How to Sell Your Landscaping Business
Starting a business is your opportunity to put your unique touch on a company. Operating a landscaping business allows you to be creative, provide a valuable service, and to build a loyal following.
This article provides an overview of the landscaping industry, and the factors that make your business valuable to a buyer. Selling your landscaping business presents a number of challenges, and a business broker can serve as your trusted guide throughout the process.
Overview of the Landscaping Industry
Many landscaping firms are small businesses owned by a sole proprietor, while larger firms often serve both commercial and residential customers. Here are some other issues that landscaping businesses must address:
The hourly rate paid to workers is relatively low, and landscaping requires physical work in all kinds of weather. Landscaping business owners have to manage high staff turnover.
Risk of theft
Many landscaping employees may provide services to other clients as sole proprietors. A landscaping business requires an investment in tools and equipment, and owners must control access to these items, so that workers don’t use them outside of the business.
Landscaping business owners need insurance to protect the client’s property from damage and to manage the risk of employee injury.
What Makes a Landscaping Business Attractive to a Buyer?
The Value Proposition
Potential buyers prefer businesses that are not dependent on one or two large customers. If your business is diversified among a large number of clients, losing a client has a smaller impact on your bottom line.
A business that operates with service contracts is considered to be more valuable. Let’s assume that your landscaping firm has a five-year contract to provide services for an office park.
Service contracts generate predictable revenue, and you may be able to renew the contract and do business for years. The longer you work for the client, the easier it is to estimate your costs and increase profits. You know exactly what equipment you need, and the number of labor hours required.
Commercial landscaping work often involves service contracts. The revenue generated from a commercial client may be much higher than the average residential customer.
Commercial businesses need consistent landscaping service, so that their buildings present a positive image to customers. Residential customers, on the other hand, may not provide consistent work over time.
Many consumers read reviews on Google, Angie’s List, and Yelp before hiring a landscaper. If you can maintain positive reviews on these sites, customers are more likely to do business with your firm.
Consumers are likely to ask their network for referrals before hiring a landscaper.
The most valuable landscaping businesses have a steady flow of repeat business, and gain new customers through word of mouth referrals.
Preparing for a Sale
Take action on these issues, so that your business is well positioned for a sale.
Analyze your company operations, and document all routine tasks in a procedures manual. A procedure manual reduces confusion about each task, and serves as a training tool for your staff.
Assess your accounting system and use technology to save time, and to produce accurate financial statements. Use software to manage accounting, invoicing, and other tasks.
Managers produce value, because they make smart decisions to grow sales and profits. If there’s a gap in your organization that is holding you back, find a manager who can fill the position. Delegate more management tasks to your team.
Review your contracts with partners, employees, vendors, and customers. Many of these agreements must be changed if you sell your business. Find out where your contracts stand now, so you can make plans for an eventual sale.
Create incentive compensation plans for valuable employees so they’re motivated to stay after a business sale.
A business sale requires careful thought and planning, and a business broker can be your trusted advisor along the way.
Work With a Business Broker
A broker can provide guidance to improve your business, and to help you through the entire sale process. Here are some issues a business broker can address:
- Managing staff: You need systems in place to maintain productivity in an industry with high rates of turnover. Talk with your broker about best practices to manage your staff. Labor is the largest cost for a landscaping business, and you can increase profitability with better management.
- Controlling the risk of theft: A landscaping business may have multiple crews in the field on a given day, and each crew requires equipment. Do you have a system in place to control the use of equipment, and to ensure that it is returned? You need equipment to operate, and a broker can help you put stronger controls in place.
- Securing contracts: As discussed above, service contracts help your business generate predictable, repeat business. How can you market your services and obtain more contracts? Ask a broker for help.
An effective business broker can make all the difference in a company sale.
Work With a Trusted Advisor
At Raincatcher, our business brokers focus on the seller’s needs, not our own.
Our objective is to educate the seller about their options. If it makes sense to work on the business, we will recommend affiliates that we partner with to help the owner maximize the value of the business. The Raincatcher team has worked with thousands of businesses, and we all have the small business entrepreneurial spirit.
Raincatcher works with other professionals, which may include an exit advisor, valuation expert, accountants, and attorneys. Our firm uses industry-leading proprietary valuation resources to value your business.
We will operate as your trusted advisor throughout the entire sale process, so you can sell your business at an attractive price without regrets.
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