There are many methods for growing your landscape business and one that should be practiced with careful consideration is adding on a new service offering.
If you select a service that is a natural add-on to your current operations, you can increase revenue and meet customer needs. However, if you add an offering without the proper analysis, it can be a wasted effort that detracts from your business.
“The old adage ‘play to your strengths’ applies here — as you survey the opportunities for growth in your market, you should focus on areas where you have, or can build, a distinct advantage in meeting that market need,” says Don Evans, president of LandOpt.
Factors to Consider
Mountain View Landscapes and Lawncare, Inc. based in Chicopee, Massachusetts, discusses whether any new services should be added annually when they are setting budgets for the new year.
“We look at who we can market the service to, ideally can we add the service to our existing customer base,” says Steve Corrigan, president of Mountain View Landscapes. “How much will it cost to get up and running with the new service?”
Corrigan says customer demand tends to drive their decision to add a service. He says the main factors that help them determine if a service is not a good fit are the cost of adding the service, if it fits their customer base and can they get a decent gross profit return.
“It’s all about ROI—return on investment,” Evans says. “At LandOpt, we use an expanded form of SWOT (strengths/weaknesses/opportunities/threats) analysis with our members—if the Opportunity (or Threat) is connected to a current Weakness of your company, we will dig deeper to determine whether it is worth the effort.”
While adding a service can increase revenue, profit and provide opportunities for your team to advance as landscape professionals, make sure you have the people and ability to get the service up and running.
“If you aren’t committed and aren’t willing to put in the effort to make a detailed plan, don’t do it,” Evans says. “As LandOpt members know, a detailed financial plan is a critical element of success! Plan the work and work the plan!”
Subcontracting
If you don’t have enough employees on staff to perform the new service, subcontracting is always an option. Corrigan says they will consider both sides if they want to offer the service in-house or find a qualified subcontractor who can perform the service.
“While you may need to use subcontractors in order to meet the market need for a new service, or to fill out your portfolio of services, make sure you know your numbers — while your profit margins on subcontractor work will be lower, you should always be making a return on this work,” Evans says. “As we tell our members, never forget that the subcontractors you choose reflect your brand image — if a subcontractor is not aligned with the core values of your company, find another one.”
Finding and Promoting a New Service
Another question you have to ask is if you want to compete with others in your area or find a niche that is not being served. Corrigan says they try to fill niches that can generate decent gross profit margins.
“A crowded market means that you better have a distinct advantage or you’ll suffer with low margins and a small portion of the opportunity — don’t be afraid of competition but be brutally honest in your assessment of whether you are truly unique in how you can meet the customer demand,” Evans says.
Whatever service you choose to add, Evans says you should use every channel you have to promote this new business offering to current and potential new customers.
“And don’t forget your own employees — if your team is excited about the growth through providing additional services, they will tell others about it,” Evans says.
Corrigan says they get the word out about their new services primarily through their account managers having discussions with their existing clients.
