Which Is More Valuable: Residential or Commercial Landscape Companies?

Jul 16, 2019 | Growth Tips

Are you in the right business?

As a business owner, you want to invest in a business that you love, but also one that brings you a very good ROI.

At some point you will want to sell your business, for one of the following reasons:

  • to cash out,
  • to transition it to a new generation,
  • to do something new.

In the landscape industry, there has been the common conception that commercial landscape maintenance companies are the only way to scale a business that you can sell for a nice multiple.

This has been bolstered by Bright View going public, and private equity rushing into the market, buying up commercial companies.

But I predict this will change.

I work with both commercial and residential companies; there is high value in both. I predict private equity will get comfortable with investing in residential service companies.

Residential focus has a few key advantages:

  • it can be operated at a very high net profit,
  • it is easy to market and sell services,
  • it doesn’t depend on one or a couple large clients who overly influence your operations.

The key is to build up a large and diversified platform of services. An investor would rather buy a large foot print. Plus this helps you diversify risk.

You also want to diversify you offerings so that you are less dependent on weather and trends.

As the market softens in the next 18 months, it is the perfect time to buy other small companies and built up your base.

Your challenge: Be poised and ready to take advantage of opportunities as they will surely pop up.

Ultimately, you will want to build up a high profit organization with a leadership team that can continue to drive your business, even as you take time off to enjoy the hard-won fruits of your labor.