In a March 2009 survey, Total Landscape Care polled its readers on a variety of economic issues. Regarding the financial health of readers’ companies, a lot of the responses were somewhat positive, but a few answers stuck out:
“I have lost about 1⁄3 of my customers from last season, all of whom cited the economy as their reason for leaving me. I am self-employed, and this is my only source of income. I have gone some months without a paycheck so my company could still afford to make the truck payment.”
“Lending from financial institutions is very tight. However, private capital is flowing into the market, especially for established companies with proven track records.”
“Thank goodness for a strong line of credit in finding creative ways to make ends meet.”
According to Capital Solutions Bancorp, an April 2009 study revealed small business owners say managing cash flow remains a top priority, but fewer are struggling as they were at the height of the last economic downturn.
In light of this, what are the solutions for landscapers looking to continue growing their businesses, including equipment purchases/leases and loans, for the financial well-being of their companies?
Jack Snow, CEO of Sheffield Financial, says his company became very proactive in the beginning of the economic downturn. “We contacted each of our commercial cutters and informed them if they needed assistance during the economic slump, we were here to help in any way we could. Through this program, we assisted a large portion of our customers by deferring payments and helping them get by until cutting season began.”
John Deere Credit, a captive finance company for John Deere, seeks to help landscapers find and purchase equipment through dealers with flexible finance tools.
“We have had a consistent approach over time,” says John Oakley, manager market development, John Deere Credit. “Relative to banks, our value proposition is a combination of rates and terms. It would be difficult for a customer to go to a bank and compete with our incentive rates.”
John Deere Credit offers customized terms enabling professional landscapers to purchase their equipment. This is beneficial for landscapers because it frees up their credit lines and still allows them to secure loans from banks for operating costs, trucks, etc.
Snow stresses even when capital is tight and a lot of companies are pulling back, it’s business as usual at Sheffield. “We do not have unlimited capital, but we do have ample capital to accommodate necessary growth in 2009 and beyond,” he says. “We are helping landscapers qualify this year through our manufacturing programs, lower interest rates, lower payments and deferred payments.
“Actual buyers may be fewer, but the opportunities for the future are great,” Snow says. “It is still going to rain, grass will grow, and people like me still want to have manicured lawns. In my opinion, the green industry has more optimism than most.”
Through John Deere credit, landscapers have several financing options including: John Deere Credit revolving plans, installment plans and leasing programs.
The Deere revolving plans can be used by landscapers to pay for equipment, parts, service, and John Deere Landscapes supplies up to $30,000. The John Deere Revolving Credit plan works like other credit cards, a re-usable credit limit, however at competitive incentive rates available for equipment, parts and service purchases at Deere dealers.
For larger purchases, Deere offers several installment plan options, including regular monthly payments or a seasonal payment plan tailored to when a landscaper has the most cash flow.
“Our most popular leasing option right now is our turn-key lease,” says Daniel Gundacker, manager product market development, John Deere Credit. “This keeps as much of their line of credit as possible open with their banks, and at the end of the lease they can walk away, or they can purchase the equipment.”
John Deere Credit notes it has maintained a consistent lending approach over time: existing to help dealers sell products and let customers buy equipment. “The convenience factor of John Deere credit is very important,” Oakley says. “We offer fast access to credit, customized terms, and one-stop-shopping. We’re here to build relationships with our customers over decades.”
Sheffield sees this downturn as an opportunity to grow business and gain market share. “We think our customer base of landscapers and cutters, being the entrepreneurs they are, are also seeing now is the time to be creative, innovative, assertive and smart,” Snow says. “Now is the time to expand and offer more and better services, and grow in profits and market share.”
