Phoenix company helps customers find financing in tough economy

During the downturn, Creative Environments decided to bring all of its services in-house, and has even provided new services such as veneering homes.

In Phoenix, Ariz., Creative Environments Design and Landscape ( has seen a dramatic shift in how clients pay for projects and has started offering assistance in securing financing for landscape work. That, and a willingness to tighten their belts and examine all aspects of the business, has helped Creative Environments successfully weather the economic downturn, says John Waters, executive partner with the company.

Creative Environments has been around since 1950, with tremendous growth taking place during the past 15 years, according to Waters. “We certainly saw the benefits of the run up in the [housing] market,” he explains of a company that saw its annual landscape design/installation revenues increase from about $7 million to $42 million. There is also a successful maintenance division. However, from its peak in 2006 to the economy’s low point (Waters puts it around September 2008), Creative Environments saw its volume drop by some 50 percent. “That’s pretty much the case with everyone here,” he says of the battered Phoenix landscape industry. “That’s where financing comes into play. Until recently, most people had the ability to get financing or could use the equity in their home.”

While Creative Environments has provided assistance with financing for several years, until recently, Waters says, “Nobody really used that service. Most customers could finance projects through the equity in their home or their stock portfolio, or they were doing well enough in their career that they could afford it. When the market turned and their equity dried up, or their portfolio dried up, or their job, they were in a position where they had to turn to some other form of financing, such as credit cards or credit score-driven financing. Getting banks to provide home equity lines has become very difficult; almost impossible. People’s home equity lines have been shut down.”

So, today, customers who choose to go ahead with projects either have the necessary capital, are pulling it out of their investments or they have strong credit. Waters also reports a “huge increase” in the number of clients using credit cards. That’s true not only on smaller, $2,000 to $5,000 jobs, but for large-scale projects, as well. “We did one job that was $280,000 and the homeowner put $100,000 of that on a credit card. It’s interesting, he had good credit, but the banks wouldn’t finance anything based on real estate [equity] at that time. They were much more willing to finance on a personal guarantee.” Waters says that credit card fees—anywhere from 2 to 4 percent—are steep, but the company accepts them as a cost of doing business.

Creative Environments is one of the leading landscape firms in the Phoenix area.

Creative Environments is the exclusive provider of landscape design/install services for Home Depot in the Phoenix area, and also works with the national retailer on financing issues. “If a customer is going through them, they can use their Home Depot credit card, but they’re usually limited to $5,000 to $10,000,” says Waters.

Creative Environments also offers customers access to financing through banks that offer as much as $50,000 in credit score-driven financing. “We’ve worked with John Deere financing. They’ve been good to work with and cooperative in providing financing, but their rates have climbed, so it’s harder to get customers to bite on those interest charges,” says Waters. “We’ve also worked with Paramount [a pool and spa supplier with a financing arm], which provides financing not only for pools, but also for pool and landscaping projects. The homeowner fills out an application, and we’re involved to the point of making adjustments in the contract to help them get qualified.”

Creative Environments’ design consultants try to discuss costs relatively early in meetings with perspective clients, both to get a sense of the scope of that clients’ vision, as well as their ability to pay for it. “We’re the experts and we try to tell them what a certain project will cost, and then ask them if that’s in the ballpark of what they have to spend. Our goal is not to find out how much they have to spend and then spend it all; our goal is to find out their budget and try to get as much into the project as we can,” says Waters. “We also try to find out how they plan to pay for it—cash, credit card, financing, etc.—so that we know. That’s more important than ever today. We’re finding that people are taking longer to make decisions than in the past.”

It can take several weeks for customers to get financing, and Waters says there have been some sales lost due to customers’ inability to get financing approval. “They’re either going to qualify or they’re not, so the sooner we get through that process, the better. We have had customers who thought they had strong enough credit, but who were not approved. It’s just a tougher market today.”

Creative Environments also works to educate homeowners about the value of investing in their home. “It was a little easier during the boom, but it’s still an investment today,” Waters explains. Rather than seeking to increase the value of a home they planned to soon sell, many customers are now viewing landscape improvements as a way to increase their own enjoyment of a home they plan to stay in, he adds.

To those customers, he points out that it’s to their advantage to do the work now. “As a company, we’re far more competitive than we were a few years ago. Because our suppliers are more competitive, our vendors are more competitive, and we’ve had to adjust our direct cost model, as well as our overhead. A project that may have once been $30,000 might now be $25,000. So, the customer is getting a good value at this time.”

As homeowners have found it difficult to get credit based on home equity, Creative Environments has seen more customers using credit cards, even for jobs costing more than $100,000.

Creative Environments has weathered the economy by adjusting its own business. As one of the dominant landscapers in the Phoenix area, with a reputation for quality, the company was one of the go-to choices for homebuilders during the rapid development that took place over many years in the city. “We’ve done business with all of the major builders here,” says Waters. As the housing market crashed, however, Creative Environments was vulnerable.

Waters says that a decade ago, the company’s work was approximately 65 percent residential (individual homeowners), 10 percent commercial and about 25 percent builder-related. “At our peak, we were probably 85 percent builder, 10 percent commercial and just 5 percent retail,” says Waters. “Now, we’ve shifted back to the point where we’re about 40 percent retail, 25 percent builder and the rest is commercial, so we have a much better mix today. And, we really had to adjust our business model, revise our direct cost model, adjust our overhead and become more efficient. We certainly had some months where we were taking a beating when the market was turning down, but we’re a stronger company now and we’re profitable,” he explains.

In addition to making necessary cuts, Creative Environments has also added services to its list of offerings. While the company had been involved with high-end pool, spa and water feature installations in the past, it usually subcontracted out those parts of the installation or left it to the client to secure those services. “With the downturn in the market, because we already had the infrastructure in place and were already doing the designs, we have now pulled pool and spa installations in-house,” Waters explains. “We also used to sub out installations of synthetic lawns, and we’ve pulled that in-house, as well. In the downturn, we’ve been aggressive in taking on any outdoor jobs ourselves, including veneering homes, painting homes—we’ve even done customer interior fireplaces. We’ve taken the approach that we can do it.” Today, the company has about 300 employees, including a team of 18 design consultants.

By becoming a leaner company during the downturn, Waters says that Creative Environments has put itself in a good position to take advantage of a rebound in the economy when it comes. “Like everyone else, we’ve learned lessons. We rolled up our sleeves and kept driving forward, and the reality is that we’re now more efficient. We’re seeing the light at the end of the tunnel. We’re starting to see people come out of their cocoons and be ready to go ahead with projects.”

Waters says that home equity financing will return, but he doesn’t expect that to happen quickly. “There’s a lot of inventory out there right now, and home builders are competing with foreclosures. Until the prices stabilize, banks won’t be too eager to loan on equity.” Until then, Creative Environments will continue to assist customers in securing other forms of financing to keep its business successful.

Patrick White is a freelance writer and editor who has covered every aspect of the green industry in the past 13 years. He is based in Middlesex, Vt., and is always on the lookout for unusual stories.