By Neal Glatt

Last month, the House passed a bill to raise the federal minimum wage from the current $7.25 to $15 by 2025.  Considering that labor is the single highest cost for landscaping and snow removal companies, a proposed doubling of that cost should terrify owners.  Of course, some companies already know exactly how to thrive in the coming job market because they have a plan...

First of all, is this really going to happen?  Certainly the current Republican Senate won’t adopt this legislation.  However, I believe the 2020 election will prominently feature wage growth and seeing a federal $15 minimum wage by 2025 is absolutely plausible, if not likely.  In fact, for those of us in CA, CT, IL, MA, MD, NJ, NY, and DC, legislation for a state minimum wage of $15 per hour has already been adopted so it is a reality for about 30% of the US population.  With precedent established in these states, it won’t be surprising for the Feds to follow suit.

Further supporting the likelihood, is the fact that federal minimum wage hasn’t been changed for over 10 years, the longest period of time since the creation of federal minimum wage under the Fair Labor and Standards Act in 1938.  And of course this movement has been gaining momentum since 2012 when fast food workers vocally called for a “living wage” of $15 per hour.  Make no mistake, labor costs will soon increase dramatically.

So what are landscape businesses to do to stay profitable?  I believe there are three options for moving forward:

Surrender

Companies can decide that the new labor market is too expensive and to simply give up.  This isn’t a negative or cowardly option by any means.  Taking an early retirement or selling the business is a great way to avoid the difficult changes and hard work that will be required of those who want to stay in the game and thrive.

If an owner were planning to exit a business in the next 10 years, I’d advise him to shorten that plan to 5 years, before profitability bleeds from wage growth, and enjoy some extra time.  Of course, one could always just...

Raise Prices

2019 is a good time for price increases.  Netflix upped their price 18% for their most popular plan in May.  Disney increased daily ticket prices about 10% and annual passes 23% this year.  Certainly a landscape company could increase prices 3-5% annually without too much trouble.  

And while some customers will leave with price increases, profitability will increase and that is the important strategic goal here.  Besides, every company I know can barely find enough labor to complete the jobs they already have, so what’s wrong with saving some overtime pay and earning a bit of breathing room in the schedule?

Pitching a price increase must be done properly to avoid frustrating too many clients, however.  If you don’t have the right mental toughness, proper technique, or enough motivation then it may backfire.  So prepare yourself to pitch these correctly (and if you need help, check out our FREE sales course here).  If you can’t raise prices enough, then you’ll be forced to...

Become Efficient

There are many options to become efficient.  Certainly the rise of automated equipment like robotic lawnmowers and robotic snow throwers are changing the game by reducing labor costs dramatically.  Many contractors now have demonstrated success with these technologies.  In fact, it’s possible that they are so efficient that contractors who don’t adopt the use of them won’t be able to compete in the future.

But even with the best technology, humans are still required to set them up and manage the processes.  This is why I believe that the greatest efficiency always lies with increasing the abilities of the members of a team.  People who are always learning will identify new technologies and new processes to implement and save money, not the other way around.  If you need to increase sales, increase efficiency, reduce costs, and thrive, make sure you enroll your people in our courses at GrowTheBench .

To help you get started, use promo code “15Minimum” for a free month of access to all of our courses by enrolling in our Monthly All-Access Pass today!