Wednesday, February 16, 2011

Extra fees, no! Increasing productivity, yes!

My wife Vicky and I just returned from a short vacation. We stayed at a nice hotel in central Florida then visited some nieces and nephews and finally ended up in Fort Myers where we hooked up with our son and daughter-in-law.

We were surprised by the “extra” expenses that we incurred in what we had planned to be a frugal vacation. First came the airline baggage and snack fees. We had anticipated these and paid them without a whimper. However, we decided not to pay extra to sit in seats closer to the front of the plane. Until recently none of these services cost extra. They used to be part of the deal when you bought an airline ticket.

Then at the hotel, a very nice hotel, we were surprised to learn that, in addition to the room rate we had been promised we were charged a daily resort fee ($16 plus tax) and also a parking fee ($13 plus tax) — this at a hotel that on our previous stays did not levy a resort fee or charge for self-parking. I don’t even want to talk about the extra taxes and charges accruing to our car rental.

So, what’s the point you’re probably wondering?

The point is this: Inflation is here and it’s likely to get worse. Perhaps much worse. Prices of commodities, all commodities, are rising. Check it out for yourselves.

Businesses that because of competitive pressures can’t raise their base prices are generating cash by other means, in the case of travel with lots of new and innovative fees. (What's next a towel use fee?)

Landscape/lawn services, participating in one of the most competitive and price-conscious industries in North America, find it difficult to tack on fees as evidenced by the fuel surcharges many of them attempted to pass to customers when fuel prices spiked prior to the 2008-09 Recession. So, what to do?

The most obvious answer is to put in place processes to generate more productivity out of each unit of input — be it capital or labor. This has got to be a continuous effort, and it'll only work if you involve your whole team. After all, everyone in your company has a stake in helping it prosper (survive?) as a business in 2011 and beyond.

If you thought operational efficiency and productivity mattered in the success of your landscape operation before, I'm saying that you ain’t seen nothing yet. — Ron Hall

1 comment:

ProMark Landscape mgt said...

Unfortunately this is very true in our particular industry. Our business is considered a luxury service, and is one of the first to be cancelled when people want to save money. Our industry is also very unrespected due to the saturation of lawn and landscape companies-it seems as if everyone and theyre brother are doing this. I believe there are many good companies, but more fly by nighters,who are wrecking and saturating our industry with false knowledge, and low ball prices. If there were more respect, and certain standards to be upheld, it would be less competitive and some of us would again be able to recoup some of our high costs for fuel, fertilizer etc.. It is true we have to work harder, than ever, pricing, and quality the key, or your customer will give joe shmo his chance!