The outlook for 2024 is optimistic with 64 percent of landscape professionals polled expecting to see increased profitability.
NALP surveyed member contractor companies in November 2023 and received responses from 328 businesses across the country. Of those participants, 69% said they either met their budget goals or were within 1-9% above or below their profitability goals.
Better than Expected Services
Many companies reported certain services performed with higher-than-expected revenue. Forty percent of companies had higher-than-expected revenue in landscape maintenance and enhancements.
Installation (construction and plant install), irrigation installation or maintenance, and lawn care and pest control also had higher-than-expected revenue.
Installation was particularly strong for design-build companies, with 43% reporting better-than-expected revenue compared to 36% of all respondents.
For the commercial-focused companies, 34% reported higher-than-expected revenue in irrigation installation and maintenance (compared to 23% for all respondents). Forty-three percent of commercial businesses also had higher-than-expected revenue in plant and construction installation compared to 36% of all respondents.
Top Challenges
When it came to challenges, not surprisingly, 51% cited staffing issues as their top business challenge. Nearly 89% said they plan to add to their staff next year if they can find qualified employees.
Lower customer demand and higher cost of equipment and products were the other top concerns (at 17% each) for the general respondent pool. Residential-focused companies (23%) and lawn care companies (26%) reported consumer demand as the number one business challenge compared to commercial operations (9%).
The number one challenge for landscape maintenance companies was higher equipment and product cost, with 22% listing it as their No. 1 challenge.
Higher interest rates, supply chain issues, historically low snowfall, drought conditions, high staffing costs and clients not being able to secure financing were some of the other issues respondents listed.
The higher interest rates were more of a concern for commercial-focused businesses than the rest of the respondents.
Growth Plans
Only 13% of respondents expect their profitability to decrease in 2024. Thirty-three percent of the companies responding expect to expand next year by either adding branches or merging or acquiring companies.
Around 18% of respondents plan to add branches next year, with commercial-focused companies planning to do so at a much higher rate of 28%. Similarly, 25% of landscape maintenance companies said they expect to add branches next year. Only 10 percent of residential companies plan to grow via branches next year.
A larger portion of lawn care companies, 31%, expect their profitability to remain the same in 2024, compared to 23% of all respondents. As for expansion, 26% of lawn care companies expect to merge or acquire companies compared to 15% of all respondents.
Design-build companies had the lowest plans for expansion in 2024, with 9% planning to add branches and 9% planning to grow through mergers and acquisitions.
Electric and Robotic Equipment
The adoption of electric and battery-powered equipment is also under consideration with 27% of companies thinking about adding handheld electric equipment, 31% contemplating adding electric mowers and 31% examining adding robotic mowers.
Another 34% of respondents said they are using handheld battery-powered equipment for less than 50% of their operations. Only 3% of respondents are using handheld battery-powered equipment exclusively for their operations.
More commercial-focused companies are considering adding electric mowers (35% thinking about it versus 31% of all respondents) and robotics mowers (36% thinking about it versus 31% of all respondents). Likewise, 36% of landscape maintenance companies are thinking about adding electric mowers.
Design-build companies were the most interested in adding robotic mowers, with 41% considering adding them.
You can view the full survey results here.
