If you're in the green industry, it won't be a secret if I say that ponds are hot. As a testimonial to the legitimacy of the ponds phenomena, USA Today (July 11, 2003 issue) declared 'water features/ponds and decks' to be the two things that homeowners would most like to add to their homes.
The fact of the matter is, historically, water has proven attractive to life forms around this planet. And when technology and good economic conditions come together simultaneously to make beautiful water features affordable to the average homeowner, it adds up to a business opportunity. But how good and how profitable is the opportunity? This is a question I'm asked all the time, so you shouldn't be surprised that I have this down to a science of sorts.
The green industry stats
Water gardening is only one part of the exploding 'green industry.' According to PK Data, a market tracking service, lawn and garden sales have doubled over the past decade and are approaching $40 billion in the U.S. alone. Furthermore, this industry has been growing at about 8% annually over that same period of time. Compare this to the 3% to 5% average annual growth in our economy over the same period of time.
Although the actual number of participating households has remained fairly steady over the past decade, the sales per household have grown dramatically. Again, in the words of PK Data, "What is driving the industry is that individual households are spending a larger portion of disposable income on gardening items." This is great for those of us in the industry.
How about water gardening specifically?
Now let's bring the focus in a little tighter and look specifically at the water gardening segment of the industry:
- Total retail sales in 2000 were about $945 million.
- Sales are growing 9% to 10% annually.
- In the U.S. there is a 7% household penetration compared to 10% to 11% in Europe, which leaves the U.S. market with lots of catching up to do.
What does all this mean? There's still a lot of room for waterscapes, ponds, etc.
A few more interesting statistics: Of the people surveyed, more than 60% said they have gardening or landscape projects that they want to start and finish within the next 12 months, and waterscapes ranked as one of the 'top three gardening or landscaping projects people want to start or finish in the next year.'
Adding pond installation to your repertoire
General statistics can take you only so far in any industry. At Aquascape Designs, we do seminars around the country introducing landscape contractors to pond building. We conduct Build-A-Pond Day seminars for contractors who want a physical, hands-on, get-your-hands-dirty, pond building experience that shows them 'through active participation' the 20 steps required to build a beautiful, naturally-balanced aquatic ecosystem in one day, profitably.
We break ground in the morning, and by 5 p.m. that same day, the whole class stands there looking at this beautiful water feature that emerges before their very eyes. At that point, you see steam start coming out of their heads as they begin to add up the numbers. Pond Kit: $1,200 Rock and Gravel: $900 Labor: about $750 (figuring in the amount of laborers and pay) Total: $2,800
Then, they start thinking about what the beautiful feature in front of them would be worth to their customers. I throw a number into their heads: $7,000, and before you know it, they're doing the math. A 60% profit margin? Is that even possible? With ponds, it is!
When they compare that gross profit margin with other possibilities in the landscaping market, they're blown away! And to think they woke up in the morning thinking 30% was good. They've learned. Ponds are profitable and they're here to stay.
The future is indeed bright Think about all the people you know, and ask yourself "How many of these people have ponds?" If you're anything like me, you'll answer, "very few." The waterscape market is effectively in the infancy stages of its development, and has many miles to go before it runs out of steam.
Secondly, the green industry with all its back-to-nature participants is growing by leaps and bounds. The popularity of beautiful, naturally balanced water features is primarily a backlash response to the high-tech character of the modern workplace. And the more high-tech we become, the more people are going to want to escape back into nature, and into a backyard paradise . . . like a pond.
Another factor that will interest you is that, in our experience, approximately 75% of our business comes from customers that we've previously done work for. So, although we do get new customers every year, the bulk of our projects are repeat business. Why is that? Because one pond is never good enough. We're remodeling, resizing, adding more ponds to properties . . . the options are endless. And if you're a landscape contractor who has flowers, patios, walkways, and the like in their business model, don't forget that all of those things are needed to thoroughly enjoy a pond. More accessories, more profit.
A good place to be
I'm not going to sit here and tell you it's easy. In order to make a profit, you have to understand the financials of your business. Only educated businessmen can succeed in making a profit with any venture. What I am saying is that if you have a good grasp of the business and financial side of your company, the water gardening industry is a pretty darn good (and profitable) place to be right now!