Saturday, October 4, 2008

Business - Survival in an Economic Downturn I

Horticultural businesses from greenhouses to landscape maintenance companies are being impacted greatly by the economic downturn. The following will be a continuing series on business survival in an economic downturn.

Business survival in an economic downturn - getting more efficient and reducing costs.

Cost reduction is a critical part of surviving economic downturns as is improving efficiency. The following are some points to consider:
  • Evaluate your labor situation. Labor is a major cost of doing business and if there is not enough work you may need to reduce your labor numbers.
  • Evaluate your labor efficiency. Are you efficient at the way you use labor? Down time in getting jobs started or organized, excessive lull times, and excessive overtime can lead to reduced profitability.
  • Fuel and other energy costs have risen greatly over the recent year. Reduce trips as much as possible, consolidate trips, trade for more fuel efficient vehicles or equipment, reduce times where engines are running (reduce idle time), tune up engines, etc.
  • Maintain equipment well and operate in a manner to reduce repairs and add to the longevity. In an economic downturn you will need to keep equipment longer before replacement.
  • Pay more attention to cost of inputs - plant materials, seed, fertilizers, mulch, etc. Look for low cost ways to achieve the same results. For example, screened yard waste is being offered by government entities for little or no cost. You can take this material and age it yourself to use on next year's jobs as mulch or compost it for use where compost is required.

More information on reducing costs will be offered in future posts.

Gordon Johnson, Extension Horticulture Agent, UD, Kent County

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