Business is booming
If the current state of the U.S. economy tells us anything, it is that business-the focus of this issue-is booming. But the reason for the continued boom is puzzling. Consumer confidence remains high, and home building and sales remain robust despite increasing mortgage rates and fears of inflation. Increased home sales and increased mortgage rates don't generally occur at the same time. As for inflation, all the pieces are poised in the right position for inflation to take off-current depreciation of the dollar; low unemployment (4.2 percent in August); high demand for homes, which will drive up home prices; and high demand for goods and services as a result of low productivity increases (gross domestic product increased 1.6 per cent in the second quarter) and weak business-inventory accumulations. But inflation is not occurring. All of this has economic analysts scratching their heads trying to figure out why the economy continues to do so well. The fact is that it does continue to do well, and the ground-care industry is reaping profits from the good times.
Landscape contractors and grounds managers will continue to benefit as long as construction remains strong in residential, private non-residential and public sectors. With almost every new building comes a landscape that has to be designed, installed and maintained. For instance, a Gallup survey sponsored by key industry trade associations indicated that 21 million households spent more than $16.8 billion on professional grounds care in 1998. This is an increase of $2.2 billion over the previous year. This scenario has swelled the ranks of landscape and horticultural services with new firms intent on taking a piece of the pie. In fact, the latest U.S. Department of Commerce County Business Patterns report indicated that there are 68,157 landscape and horticultural service establishments-up 5.1 per cent from the previous year. Obviously, increased competition for accounts and labor will ensue.
With so many new firms comes the probability of increased low-ball bidding. It may be that individuals in these new firms may not know how to accurately bid a job or they may be intentionally bidding low to try to get a foot in the door to this market. So how do you deal with them? Ron Kujawa, president of Kujawa Enterprises, unveils his strategies in dealing with low-bid contractors on page 12.
Individuals contemplating getting into the landscaping market may think that money just grows on trees-well it does in certain respects. Trees add considerable value to a property, and in many instances, such as insurance or legal claims, tax purposes or real estate assessment, a monetary value must be assigned to the tree. This is where a professional tree appraiser can help you. For an overview of what tree appraisers consider in their appraisals, see "How to: Determine the value of a tree," on page 22.
A mature tree on a property can be worth a considerable sum; however, an overgrown mass of 2-year-old saplings and brush can detract from a property's value. To clean up the property, you'll need a brush cutter. Learn about some of your product options on page 17.
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