INDUSTRY TRENDS AND OPPORTUNITIES

• Rapid Population Growth in Southern States increases demand for landscaping and lawn maintenance - The rapid growth in population in the dry states of the South and West has also increased the demand for both household and residential irrigation systems.
• Steady Industry Growth - Demand for landscaping services has grown steady over the past decade. To illustrate, from 1994 to 2004 industry employment increased 50 percent due to the strong real estate market at that time.
• Diversification of services - Landscaping companies are increasing the range of services they are offering. Many landscaping customers, such as building owners and property managers also need services such as pest control, aquatic maintenance, janitorial services, building maintenance and security services. Landscaping companies have expertise managing a low-paid work force and can utilize this to offer additional services to existing clients.

“Things to know before buying an Landscaping Business business”
If you are considering buying a landscaping business there are a lot of factors to consider. Since several associates at Murphy have expertise in the industry we know the major factors in the industry to consider. We know the trends and opportunities in the industry as well and can help you capitalize on that knowledge. Here are some important items to consider.

• Demand - It is important to understand the demand for landscaping industry. It is tied to the economy and is driven partly by construction of new commercial properties and partly by the health of the overall economy. The demand can also be seasonal. Understanding how to adjust in times of lower demand is critical to the success of the business. Lawn and landscape maintenance is in constant demand, especially by commercial properties, condo and homeowner associations, retail centers and office buildings.
• What are the company’s margins? Margins are typically low for smaller companies due to strong price competition but can be increased by operating efficiency. Large and medium size providers usually have better margins and can be highly profitable.
• How is the company determining its pricing? Understanding the way the pricing system works is a major component of success in this industry. One of the biggest mistakes a company can make is to base its price solely on what competitors are charging.
• Does the company use job costing software or other software to determine bids for jobs? Large successful companies often use some type of job costing program to keep track of costs as well as programs to help accurately bid on large landscaping projects and increase operating efficiency.
• What percentage of sales comes from contracts versus individual work orders? Contract work provides more stable cash flows and is becoming the norm for commercial work.
• How does the company manage the seasonal swings in revenue? Landscaping revenues are highest in the second and third quarters. Companies can typically incur losses in the first quarter. Having a higher percentage of commercial contracts that call for monthly payments can help smooth out cash flows.
• Does the company have trouble finding low cost labor? Landscaping depends on reliable seasonal labor. Some companies typically hire local college students and immigrant laborers, but larger companies usually have developed a permanent work force that they keep busy year-round.
• Does the company offer additional services besides landscaping? Diversifying services can increase revenues. Expanding services to include pest control, aquatic maintenance, janitorial, building maintenance, and security can offer additional revenues.
• What range of plant care can the company provide? Many landscaping companies offer sophisticated plant care, pest control, landscape design, lawn maintenance, leaf and snow removal. Some also provide installation of patios, pavers and brick walks.