We are seeing lots of interest right now from buyers pursuing lawn and landscape maintenance companies. There’s good reason for that. If the economy does start to slow down (and it will eventually), landscaping is one of the few service businesses that can survive any recession. Grass is always going to grow, even during a global pandemic, and both residential and business customers have year-round standards for their properties.
Landscaping companies have relatively low barriers to entry, requiring just basic licensing, insurance, technical and equipment knowledge, and startup costs. The monthly recurring revenue is a big attraction for buyers, and we’re seeing larger companies wanting to grow through local acquisition. Acquiring companies is the easiest and fastest way for a business to grow, since they achieve economies of scale with some simple branding changes.
Lawn companies also fairly easy to scale up or down; crews are usually fully cross-trained and easy to move around when needed seasonally. The landscape industry is also poised for growth: Businesswire.com predicts that the U.S. market will see at least 4.5% growth through 2025. Wherever there is residential and retail and business park construction, there will be new business for landscape maintenance companies.
Companies can also expand into other related services such as landscape design, construction, pest control, fertilization, and irrigation systems. Northern companies often add snow removal to keep revenue flowing during winter months.
Marketing and advertising aren’t a big drain on profitability in the lawn business. Customers don’t expect sophisticated ads and websites; you just need to be findable, responsive, and deliver great service. Once a lawn company is performing well in a neighborhood or for a developer, it’s easy to get referrals.
Labor is a challenge in any industry right now, but lawn work has a very short learning curve and neither education or language is a barrier for workers. Lawn company owners don’t have to invest large sums in recruiting or training. Since material and equipment costs are fairly stable, a well-run landscaping company usually has gross margins of about 50 – 55%. That’s a very attractive figure for entrepreneurs looking to get into or expand their ownership.
Selling a landscape business offers more flexible options than other businesses. If you’re not quite ready for retirement, you might opt to stay on in the new company as a sales representative or a foreman. You get the benefit of the new infusion of capital and energy, someone else taking over administration, and being able to focus on the parts of the business you really enjoyed.
All this adds up to favorable conditions for a lawn and landscape business owners looking to sell their company. The winds are certainly at their back as they contemplate their future and consider retirement or just pursuing other interests.
I have nearly 25 years of experience as a professional business broker, and I know (and care about) the lawn industry. We specialize in selling both residential and commercial companies related to landscaping, including tree cutting, pest control, irrigation, and other specialties with gross revenues over $1 million. If you’re thinking about selling your company, the first step is to get a complimentary and confidential opinion of value. Click here.
About the author: Jim Parker
Jim Parker is an experienced business broker specializing in lawn and landscape businesses. The Lawn Boss is based in Clermont, Florida. As an industry leader he has served as the past president of the Business Brokers of Florida. Jim is a sought-after speaker, where he teaches others in his industry best practices in ethics, closing transactions, and finding qualified buyers. He consistently is a million-dollar award winner and is among the top 50 in sales of all business brokers.
He is a Certified Business Intermediary (CBI) and is a Mergers & Acquisitions Master Intermediary (M&AMI). To contact Jim, visit thelawnboss.com or call (407) 927-8999.