The seasoned investor sees unique profit potential in the lawn-care franchise
After a decade at an international, boutique consulting firm, in 2009 Kevin Dell’Oro left his practice and his position as the Managing Director to start his own growth consulting firm with two partners. As success with this business grew, Dell’Oro became increasingly interested in outside investments and in 2011 began making angel investments in a range of business ventures. This year, Dell’Oro and his wife made their first full-ownership investment, purchasing an existing business with lawn-care franchise Lawn Doctor.
Lawn Doctor is not technically Dell’Oro’s first foray into lawn-care. One of the very first businesses he ran was a lawn-mowing company, a project he started while working for his father’s small business.
“My father was a jack of all trades with a few different businesses.” Dell’Oro added, “He built houses, did HVAC, site work and paving, so I grew up working with him on providing all sorts of residential services. The lawn-mowing company was the first business I started for myself, but I was just pushing a mower around; nothing like the technology you see at Lawn Doctor.”
Dell’Oro made a decision to look for bigger opportunities in small business, when he and his wife moved from Northern Virginia to Annapolis, Maryland, a smaller, close-knit community in which he was determined to have a positive impact.
“When we moved to Annapolis, we found a close community with a thriving local economy, and I realized that’s exactly what I wanted to support with my investments,” Dell’Oro said. “I wanted to serve people who were my friends and neighbors and establish roots in the area.”
Soon after the Dell’Oros began looking for local businesses in the Annapolis area to invest in, they met Tim and Patty, a pair of Lawn Doctor owners who, after 35 years in the business, were preparing to retire and looking for a buyer for their territories.
“We didn’t work with a broker, my wife and I just sat down with Tim and Patty as well as many other Lawn Doctor franchisees, and we learned everything about the business,” Dell’Oro said. “They were very forthright and willing to share key information about the business, and it was extremely helpful to get a personal account of what makes the business work.”
As the Dell’Oros learned about the Lawn Doctor business, they saw a number of advantages over other businesses they’d invested in. “It not only fit all our criteria, it was checking off a number of boxes we had never even thought of,” Dell’Oro said.
The seasonality of the business was the first thing that struck the Dell’Oros. Having the bulk of labor occur in the Spring, Summer and Fall and focusing on marketing and maintenance in the winter allows owners to schedule out work and priorities well in advance, a significant advantage for owners who manage other businesses or investments, like the Dell’Oros.
The other aspect of the business that quickly caught the Dell’Oros attention was the scalability. “The range of sizes we saw was very appealing,” Dell’Oro said. “There were smaller, sort of DIY Lawn Doctor businesses, then there are folks who had built empires with the brand and everything in between. We realized with our experience, we could grow this thing quickly and find a big return.”
Early in 2018, the Dell’Oros purchased the existing Lawn Doctor territories and quickly set to work learning the ins-and-outs of the operation. “We are taking a strategic approach and focusing more on growing the business than working in it, but it’s still important that we have a comprehensive understanding of how the business is run,” Dell’Oro said. “Despite all my experience, I didn’t know much about the business but the support from Lawn Doctor corporate and other franchisees has been incredibly helpful and really gotten us down the learning curve, quickly.”
The Dell’Oros investment-style approach to their Lawn Doctor is not uncommon among the brand’s more experienced investors. Scott Frith, Lawn Doctor’s CEO, said the franchise is seeing more and more interest from entrepreneurs who are looking to Lawn Doctor as a way to diversify their holdings.
“Traditionally, Lawn Doctor is a business that attracts people who are looking to escape the corporate world and run something for themselves. As our franchise moves into more markets, we’ve seen increasing interest from sophisticated investors who see Lawn Doctor as a business that they manage easily with an ability to scale into a relatively hands-off position,” Frith said.
Growth is key to the Dell’Oros plan for their Lawn Doctor. “This is our first investment where we actually own the whole business, so we’re treating it a bit differently than our other investments,” Dell’Oro said. “We are specifically interested in significant growth. This is not just an annuity that will stay flat and slowly show returns, we plan to grow it, a lot.”
Dell’Oro said he sees Lawn Doctor as a 20-year investment, but that doesn’t mean he necessarily plans to sell the business after two decades.
“We see three or four potential exit strategies,” Dell’Oro said. “The first is that our kids could take over the business, which would be cool because we want the business to be a big part of the local community. The second option is letting some of our employees take over. We’ve got a really strong team, and we are determined to help them grow with the business. They’ll be much more involved in the day-to-day than we are, so we want to help them take on more responsibility at every opportunity and one day that could mean taking over the business altogether. The third option is stepping back from the business entirely but maintaining ownership so that it just becomes passive income. And the fourth option is to sell to another investor. We expect the business to be very big in 20 years, so if we sold it outright to an investor, it would be a large sale.”
According to Frith, the Dell’Oros exit strategies show a sophisticated understanding of the opportunity.
“We’ve seen so many owners come in over the years and have great success with the brand. Then when they are ready to retire, they aren’t sure quite how to go about it, so they pass the business on to their children or they look for a buyer,” Frith said. “Both of those are perfectly good options, but the fact that the Dell’Oros are already looking into their exit strategy and see a number of different options, proves that they are thinking about how to make the most out of this business. We are always excited to work with owners who see the big picture.”
Even in his first months as a Lawn Doctor owner, Dell’Oro said the business is already showing more potential for growth than he initially expected.
“This business has so much going for it, more than I think most investors might see if they don’t take a hard look at the brand,” Dell’Oro said. “The loyalty of the customers and the recurring revenue model make it an annuity-like business. The propriety technology is incredibly effective and gives a distinctly modern edge to a service that’s been around forever. The corporate support allows you to get the business up and running quickly and easily; I could go on and on.”
For the Dell’Oros, Lawn Doctor’s value extends beyond its potential return on the investment, it’s a connection to their community.
“When we moved to Annapolis, we knew we wanted to get involved with the local community, both culturally and economically, but we never expected to find something that would allow us to work so closely with so many people in the community while also providing such a financial upside as an investment. We’ve found something unique and special with Lawn Doctor, and we’re excited to take it to the next level.”