Buy Landscaping Business or Start a Landscaping Business? What is a better option?
Like many other businesses in the construction industry, a landscaping business has its own advantages and disadvantages. If you are thinking of either starting a landscaping business or buy a landscape business, there are various factors that need to be considered first.
Read ahead for a detailed understanding of the good, the bad, and the ugly of landscaping businesses and how to value a landscape business. We’ll walk you through the pros and cons of ownership, help you understand the choice of starting a landscaping business versus buying an already existing landscaping company, and everything to consider before you make a choice.
Why Owning a Landscaping Business Is a Good Idea –
The Pros
Whether you’re thinking of buying a landscaping business or starting one of your own, now could be a great time to do so. The landscaping industry is expected to grow significantly in the next five years, and the demand for landscaping services is increasing all over America. Lawn care, in particular, is becoming a new hobby for many American households. The money earned in sales and revenue of landscaping businesses also speaks for itself.
Here are some of the pros of owning a landscaping business:
Recurring Revenue
Most landscaping businesses offer seasonal services whereby they work during the summer and take time off during the colder seasons. There is the option of still working throughout the year, however, and some companies offer services such as snow removal in winter. Still, when it comes to owning a landscaping business, recurring revenue guarantees and profits can be made even when the business doesn’t operate throughout the year. With this kind of business cycle, it is even possible to own landscaping business as a part-time job while you do something else for the remainder of the year.
Steady Demand
A landscaping business offers services that many households across America consider necessary. These services include lawn mowing, snow removal, landscape design, irrigation installation, sprinkler system installation, and more.
This ensures the steady demand for landscaping services and sets the tone for future growth of the business. Not only is there demand from households, but post Covid-19, the demand for beautification of public places has also gone up.
An Easy Business Model
The business model that landscaping businesses are based upon is relatively simple and is easy to copy or scale. Additionally, compared to other trade businesses, you don’t need licenses or certain qualifications to get the business up and running.
To begin with, the only things you need to contend with include buying equipment, hiring labor, and working around transportation.
Flexible Management
A majority of landscaping businesses work well as a one-person management operation. This allows for significant flexibility, especially when considering the business’s seasonal nature. With owning a landscaping business, you have two options to consider.
Firstly, you could take a hands-on approach and work by yourself to offer landscaping services. Secondly, you could work in the office and handle administration while hiring labor to do the actual landscaping. Landscaping can be a good fit for an owner even if they do not want to work on the ground.
Opportunities for Expansion
And finally, another significant pro to owning a landscaping business is the opportunity for expansion it offers you. You can expand your landscaping business either by expanding the number of services you offer, expanding the service area you operate in, or expanding your customer base from just households to office builds and public spaces as well. There is also the opportunity for expansion and growth via acquiring already existing landscaping businesses. Another source of opportunity could also be to acquire landscape supply business for sale.
Why Owning a Landscaping Business Is Not a Good Idea
– The Cons
Of course, as with owning any kind of business, it can’t all be good. When it comes to the ugly, a few significant problems can arise when owning a landscaping business. Here are the cons to consider:
A Highly Competitive Industry
The construction industry, in general, and landscaping in particular, are very competitive industries with low barriers to entry. This can make it so that there are a lot of competing businesses in the same area, all competing for the same clients. As such, it can be difficult for a new company to thrive and make good margins. If you’re starting in an area where there are already a few well-established businesses to compete with, you may need to offer lower rates or special packages to keep up.
High Labor Costs
A landscaping business is labor-intensive, meaning that you have to take on high labor costs, which is not something that can be avoided. Hiring untrained workers would be cheaper, but then you would have the added costs of training them. Overall, there is usually a high labor turnover in the landscaping business. To avoid this, ensuring that your workers are compensated fairly and taken care of is important.
High Equipment Costs
As with labor costs, the costs for landscaping equipment are also quite high. These costs are most of the startup costs that would be needed for a landscaping business. Equipment such as lawn lowers, trailers, gardening tools, and more can be quite expensive. However, they are usually just a one-time cost.
Difficult Working Conditions
The work environment for landscapers is not often pleasant. Spending hours outside in the heat while doing intense physical labor lends to very difficult working conditions. And as for those landscaping companies that offer services throughout the year, working outside in the extreme cold can also be challenging.
Safety Concerns
And finally, one of the specific disadvantages owners of landscaping businesses need to deal with are the safety concerns and challenges for their employees. Working with large equipment and being outside throughout the day can offer several opportunities for physical harm to the workers. This calls for the need for proper safety precautions, safety gear, thorough training, and insurance coverage.
What Is the Better Option – Starting a Landscaping Business or Buying a Landscaping Business?
Now that we have gone over the pros and cons of owning a landscaping business, the next important question is whether it would be a better idea to start a landscaping business from scratch or buy an already existing one and build it up.
Generally speaking, buying an already existing business would offer you a good base to work off of. Take, for instance, the reduced costs associated with buying all new equipment, the already existing and loyal customer base, and the employees that are already working with the business. All of these factors, and more, can help reduce the upfront costs you may have otherwise had to deal with, as well as the difficulty in sourcing employees and equipment and convincing new customers to work with your business.
If you buy an already existing landscaping business, you have the added advantage of being able to channel all of your time and energy into growing the business and managing it better, or maybe even marketing the business and expanding its scope.
However, buying or acquiring a business comes with its own set of challenges that need to be dealt with. You need to carry out a thorough investigation of the business you’re planning on buying and get in touch with an expert business advisor to help you throughout the long and challenging process. You will also have to consider different valuing factors that are used landscaping construction business versus landscaping maintenance businesses for sale. From time to time, you may be able to grow your landscaping business by acquiring your competitors landscaping clients for sale.
What to Consider Before Buying a Landscaping Business
Buying or acquiring a business is not something to be taken lightly. There are a lot of things that need to be taken into consideration when choosing a business to buy. The same is true for buying a landscaping business.
Here are some things to keep in mind when looking for a landscaping business to buy so that you can minimize your costs and maximize profit and revenue:
Existing Customers Base
It is very important to ensure that the landscaping business you plan on buying already has an existing and well-established customer base. It would help lower your risks if this customer base was a mix of residential and commercial customers. This way, you will have different kinds of landscaping contracts to work on. Sometimes, you may also be able to acquire landscaping clients from a small competitor who doesn’t have enough landscaping eqiupment.
Equipment Owned by the Business
Landscaping equipment is one of the biggest costs associated with a landscaping business. If you buy a business that already owns good quality and functioning equipment, that is a huge cost you can save yourself. When doing your business evaluation, be sure to consider when the business’ equipment was bought, how often it has been used, and when it was serviced to ensure that it is in a good current state.
The Reputation of the Business and the Brand
A business operating in a certain area should ideally have a good reputation and a recognizable brand. The last thing you need is to buy a landscaping business only to find out that you must first work on building up its reputation and spend time and money rebranding it. A business with a good reputation will be more likely to attract customers and help you turn profits.
Employees Currently Hired by the Business
When it comes to buying a business, retaining the employees they already have hired is much more beneficial than having to hire and train all new employees. It would be a good idea to choose a company with already hired employees and then also carry out a thorough investigation into whether those employees are adequately trained, fairly compensated, and satisfied with working for you. You may also have to consider how difficult is to to find employees for landscape business.
This will help reduce employee turnover in the future. Existing employees can also offer valuable insights on improving working conditions and ensuring that your employees are loyal to the business.
State of Business Insurance
Insurance coverage is imperative for any business, but especially so for businesses in the construction industry. Workers’ insurance policies are also very important considering the dangerous environments they have to work in. When buying a business, be sure to review all of their insurance policies and documents and check that their contracts are all legal and valid.
N3 Business Advisors – Construction Industry Mergers & Acquisition Advisors
If you are interested in breaking into the construction industry and buying a landscaping business, then N3 Business Advisors can offer you its services relating to business acquisitions. We are a merger and acquisitions advisory firm located in Ontario, Canada. We work primarily with businesses in the construction industry, such as HVAC companies, general contractors, landscaping companies, civil engineering firms, and more.
To begin with, you should consider how many landscaping businesses sale in Ontario. At N3 Business Advisors, we aim at maintaining an active inventory of sellers and buyers of landscaping companies. We invite you to regularly check our website for current and upcoming landscaping companies for sale in Toronto and across Ontario.
When buying a business, it is important to conduct a thorough investigation into the different options available. Here at N3 Business Advisors, we can help you throughout the process. From finding a business to buy to strategy development, research, approaching targets, financial modeling, and finding creative solutions to complex issues.
You can get in touch with N3 Business Advisors now to schedule a confidential consultation. Visit our website for more information, or call us at 647 967 4222. Our office is located at 55 Village Centre Place, Suite 200, Mississauga, ON L4Z 1V9.
The Bottom Line
When it comes to landscaping businesses or any other business in the construction industry, there are various reasons why you may want to start your own business or even buy an already existing one. We have gone over most of the pros and cons of owning a construction company, as well as the advantages you may gain from buying an already existing business rather than starting one from scratch. It is up to you now to get in touch with an experienced business advisor and make the first steps towards owning your own landscaping business.
