Here are my latest three of predictions for the future of the industry.
Prediction 1 – Company Owners Will Increasingly Sell to Their Employees.
As the baby boomers head toward retirement, there is an unprecedented need for transitioning ownership of landscape and related green industry businesses. While this has given rise to outside money buying up landscape businesses it will also create an increase in employee bought and owned business. ESOP (employee stock ownership plans) was all the fad a few decades ago.
I predict we will see a resurgence in employees buying and running businesses. To prepare for this, you (as an owner) need to develop a leadership team (and likely with a single leadership person) that is capable of both leading the business and buying the business. While there are many resources available for business purchase/transition, the leadership must be built up, organized and mentored. Time to get started, no matter the timing of your exit strategy!
Prediction 2 – Mow and Blow Companies Will Fall Away (as a Viable Business)
There has been an influx of many new channels for buying/selling services including landscape maintenance services. Amazon has started offering services, and new companies have formed to sell mowing services via the Internet and phone (e.g. Canopy), and new apps have been released to sell mowing services. Moreover, new robotic mowers and services have begun to appear.
I predict all of these trends will converge to put significant pressure on simple mow and blow company pricing. To remain viable in the future, these companies will either sell out (to companies like Canopy) or they will shift their services to more substantial offerings, serving the more discerning and needy client. The low end of the market will become more commoditized and taken over by technology firms, and will no longer be the “easy” entry point to entrepreneurial success.
Prediction 3 – Residential Companies Will Be Rolled up by Private Equity.
Private equity has been attracted to our industry, buying up commercial maintenance companies. And other private money has helped commercial landscape maintenance companies to accelerate their expansion through acquisitions. This has created the broad sense in our market that you an entrepreneur must be in the commercial space in order to own a truly valuable (salable) business.
I predict this (mis)conception will change, and residential companies will begin to be pursued. Smart investors will realize that residential firms can be highly profitable and stable. I see this personally when I help residentially focused firms achieve upwards to 20% net profit and more. Residential is much more fragmented than commercial, and you can take advantage of this, by building up your residential service operations into a larger platform with diversified services.
In summary: There is a right way and a wrong way to grow and to profitably build your business, regardless of when you plan to sell your business.
Regards, Jeffrey Scott
P.S. Early bird pricing ends later this week, see below.
This article was previously published here.