Opportunities & Barriers to Entry in the US Landscaping Service Industry
Some key barriers to entry in the landscaping service industry in the US include the competitive market, labor shortages, legal issues surrounding the immigration of temporary workers. Some key opportunities to entry include quick adaptation to changes in demands, using position within other markets as a unique selling point, setting higher standard with customers in terms of deliverable and growth. Below is an overview of the findings.
KEY BARRIERS TO ENTRY IN THE LANDSCAPING SERVICE INDUSTRY IN THE US
- In general, the barriers to enter the landscaping service industry in the US are low.
- New companies wanting to enter the industry might face competitive markets of varying sizes (small, medium-sized, large) and varying geographies (local or regional).
- Some customers opt not to outsource landscaping, which could have an effect on the industry by increasing the competition for existing and new companies.
- Former employees of landscaping companies in the U.S. often establish their own companies and compete in the same market. Though they are unable to compete directly with their former companies for a short period, they still contribute to the market.
- Former employees establishing their own businesses can lead to reduced market share and lowered financial positioning for other companies.
- As it relates to the immigration of employees strict federal, state and local laws pose some difficulty for companies.
- Other barriers to entry in the landscaping service industry in the U.S. that could be considered, based on barriers to growth rather than barriers to entry, include: labor shortages, immigration regulations for seasonal/ temporary workers, the high cost associated with the H-2B program, instability of income, and legal issues such as audits or raids.
- Labor shortages are daunting and the legal processes for immigrant workers have frustrated employers.
- Doing both office work and manual labor for landscaping due to customer demands and lack of staff can be burdensome.
KEY OPPORTUNITIES IN THE LANDSCAPING SERVICE INDUSTRY IN THE US
- The opportunities that new companies entering the industry might want to consider are: market size with a few large competitors, providing better/higher quality service at a low cost, and building stronger bonds with existing customers or consumers in the industry. Based on the current market experience, these attributes will contribute to a successful business.
- New companies could focus on adapting more quickly to demand changes than the current service providers (for example, by using new technology or software to conduct business).
- They should also focus on utilizing better resources, promoting and selling services at a more advanced level than the existing service providers, and gaining access to more advantageous financial support.
- Regional competitors have an edge over local competitors as they can use their position within other markets to their advantage.
- There is the opportunity to target customers who are not outsourcing their landscaping.
- Only a few existing companies can operate nationally and regionally.
- The commercial market is predicted to grow at a CAGR of 3% until 2022, which may be attractive to new companies.
- The largest service provider in the industry, Bright View, only has a 2.8% market share, which would be a great attraction for new companies looking to enter the industry.
- Treating customers with the utmost respect and dignity could go a far way to avoid issues and stay ahead of competitors. This includes doing things such as honoring customer requests, not deviating from the agreed price and completing the job on time.
- There are increasing opportunities due to the demands of residential and non-residential markets and the increase in housing and land properties.
- There are even more opportunities in areas such as landscaping design & building services and lawn care & chemical application services. Nineteen percent of businesses see the former as their fastest-growing service, while 13% of businesses see the latter as their fastest growing service.
ADDITIONAL INFORMATION ABOUT THE US LANDSCAPING SERVICE INDUSTRY
- The median revenue for the Landscaping Service Industry in the US in 2017 was $287,000.
- The average revenue for the Landscaping Service Industry in the US in 2017 was $1,100,000.
- The top service provided in 2017 was lawn care.
- A popular trend in the industry stems from private equity firms' interests, mergers and acquisitions.
- Challenges facing the industry include high demand based on growth, difficulty related to hurricane/ extreme weather events, insufficient labor, restricted water supply and low-ball competitors.
- The industry has experienced a strain due to insufficient manual labor of good quality which blocks the industry's growth. This has stimulated contractors to look into technology to lessen the need for manual labor.
- Increased investigation by the government into employee immigration processes of businesses with seasonal and temporary workers has made it difficult for employers.
- The H-2B program for visa allocation has become more difficult for employers in the industry who have decided to use it less; only 1% currently do. The program is costly and time-consuming.
- Unreliable domestic laborers negatively affect the company's reputation in the industry.
- Potential employees feel discriminated against by potential employers during the recruitment process if it is too stringent.
- The industry faces the issue of unstable income for workers as well.
We conducted research on the landscaping service industry in the U.S. with a specific interest in key barriers to entry, as well as opportunities. These two areas were looked at separately. To gather information about the United State’s landscaping service industry, we used a variety of trusted and reputable sources including landscaping industry reports, articles in association with landscaping in the U.S., market reports (such IBISWorld reports), and annual reports for landscaping businesses (which included information about the industry at large), among others. The findings were considered to be key to the industry because they were highlighted as issues within the industry for existing companies that have information specific to the industry (industry reports and annual reports).
We also checked other sources such as Ivey Publishing but were unable to find any additional information.