Landscaping maintenance operators: What makes your business tick?

searcher profile

July 16, 2024

by a searcher in San Francisco, CA, USA

What are some hallmarks of a great landscaping maintenance/lawn care opportunity? In a recent SBA lender roundtable, lenders mentioned that lawn care acquisitions have been struggling, and I'd love to hear what makes or breaks these operations.

Are there services provided, customer demographics, or market dynamics to watch out for? I'd love to hear from operators in the space.

As a note, I'm well aware that contractual agreements are a huge plus.

1
8
154
Replies
8
commentor profile
Reply by an investor
from Virginia Polytechnic Institute and State University (Virginia Tech) in Richmond, VA, USA
We do strictly high end residential in Virginia. Business was doing 80% install 20% maintenance with annual contracts when we purchased. Have since moved that split to 60/40 as we’ve grown organically and through more acquisitions. Would say commercial is definitely more sought after / bigger market when looking to exit along with quicker path to scale but residential especially high end can drive higher margins.
commentor profile
Reply by a searcher
from University of Maryland in 4040 Civic Center Dr, San Rafael, CA 94903, USA
From my observation speaking ONLY to commercial maintenance exterior landscapers, top priority things to assess quality of a landscaper are:

1) Direct contribution margins (at least 45%, more market is 50%+), of which labor is your #1 driver
2) Enhancement "pull through" rate (e.g. Enhancements as % of maintenance revenue)...minimum 40%, world class 100%+
3) Fleet age (e.g. is most of fleet 5 years < or much older?) - directly related KPI is capex as % of rev. (minimum 2% have seen as high as 4%, depends on maintenance vs growth)
4) Accurate job costing to make decisions on (ties to #1) - things such as Aspire, are very credible for achieving this
5) Leadership and management bench

Anyway, looking at prob. just the 5 points above, you could probably accurately compare / benchmark any commercial maintenance first landscape company with a high degree of certainty as to where they fall on the spectrum of quality, whether struggling or not etc.
commentor profile
+6 more replies.
Join the discussion