HOW TO SELL A LANDSCAPING BUSINESS

Landscaping businesses are one of the most highly sought after businesses for entrepeneur’s to purchase in today’s commercial business market. If you are thinking about selling your landscaping business, this is a great time to get it listed with an army of buyers out there looking to buy a business just like yours. But, you don’t want to just take the first offer that walks in your door when you start talking about selling your business because it is probably worth a lot more than you think it may be due the high demand from potential buyers. When you are ready to make that decision to sell, these important tips below can help you prepare to sell your landscaping business as fast as possible, while getting the best price possible so you make the most money. For your landscaping business to have become a success, you have had to pour a lot of time, energy, and money into building it and making it successful. This is why there is so much value for someone else to buy your business, so they can hit the ground running and have a profitable business on day one. There is also value in the equipment, supplies, the service contracts, and the client base. I f you have a website, this also adds value to the price of the business. There is value in the business name, the reputation that you have built as you have built a loyal customer base that knows your company does great work building landscape designs, maintaining their landscaping, and keeping the weeds at bay. Most importantly, there is value in the income and profits that you have that you can prove on paper that will be carried forward with the new owners of your landscaping business.

7 Steps To Take When Selling Your Landscaping Business

Whether your landscape business has lawn mowing, weed management, full landscaping for residential or commercial, high end landscape design and construction, the selling process is relatively similar and straightforward. Take the following seven steps into consideration as you begin to prep your business so that you can get it sold. 1. Plan Your Exit 2. Get Your Business Ready to Sell 3. Gather and Organize Your Documents 4. Hire a Business Broker 5. Get a Business Valuation 6. Set Your Landscape Business Selling Price 7. List Your Business For Sale

Plan Your Exit From Your Landscaping Business

The first thing to start working on is to plan for your exit from your Landscaping Business. The first thing that a potential buyer will be thinking about is what they will have to do, or what role they will have to step in and do for them to continue to run your business once they buy it. Start setting up how your busineess can run without you being part of it. Answering these questions will help get you started in thinking about the right things to help you get organized and ready to sell your landscaping business.

Some questions to think about:

1. When do you plan on leaving your business? 2. Will your current team members stay with your business? 3. Do your tools and equipment need any maintenance, or need to be replaced? 4. How long are you willing to provide training to the new owner?

Get Your Landscaping Business Ready To Sell

When you are ready to sell your landscaping business, you should do some work to get it ready for potential buyers to take a look at it. A new owner will want to walk right into the business and have everything working, have happy customers that they will be proud to show that they are the new owner that will be providing the great products and services that they will continue to enjoy. You will want to make your business stand out from other businesses so that it will sell quickly and get you the highest dollar amount for your business.

Some good things to work on are:

1. Fix anything that needs to be upgraded or repaired. 2. Apply a new coat of paint, or a good cleanup on your gear, tools, vehicles, and equipment. 3. Get more engaged on your social media to continue to grow your customer base. 4. Expand or fine tune your service offerings to show the most profit for new and future work. 5. Encourage customers to write positive reviews online to show others how great your service is. 6. Look for new money making opportunities and identify additional sources of revenue. 7. This would also be a good time to try to collect any open accounts receivables that are past due to close out those old invoices.

Get your Documents Organized

Now it’s time to start preparing your business paperwork to make sure you can show that your business is making a profit, and you have your paperwork in order. Any potential buyer will want to see your financial documents that will show them that there is value in the business and it is worth what you are selling it for. They will want to see your tax returns, your monthly and yearly cash flow, income statements, and balance sheets. A potential buyer for your business will want to see that the value is there to make it worth while for them to invest in buying your business. Some business sellers will engage their accountant to help them with this piece if you have some complicated financials, or if you already work with an accountant that can easily pull this information together from the information and details that they already have.

Documents you may want to gather:

1. One to three years of profit and loss statements. 2. One to three years worth of balance sheets. 3. One to three years of full tax returns. 4. Inventory list of landscaping equipment. 5. Inventory list of landscaping products and supplies. 6. Pink Slip or loan details for any vehicles or large equipment. 7. Any service or product contracts that you may have. 8. Any licensing or permits that the new buyer will need to be able to continue your business. 9. Any Lease contracts or agreements. It may also be a good idea to consider asking your employees if they would be willing to sign a non-compete agreement, after consulting with your attorney to see whether this is a good idea for your type of business or not. A potential buyer would be concerned that some of your top employees may leave and start their own company once they buy your business, leaving them high and dry.

List of Landscaping Equipment

You will need to provide an estimate for the value of all of your equipment in an itemized list. You should include any information or paperwork that you have that would back up the estimated value for the equipment as well. This includes any vehicles, any landscaping equipment, supplies, products, tools, and anything else that helps to add to the value of your landscaping business. Other documentation may be needed as well, so it is good to pull those together if you can so that you have them ready. The more documentation that you have, the easier it is to show any potential buyers that your business is stable, profitable, and a good investment opportunity. You may need to provide any insurance policies, employment agreements, supplier contracts, documentation for any trademarked or copyrighted products that you have created, equipment leases, bank statements, business loans, agreements with property owners, etc. The more paperwork that you have ready to go, the better. Gather what you can quickly and easily, so that you can provide some information to your business broker. You don’t have to provide everything right up front. It may take six or nine months or more to sell your business, so you still have plenty of time. You can come up with more documentation as you move forward in the process. You don’t have to be worried about sharing information with potential buyers, because your business broker can have any potential buyers provide proof of funds to buy the business, and sign a Non-Disclosure Agreement (NDA), so they won’t be able to share your information with anyone else.

Hire A Business Broker To Sell Your Landscaping Business

If you’re looking to buy or sell your landscaping business you should use an experience professional who understands the market and can save you time and money. For more information, contact Michelle Mendenhall as she is a Certified Business Broker that is a member of the IBBA (International Business Brokers Association), and a Commercial Real Estate Specialist. Michelle Mendenhall Professional Business Broker, IBBA Commercial Real Estate Sales & Leasing Associate Phone: 916.459.7526 DRE #02116152 LocalGirlGoesCommercial.com

Get an Accurate Business Valuation

Now that you have hired a business broker to sell your landscaping business, they will work with you to determine the value of your business. It’s good to think about what you think you want to sell the business for, to give your business broker a good place to start from. You know your business best, but there are several ways to go about valuing your landscape businesses. Having a qualified and certified business broker will help you come up with a good selling price for your business that will attract the right buyers. A business broker does not typically charge you anything unless your business is sold. Though, this is a conversation they will have with you so that you fully understand what they will charge for their services. Your business broker will consider the value of your vehicles, buildings, equipment, tools, contracts, the net income of your business, as well as any other assets, or liabilities that you have with the business. If your is really profitable, you will want to showcase that because it will increase the value of your business quite a bit.

Set Your Landscape Business Selling Price

Picking the right price to sell your landscaping business is important. This price point is what will attract buyers to make the decision to look into buying your business or not. To sell it quickly, the best thing you can do is set the price a little lower than the going rate so that you can attract more buyers. You might get lucky and have multiple buyers offer you more than your asking price so that they can buy it. Setting a price that is too high can scare away potential buyers because they will think that the business is not a good investment for them, or that you are not serious about selling it.

List Your Landscaping Business For Sale

Now is the exciting part, listing your business for sale. There are a lot of places that you can advertise your business for sale, and your business broker will handle all of this for you. If you hire the right business broker, they will create advertising material, and send it to you for your approval of the content, and how it looks. Once you approve of the advertisement, they will get your business listed for sale. A professional business broker has access to advertising streams that are full of potential buyers that are looking to buy a business, to give your business for sale listing the highest level of visibility. If you are ready to sell your landscaping business, you should consider partnering with Michelle Mendenhall with Local Girl Goes Commercial. She is a Certified Business Broker that has years of commercial real estate experience, and access to a pool of potential buyers as she is a member of many different business selling websites to give your business for sale listing the right exposure to get it sold. Get in touch with Michelle and get started today!

How to Value Your Landscaping Business

The most accurate way to value your landscaping compay is to use the multiple of earnings method. To understand this you need to understand two key terms, SDE and EBITDA. SDE stands for Sellers Discretionary Earnings, and represents the total financial benefit the owner can expect to receive from their business. You take the expenses such as officer’s or owners salary, benefits, depreciation, and other items like rent, utilities, and other one time expenses back into your net profit before taxes to show the total financial benefit your company can provide an owner operator. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, and it is similar to SDE, but it is usually used to value larger businesses with over three million in revenue. The real difference between EBITDA and SDE is that EBITDA assumes that the new buyer will not be an owner operator. Instead, EBITDA factors in a market value officer’s salary. Businesses that are priced based on EBITDA will often pull a higher multiple because they are not owner operated. Business Valuation Formula: 2 to 4 times SDE, or 5 to 7 times EBITDA

Factors That Impact Business Value

Owner Involvement

The more involved an owner is in the production of revenue, the less valuable the company is. Though it may not be possible to pull yourself out of all day to day operations, it is a good idea to try to minimize how much the business needs you to carry a large load. Consider taking a look at your management team, or hiring or designating some managers to take over some of the tasks that you have to do on a daily basis.

Keeping Your Books Up To Date and Accurate

It is a huge benefit to the value of the business to make sure you are keeping your books up to date, and clean. Many business owners pull some cash out of their business, and when they do that, they are dropping about two to three dollars from their business value for every dollar they pull out of the business.

Avoid Customer Concentration Issues

You will want to try to diversify your earning among both large and small clients, instead of just focusing on a few large clients to show a new buyer that your whole business won’t fall apart if a large client walks away. This would be a high risk for any buyer, and though it may lower the value of the business to them, but they may still be interested in purchasing your business.

Reduce Working Capital Requirement

When a new owner steps in, they may have to fill the role of putting forward the funds to be able to make payroll, pay vendors, and keep the lights on before any revenue comes in. If you extend credit to your customers for longer than 30 days, it can make it difficult for the buyer to use the SBA 7(a) small business loan program. If you go in and clean up your accounts receivable for anything that is more than 30 days old, you will increase the value by attracting more potential buyers so that they can use this loan program, or others. Plus it shows that you are on top of your office accounting, which increases the confidence in the business to the new owner.

Company Size

Some lenders will shy away from smaller businesses with a value of less than $350k. It is difficult to get anything below that financed through the SBA or other loan sources. If you business can grow to above this level, it will definitely add more value, and give a new owner better chances at great loan opportunities. If you can’t increase the value by building up the business easily, you may want to think about whether you would consider providing seller financing, to take this concern away from any potential buyer.

Service Contracts

Any potential buyers love to see long term contracts, which will protect the business from any financial concerns, and will help them to be able to predict the revenue and earnings for current and future years. This also helps you to plan for your routes for your landscaping crews. It’s easy to invest in employee expansion and equipment when these long term contracts are on the books.

Commercial Clients

Many landscaping companies focus strictly on residential customers because they are easier to get. Commercial clients are seen as less volatile in the industry overall. If you can add some commercial clients in yearly or multi-year contracts, this will add value to your business. Landscaping businesses that focus on commercial clients sell for higher multiples than strictly residential companies.

Business Reputation

One of the most important measures for business success is their reputation. A good reputation gives you client loyalty to maintain your service contracts year over year. You should ask your customers to review your services on Google, and Yelp. You may also consider asking some of your clients if you can make a quick video of a customer testimonial that you can add to your website, and social media, or if they will provide you a letter that you can publish on your website.

Digital Marketing

Most potential customers will research companies or products online before making a decision on what to buy, or what service to sign up for. You should take this time to develop a social media presence, or add to the ones you already have and keep them current. Invest in a nice website, and put some time into improving your search engine optimization. Add some logos to tshirts for your employess, and your best customers. Put some logos or an advertisement on your vehicles. When you get a new customer, or upgrade the landscaping on an existing client, ask them if you can put a small yard sign for a few weeks to advertise your business and spread your business name around.

Reliable Employees

One of the biggest challenges for any business is labor. Especially for good manual labor. If you have a trustworthy crew that works hard, this will add value to your business. It’s important to have a good hiring process, and offer incentives and rewards to keep them happy and hard working.

Installations and Design Work

Service contracts are important to focus on. New installations are a higher risk because of the upfront investment that add risk to the income of the business. For your installations, when it comes to selling your business, it is important to have the designs developed by employees or third parties, instead of just the owner of the business. The new owner may not be able to step into this role, and this may impact a purchasing decision. If you can contract that out, or train some of your existing employees to do the design work, this will give the new owner peace of mind.

Undocumented Employees

Finding employees can be difficult, but hiring undocumented immigrant workers can be a huge risk to a company in the terms of penalties and liabilities. Penalties can range from a few hundred dollars up to thousands of dollars. This is a risk that can scare potential buyers away from both a cost perspective, and an unknown area of expertise or something they are not familiar with. It is important to do your due diligence when hiring new employees.

Selling Your Landscaping Business to a Competitor

A good place to look for a potential buyer for your business is to sell your business to one of your competitors. If business is good, they may want to grow and expand by buying your business. Give their contact information to your Business Broker, or talk to your business broker to have them reach out to them on their own to have the conversation.

Selling Your Landscaping Business to an Individual

Selling your business to an individual buyer will typically give you a higher selling price because they will need to purchase every aspect of your company as it is running today in order to keep running your business.

Selling Your Landscaping Business to a Strategic Buyer

A strategic buyer is a business that operates in an industry related to your business so that buying your business will complement their existence business. For a landscaping company, you may think about selling your business to a property management company, an irrigation services company, another landscaping company outside of your service area, or a construction company. You may want to think about your client list and decide if any of them could benefit if they purchased your landscaping business.

Selling Your Landscaping Business to a Private Equity Group

Selling your business to a private equity group (PEG) can be a lucrative deal, though it is not very common that a PEG will purchase a landscaping company. Selling to a private equity group is more like bringing in a money partner. Private equity groups do like to buy businesses where the owners want to stay on, but they want to sell or bring in an investor that can help them take the company to the next level. Another good option similar to this may be to add an investor by revenue sharing.

Selling Your Landscaping Business to An Existing Employee

If you have an employee that you think may be interested in buying your business, you should have a discussion on what it would take to make that happen with your Business Broker. One commonly used way to sell your business to one of your employees is to do owner financing so they can qualify for the loan. Typical loan methods can also work, but owner financing is a quick way to let them take the business over and you have comfort in knowing that your valued and trusted employee will run the business like you have in your vision for your company.

How Long Will it Take to Sell Your Landscaping Business?

Over half of the business owners that sell their business feel that it will only take about five months to sell their business. However, a market analysis across the United States shows that it may take six or eight months to sell your business. The main factor is the business climate in your area, whether there is a strong pool of entrepeneurs, and the price point you choose to list your business at. The size of your business is also an important factor because if your business is very large, with a very high price, the number of qualified buyers is much smaller.

How Much Does A Business Broker Charge?

A business broker usually charges ten to fifteen percent for their services during the sale. If you business does not sell, they do not typically charge a fee. They will provide this information to you as you start your conversations with them. This is a fair price for them to earn a living, and cover their expensive advertising and marketing costs as they work to find the right buyer for your business. At ViralStudioX, we highlight products and services that you might find interesting. We frequently receive free products from manufacturers to test. This does not drive our decision as to whether or not a product is featured or recommended. If you click a link on this page, then go on to make a purchase, we might receive a commission – at no extra cost to you, and does not impact the purchase price of any products that you may purchase.