Specialization vs. Diversification

Deciding the Future of Your Tree Care Business

While some companies focus exclusively on hazardous tree removals or high-end residential services, others cast a wide net, offering everything from pruning to storm cleanup. Each approach has its advantages and challenges, and the right choice for you depends on your market, business goals, and resources.

When it comes to specialization versus diversification in the tree care industry, understanding these dynamics can help you decide the best path for your business.

The Case for Specializing in the Tree Care Industry

Specializing allows your business to position itself as an expert in a particular niche. Expertise builds trust, which can lead to a solid reputation within your community or industry.

“It takes a lifetime to make your brand, but you can lose it instantaneously,” said Ben Tresselt, president and owner of Arborist Enterprises. “You’re always going to be judged on your weakest    service.”

Clients are more likely to hire a company that is known as “the pruning experts,” for example, rather than a generalist. Similarly, a company specializing in disease management can market itself as the go-to for saving valuable trees from pests and decay. This laser focus helps you stand out in a crowded market.

Higher Profit Margins

Specialized services often come with premium pricing. Clients seeking a specific skill are willing to pay more for perceived value and quality. This can translate into higher profit margins compared to generalists competing on price.

For instance, businesses that excel in large tree relocation can charge significantly more due to the technical expertise and specialized equipment required.

“If you’re good at it, the market will take it. I mean, you have to be good at it,” Tresselt explained. “You just can’t charge more because you want to. Only if you’re providing a high care service that people are willing to pay for.”

Targeted Marketing Efforts

Specialization simplifies marketing. Instead of appealing to a broad audience, you can tailor your messaging to a specific group, leading to cost-effective campaigns with higher conversion rates.

For a business specializing in tree    cabling and bracing, a smart marketing campaign would target clients with    mature trees or those in storm-prone areas, ensuring that your message reaches the right audience.

Efficiency and Mastery

Specialization also allows your team to hone their skills and perfect processes. When you focus on a narrow set of services, you can invest in specialized equipment and training, leading to greater efficiency and mastery.

This not only improves the quality of work but also reduces costs over time, as you won’t need to maintain a wide array of tools or train employees in diverse techniques.

“I would pick something you’re really passionate and good at, stick to it, and get really, really good at it,” Tresselt advised.

The Risks and Challenges of Specialization

Market Saturation or Shrinkage

If your chosen niche becomes oversaturated, competition may erode your pricing power. Similarly, if the demand for your niche services decreases, your business could face significant challenges.

A company focusing solely on treating a specific tree disease, for instance, may struggle if that disease becomes less prevalent or new regulations limit treatment options. This might be a point at which that company would need to expand its services to include other plant health care offerings.

“What you have to do is evolve with the industry,” said Michael Roche, certified arborist of Vermont Arborists. “There weren’t self-propelled lifts, or spider lifts 15 years ago, or they just weren’t common. Everybody owned bucket trucks. Well, now you have to evolve and own spider lifts in your business because they can go places that a bucket truck can’t. So, you’re constantly evolving.”

Limited Services

Specialization inherently means saying no to certain opportunities. While this can streamline operations, it may also leave money on the table. As a result, clients seeking a one-stop shop might inevitably choose competitors with broader offerings.

“Streamlining multiple services in a marketing effort helps,” Tresselt said.

He explained that for clients that typically request tree pruning and removal tasks, his team can mention their additional services, such as planting, lawn care, and plant health care services.

“That’s helped out a lot over the years when we do our marketing,” Tresselt added.

Seasonality and Market    Fluctuations

Specialized services can amplify the effects of seasonality. If your niche sees a downturn during certain months or years, your revenue stream could dry up.

Roche detailed the struggles that a business focused solely on plant health care might experience with long periods of inactivity in regions with cold winter weather.

“For a tree service in Vermont or Wisconsin, it’s going to be slower to get a plant health care program going than a tree service in Virginia,” he explained. “The growing season is shorter and therefore the money to be made on it is shorter. Yet the cost of the machinery is the same.”

The key to a constant stream of revenue is then offering additional services that your company can offer year-round, such as climbing trees or running bucket trucks.

“That stuff has to be making enough money that it can help finance you into a better plant health care program,” Roche stated. “And then, when that’s up and running, then you’re really making money at it.”

Barriers to Expanding Later

Once you’ve established a reputation in a niche, pivoting to new services can sometimes be challenging. Rebranding and expanding often require significant investment in marketing, equipment, and training. Additionally, before you make such investments, it’s crucial to think about how much benefit those investments will create for your company in the long run.

“I think in the industry right now, because of the immense amount of mechanization we have going on, you have to make some very smart financial decisions,” Tresselt explained. “Things evolve a lot in technology and mechanization in the industry, which is great, but you have to be very aware of the financial implications and where it’s going to take you strategically.”

The Case for Keeping a Broad Range of Services

Diversifying your service offerings involves catering to a wide range of tree care needs, from planting to removal to even landscaping or storm cleanup. Here is why many businesses choose this path.

Stability Across Markets

Diversification provides a safety net during market fluctuations. By offering a variety of services, you can maintain revenue streams even when one area of your business slows down. If pruning demand decreases, stump grinding or landscaping could fill the gap.

Roche noted that there is often an organic path to follow with your tree care business that leads seamlessly into other services.

“When you’re doing actual tree work, you’re starting with things that involve chainsaws,” he shared. “And then you branch naturally into installing cables and brace rods.”

However, Roche also highlighted the importance of considering the effort and investment required for education and licensing, especially when expanding into areas like plant health care.

“That becomes a very different skill set as well as different licensing,” he said. “You don’t need a license to fertilize, but you do need a license to spray chemicals. So, your knowledge now has to jump significantly on what you know about trees.”

Larger Customer Base

A broad service portfolio appeals to a wider audience. From homeowners needing tree trimming to commercial clients requiring land clearing, diversification allows you to attract more clients.

Still, Tresselt cautioned against unrelated add-ons, citing snow removal as an example.

“I live in Southeast Pennsylvania, and we don’t have winters like the Midwest, so snow removal for us isn’t really that great,” he said. “You spend all that money and time and effort, and you get into it. Then next year, you have nothing.”

If the service is only seasonal or inconsistent, you risk underutilizing your equipment. Instead, it is best to stick to services that align with your core expertise.

Flexibility to Pivot

Diversified businesses can adapt more easily to changing market demands. For example, if sustainability trends create demand for tree planting, companies already offering this service can quickly expand.

“The more you can think down the road — what you’re going to do with things and where you’re going to take your business — the easier it is going to be for you to find the path you want to take,” Tresselt said.

Offering a variety of services, however, requires a versatile workforce. You should have different employees trained in different areas who can help your company pivot to different tasks as needed. This ensures your company stays engaged and valuable in the market.

“I’ve seen companies branch into other businesses like excavating or landscaping or snow ploughing and get spanked on that,” Roche explained. “I’ve also seen guys do well with it, and it comes down to one thing. Did you find the right personnel to help you run that new division?”

Drawbacks of Diversification

Jack of All Trades, Master of None

As Tresselt warned, “If you try to do everything, you’re not gonna be really good at anything.”

Diversified businesses may struggle to establish themselves as experts. Without a clear focus, some clients might perceive your company as lacking in-depth knowledge. For Tresselt, this concern was a key factor in deciding whether to offer lawn care services.

“I don’t have any background in lawn care, but one of my sales representatives did, and he had an extensive background,” he explained.

Ultimately, Tresselt decided to add lawn care to his company’s specialties, so long as they could provide a high-quality service that complements their core offerings.

Higher Operational Costs

Maintaining a wide range of services often requires investing in additional equipment, training, and certifications. This can strain resources, particularly for smaller businesses.

Tresselt shared that aspects of large storm cleanup services can sometimes get companies into trouble.

“When we have storms like the big hurricanes this past year, and if you’re in that area of effectiveness, people go out there and they buy a truck and a chipper and this and that, and they add extra people,” he explained. “Now all of the sudden, the hurricane’s all cleaned up and everything’s fine a year later or less. And now you’re sitting there with all this equipment. What are you gonna do with it?”

Finding the Right Balance

The choice between specialization and diversification is pivotal for any tree care business. Deciding which route to take, however, doesn’t have to be an all-or-nothing choice. Many successful tree care businesses adopt a hybrid approach, offering a broad range of services while excelling in a few key areas.

For example, a company might provide general tree care while establishing a reputation as the local expert in hazardous tree removals. This approach allows flexibility while leveraging the benefits of specialization.

In the end, the best path depends on your market, goals, and resources. Take time to analyze your local demand, competition, and business strengths before deciding. Whether you choose to specialize, diversify, or strike a balance, success lies in executing your strategy with excellence and adaptability.