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Eyes on expansion

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The Yard Group’s consolidation business model keeps the people in the picture so everyone profits.

Kristen Hampshire | May 24, 2012

It’s a way out for a smaller company that couldn’t hack it in the tough economy. It’s a succession plan for a seasoned industry veteran looking to monetize his business. It’s a partnership opportunity for an entrepreneur who wants to scale up.

Consolidation is all of these things, and a personal approach to joining forces is what makes The Yard Group’s business model better than the behemoth, if you ask CEO David Pyne. “Getting bigger isn’t always a negative,” he said, shucking the stigma of a Goliath hungry for acquisitions. The Yard Group isn’t like that. “We use big company ideas, but we never lose sight of what got us here, which is the local brands and customer relationships.”

The Yard Group, headquartered in Rocky Hill, Conn., was created in 2007 with the purpose of bringing together landscape industry talent in the area. Since its founding, the parent company has acquired four major landscape brands in the central Connecticut region, all primarily focused on design/build services.

The first to join The Yard Group was B&B Landscaping & Design of Glastonbury, followed by Burhoe Landscaping and Lawn Service of Farmington. Most recently, the parent company broadened its portfolio by acquiring Readco Landscaping and Connecticut Homescapes, both in central Connecticut.

“The landscape industry is no different than a lot of other cottage industries in this country have been consolidated over the last 10 to 15 years,” said Michael Ferris, a founder of The Yard Group. “There are advantages associated with scale and purchasing, and you can pass savings to the bottom line and to customers.”

It’s not just about dollars and cents. For The Yard Group, bringing more companies under its umbrella allows each of its brands – Burhoe, Readco, B&B and Connecticut Homescapes– to offer more value to clients.

“We want to bring as many products and services into the relationship as we can to make the experience as simple and hassle-free for the ultimate client as possible,” Ferris said. “Our feeling is we can create longer-term relationships with customers by serving them in a variety of ways across the whole spectrum of landscaping products and services.”

Homegrown Identity
When The Yard Group acquires a large, regional brand, the plan is always to keep key people and employees in place.

Perhaps some back-room jobs are trimmed out, since the parent company can offer centralized administrative services, including human resources, purchasing and other core business functions. But the people who have worked hard to grow the acquired company into a successful, desirable entity stay on board. That’s part of the deal.

“There is a human side to this business model,” Pyne relates. “We are not going in like corporate behemoths, we are going in and saying, ‘Those jobs are staying put.’ Jobs are safer than ever, and we can offer their clients better service and sharper prices than ever before – and by the way, we’re a local company, as well.”

Most times, when employees think consolidation, they figure they’ll be out of a job. “What you find with this business model is the founders of the brand stay on and are a necessary equation to the go-forward success of the entity,” Pyne said. Same goes for key personnel and operators in the field. “The difference is, now they have the kind of career potential they probably didn’t have before.”

The local, homegrown story is an important part of The Yard Group’s culture, and its branding efforts. The parent company isn’t melting out-of-state outfits into its operation. There are plenty of opportunities to consolidate regionally. And so far, integration has been solely horizontal, though The Yard Group sees how vertically integrating into the retail nursery business could diversify the business. “We could deliver our footprint in a way that does not require the upfront investment associate with renting space and buying equipment,” Ferris said.

When larger brands like Connecticut Homescapes and Readco are absorbed into The Yard Group, they retain their identity. Their names are marketed, but The Yard Group drafts service offerings from one brand to the next to make each company’s offering more robust.

“The fact is, we are still a local landscape company, and we are not going corporate,” said Pyne, acknowledging that one challenge of growing is working to maintain brand identity and customer intimacy. Pyne said The Yard Group maintains a balance by always returning to the people who drive the company – the founders of each acquired company.

Those business owners decide to take The Yard Group opportunity because the marriage makes sense financially, culturally and philosophically. “There is a certain profile of an entrepreneur who is intrigued with involving himself economically and personally in a different career path, and it gives him a way to monetize his investment,” Ferris said.

For The Yard Group, adding more like-minded businesses to the mix diversifies and expands the parent’s suite of services. This can be a real buffer in a tough economy. “We think we need to be diverse and nimble. From our experience, it is clear that this area has a lot of capacity in the industry for this approach.”

Right time to roll up
Ten years ago, The Yard Group’s consolidation model might not have been so appealing to landscape firms. “It might not have worked when things were flying high and the housing market was red hot, and people were extracting equity out of their homes and spending money on projects,” Pyne said.

Single operators could survive on their own then, Pyne said. But the economy has changed that picture for many mom and pop businesses, some of whom are just tired of the struggle. The Yard Group has absorbed several businesses like this in the last five years, melding those operations into its four core brands.

“People can save face and continue to deliver services that the market demands,” Pyne said, positioning The Yard Group as a golden ticket out for one-truck operators that are tired of wearing all the hats. They can retain their client list, continue working at The Yard Group companies, and rid of their administrative headaches.

“We see consolidation as a trend with no end in sight,” Pyne continues. “And candidly, with the economy and some of the not-so-sophisticated operators that have struggled more deeply than sophisticated organizations, we see an opportunity to roll those operators into our family of companies.”

The Yard Group is engaged in discussions with a number of small operators now, and a handful of “sizeable” companies. “It’s all about the back-office consolidation and economies of scale,” Pyne said.

“But their customers still interact with the individuals they have come to know and trust over the years,” Pyne adds, relating how those business owners stay on their accounts. Continuity is key.

As The Yard Group looks toward further expansion, it will consider ways to deepen its service offerings and expand its penetration in the commercial market. Currently, the business mix is one-third commercial, and Pyne would like to see that increase to one-half.

“The commercial piece is really the recession-proof part of this business, much more so than residential,” Pyne said, speaking of the maintenance services that The Yard Group offers since expanding from its core design/build. “Businesses have to have their lawns cut every day.” And when those clients need more than a cut, The Yard Group is there with a comprehensive design/build offering.

Ferris said the improving economy and pent-up demand for services will drive growth opportunities their way. “There are companies that have been weakened by the last four years of economic downturn, and that intersection (of a better economy and customer demand) makes it the right time for us,” he said.

 

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