Want to sell your landscaping business? Use the services of the best business broker, Business Exits, to sell it without a hassle. Sell your business in only 180 days and get the best deal.
Selling a landscaping business is no easy feat. If you are an existing business owner and want to sell your company, consider taking the services of a business broker to make the process efficient and quick. Hiring a business broker also ensures you have the best possible experience throughout the transaction and don’t risk running into legal pitfalls.
Moreover, busy entrepreneurs in the landscaping industry have no time to manage the intricacies of selling their company. Therefore, investing in a business broker can help save time and money. Business brokers work all the details, like business negotiations and valuations, ensuring confidentiality and guaranteeing that all standards are followed during the sale.
Sell Your Landscaping Business in 6 Easy Steps
With an experienced and reliable business broker, it’s never been easier to sell your landscaping business at a reasonable price within a limited time frame. Here’s how:
- Evaluate your landscaping business
- Choose the right time to sell
- Identify the ideal buyers and interested stakeholders
- Prepare your landscaping business for sale
- Market your selling strategy
- Negotiate the deal and accept an appropriate offer
We have selected Business Exits for this how-to guide because it is one of the best all-around services on the market today. Business Exits has a 91% success rate when it comes to selling a business. Depending on the business broker you choose for selling your landscaping business, the following instructions may vary slightly.
Step 1: Evaluate Your Landscaping Business
The first step in selling your landscaping business is to evaluate the monetary worth of your business. Take a business appraiser’s services to assess your business’s correct value. This step helps you manage your expectations and sell the company at a fair price.
However, if you want to do it yourself, calculate your SDE (Seller’s Discretionary Earnings), multiple of revenue, and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Let’s discuss how you can calculate them.
Multiple of Revenue
Calculating the multiple of revenue is the most common and fastest way to estimate the value of a business. You can calculate it by multiplying your annual income by the industry’s expected growth percentage next year.
For example, If you have a landscaping business that brought in $800,000 before taxes in the previous year and the landscaping industry growth rate is 2-4%, then the estimated value of your business is around $1.6M – $3.2M.
Seller’s Discretionary Earnings (SDE)
Calculating SDE is another easy way to calculate the worth of a landscaping business for the buyer and seller. It can be calculated by adding your previous year’s earnings before taxes, your annual pay as an owner, and any other business expenses and multiplying with the industry modifier, which is the percentage your industry is likely to grow by next year.
For instance, your landscaping business earned $800,000 last year, your salary was $60,000, and you spent $5,000 attending a business-related trade show. If the industry modifier is 2-4, your business is worth $1.65M to 3.3M to you.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
The EBITDA model works best for businesses worth over $5M. Comparing earnings before interest, taxes, depreciation, and amortization can give you an idea of the business’s profitability and cash flow. The steps to calculate your EBITDA are as follows;
- First, review your cash flow statements to add up your net income, taxes, and internet expenses to calculate the net profit.
- Afterward, calculate the difference between tangible and intangible assets by adding your depreciation and amortization.
- Finally, add net profit, depreciation, and amortization expenses and multiply with an industry modifier to calculate your business EBITDA.
For example, if your business earned $3.6M last year and the equipment used is depreciating by $30,000 every year due to normal wear and tear; factoring in the industry modifier will declare your business’s EBITDA value to be around $12.66 – 25.32M.
Factors That Can Affect the Value of Your Business
Many factors can affect the value of your business and determine how much it sells for should you decide to put it on the market. Let’s discuss some prominent ones below;
- Number of employees and years of experience
- Company size and years in business
- Sales revenue and trends
- Client types
- Quantifiable reputation
- Marketing presence and investment
Moreover, you can also research the sales information of a similar landscaping business to get an idea about the monetary worth of your business.
Step 2: Choose the Right Time to Sell
Only a business owner can fully comprehend the right time to sell the business. However, the following are some general reasons that indicate the right time to sell your business:
- You want to pursue other opportunities.
- You need a large amount of liquid capital in the near future.
- Your business is performing poorly.
- You are moving somewhere else but want to keep the business running.
- You want to retire.
- Your company has a consistent record of growth.
- The market is expanding.
Overall it can take 6 to 12 months to sell a business. However, small businesses may sell sooner than larger businesses. The timeline is also affected by how well the business brokers you hire manage the process and maintain efficiency.
Step 3: Identify the Ideal Buyers
You are free to sell your business to anyone. However, you usually have four options to choose from:
Sell to a Competitor
You can sell your business to competitors because they can use your client list, processes, and other resources to get ahead in the market. Make a list of all the landscaping businesses in your area and reach out to them individually to see if they are interested in buying your business.
Find a Private Equity Group
Private equity groups are always looking for businesses to invest in. They devise strategies to increase the value of the business and sell it for a higher price. However, they take more time, but you will get more money for it.
To find a private equity group, simply search on Google for “landscaping private equity” in your state. This simple search will show you all the groups closing deals on landscaping businesses in your area.
Sell to a Strategic Buyer
Strategic buyers are different from competitors because strategic buyers are not direct competitors and include companies selling services related to your business—for example, a business providing weekly lawn or pond maintenance.
You can easily find a strategic buyer through a local business directory. Note down all the companies providing similar services, then contact them about a possible purchase. Strategic buyers can add an additional service to your business, further increasing its value in the market. Moreover, such businesses can easily afford your stated price.
Sell to an Employee or Other Individual
Many landscaping business owners sell their business to another person, like a current employee or a stranger looking to break into the landscaping market. You can find an individual buyer through your business contacts. However, it is difficult to sell a high-valued business to this type of particular buyer as they may not be able to afford it.
Step 4: Prepare Your Landscaping Business for Sale
After you have evaluated your business and are ready to sell it. Here are a few tips to keep its value high and make it more appealing to potential buyers:
Trim Your Client List
Start focusing on valuable clients and cut unprofitable ones. Residential clients with large yards are often less profitable. In the same vein, commercial clients are more reliable sources of income than residential clients. Focus on securing long-term commercial lawn care contracts.
Review Your Books
Gather all your financial statements, licenses and deeds, tax filings and returns, and balance sheets for the business. You must also follow up on all unpaid invoices and clear up accounts. Overall ensure that all your books are clean.
Encourage Independence
Slowly step back from your business by building a competent management team. Ensure that your team independently runs the business and makes trustful relations with your clients. This will help the company and its employees survive without you.
Update and Maintain Equipment
Replace faulty equipment in your facility and maintain efficiency while looking for a buyer. New and improved equipment will fetch a higher price for your business, and better buyers will be interested in buying.
Improve Invoicing
Increase prices to shorten your payment period and boost your profitability. Consider using landscaping invoicing software to send payment reminders and invoices automatically.
Step 5: Market Your Selling Strategy
When marketing your landscaping business for sale, remember that marketing for sellers is different from marketing to customers. You have to market at a larger scale.
For example, you’ll post ads in local publications for business people, or you’ll spread the word through business connections instead of distributing flyers or other small-level marketing methods. You can market your business by promoting the operational parts of your business, like:
- What types of clients do you have.
- What is your landscaping business plan.
- What processes do you follow to run the business smoothly.
- What makes your business stand out in the local market.
- Who are your employees, and what experience do they bring to the table.
When working with a business broker, you don’t have to worry about marketing your business for sale. Business brokers know what parts of the operation to promote and how to make the company appealing to potential buyers.
Another vital factor to consider while marketing your business for sale is the busy season. Try to sell your business during its busy season so the buyer can make a profit immediately, increasing its selling potential.
Step 6: Negotiate the Sale and Accept an Appropriate Offer
After following all the steps discussed above, you will receive an offer from a potential client. Your business broker will negotiate and try to get the best possible price for your business. However, if you want to negotiate yourself, follow these tips:
- Make sure that the buyer is a good fit and will respect the company that you built
- Keep calm and think clearly instead of getting emotional
- Be confident in stating your price
- Take the services of a lawyer to review the sale contract
- Involve your accountant in the process to prepare them for tax season
Another crucial factor to consider while selling your business is that if your company offers licensed services like weed control, you won’t be able to sell your business until the buyer also gets approved. Therefore, be prepared for any licensing-related delays.
Final Thoughts About How to Sell Your Landscaping Business
Whether you are looking to retire or want to pursue other opportunities, a business broker can help you sell your existing business. If you have a landscaping business, business brokers specialized in selling landscaping businesses can help you sell it at a reasonable price within a specific time frame.
They handle all the intricacies of selling a business, from gathering essential documentation to ensuring legal compliance. Moreover, they also help you effectively market your business to target preferred potential buyers.
Essentially, you can easily sell your landscaping business by hiring the services of a reliable business broker.