing Customer Survey, contractors said they are focusing on seven key areas to drive profitability:

• Managing projects better.
• Finding new ways to incentivize and retain employees.
• Raising prices.
• Streamlining processes.
• Enhancing training programs.
• Utilizing professional invoicing, cost management, and task scheduling.
• Learning the newer technology in the green industry.

Successful landscape businesses can reach a point where growth slows over time, especially when they specialize. In the coming year, savvy contractors are fueling growth by increasing sales of existing and new products to both current and new clients.

2. Supply Chain Issues

Expect the U.S. economy to remain volatile. Supply chain issues have somewhat eased, but domestic and international politics can rapidly impact product availability and cost. Flexibility will be vital for sourcing products in a timely and cost-effective fashion. This will be especially true for long-term design-build projects. Educating customers about these challenges and including language in a contract that allows for similar substitutions or price increases can help protect your business from uncertainty.

3. Labor Woes

Staffing remains one of the biggest challenges facing contractors this year. According to the Irrigation & Lighting 2023 Green Industry Outlook, 73% of contractors say their region needs more workers to meet company needs.

Rising wages are one factor affecting staffing. Local fast-food establishments and retail outlets advertise starting wages at $18 per hour for less physically demanding jobs. Landscape contractors report having to raise pay to attract workers to physically demanding positions. Nearly 48% of contractors pay more than $18 per hour, with 23% paying $24 or more per hour, according to the Irrigation & Lighting report.

Keeping pace with pay and benefits is only part of the recruitment and retention solution. The hiring market has changed—today’s applicants expect instant feedback via text or email. If you’re not replying quickly, they move on to the next opportunity. Responding in real time can give you a hiring advantage.

Many workers also are seeking career paths. Supporting additional training and licensing, and clearly outlining career development paths can help attract and retain employees.  

On the bright side, bringing H-2B workers in to fill in hiring gaps should be easier in 2023. In October 2022, the Department of Homeland Security announced an increase in the maximum number of supplemental H-2B visas, allowing for an additional 65,000 seasonal workers. 

4. Battery-Powered Equipment is Coming Faster Than Expected 

An increasing number of noise ordinances and climate change policies are accelerating the industry’s transition from gas- to battery-powered equipment long-term. It’s no longer a matter of “a few years down the road.” Landscape companies that have not already begun planning for the switch need to start this year.

Costs concerns associated with the shift are valid. Batteries cost more than gas cans, so having enough power backups on hand to keep crews working is higher than with gas. Theft also is a concern for many landscape contractors—the expense of replacing stolen batteries is essential to consider.

Phasing in battery-operated equipment requires planning. The infrastructure inside your shop will most likely need to be upgraded, with dedicated breakers to handle the additional electrical load.

Educating customers about battery-powered equipment’s benefits and limitations will be necessary during the transition. For example, property owners may not realize that some gas-powered tools will continue to be essential for efficiency as battery-powered technology improves. 

5. Make Sustainability Part of the Conversation

Water shortages, climate change, soil health, and automation are increasingly on customers’ minds. Companies that seize opportunities to offer sustainability-related solutions to residential and commercial clients will gain an edge in keeping pace with changing customer priorities and legislative policies.

Those products and practices often come with a higher price tag for installation and maintenance, which requires communicating with clients so they understand and embrace the need to lessen the environmental impacts of landscape and irrigation. 

Becoming the go-to expert on sustainable products related to your services will show clients you’re in tune with current events and are using creative options to keep their landscapes in top shape with environmentally friendly options, and it will give you an advantage over your competitors.

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