Buy a Lawn Care Business or Start a Lawn Care Business — which is better?
My answer to this question applies to those of you that are just getting started and those of you with an existing business and are trying to grow faster. I see a lot of existing businesses that buy businesses to grow faster. My opinion on this, and it’s been stated before in other videos, is that it is better to grow organically then it is to buy a business. Meaning, it is better to go out and do your own marketing.
Now, why do companies buy other companies? To grow faster. Well, if you are a small guy in the lawn and landscape industry and you don’t know how to do marketing and grow your company on your own, then you are stuck in a predicament and the only way to achieve growth is to go buy companies and buy accounts. My opinion is, once you learn how to market and you learn how to get accounts on your own, you will be less interested in buying accounts. What you will quickly realize is that you can generally go spend your marketing dollars and acquire a new client for less money than it will cost you to go buy that very same client.
The problem is, when you buy a client, you have to educate them on why they should want you. They didn’t pick you. When you do marketing, they pick you. When you buy them, they don’t pick you and that’s a tough road. You have to then resell them to keep them.
I think that spending the money to acquire your clients organically is the better approach. But that doesn’t mean I wouldn’t buy accounts. I absolutely would. If a fantastic deal presents itself, if it makes sense, it’s a fit with your business, and the way that that company did business is not so different from the way you do business, then there is a high probability with a lot of hard work, you will be able to merge all those clients that you are acquiring into your business.
If you are moving into a new state and you want to get started and you are able to find a really good deal, that’s a great way to launch. It gives you an immediate launch pad. It gives you some employees and probably some equipment.
I would not over pay. What over paying means is different to everybody. I tend to be on the lesser side of paying for accounts because I see that accounts only have so much worth. Again, I can go get them myself. So if you don’t over pay, then I think it’s a nice way to get started.
If you look at bigger companies that are trying to grow really, really fast then they are using both organic growth and acquisition. They are doing both, not just doing one or the other. Then, we’ve got some major players in the industry that have such high attrition, meaning so many clients are leaving on an annual basis, that to keep their numbers where they are and grow their client base, they have to acquire. They have no choice but to acquire. That’s not the same game that you are playing.
So, as a company that is trying to grow larger, my focus would first be on learning how to market. You must learn how to get new clients and acquiring clients on your own. Then from there, I would augment that strategy with actually acquiring reasonably priced lawn care companies, landscape companies, and irrigation companies, that very closely match the business that you already have and integrate them into your business.
The summary of the answer is, if you are the fellow moving from New York to Atlanta and you find a great deal, go for it. Make sure it’s a great deal. I would say the vast majority of guys buying lawn care companies are over paying for these businesses. There’s a reason why most guys are getting out of their business. The reason for it is not usually one that has to do with being a fantastic business that is going to make you a ridiculous amount of money. So, be very careful about what you are buying and the real motivation behind why they are selling it, what the hidden problems are, and how long it will take to recover your money. Consider all of that and I think that will help you make the decision.
