What’s a Landscaping Business Worth?

Views: 117 Comments: 0 0 Post Date: December 15, 2020

To plant a garden is to believe in tomorrow. Did you know homes with big trees and nice landscaping sell for 15-20% more value than comparable homes? Multi-families with good landscaping can charge 10% more rent than their competitors?

Seems simple and intuitive enough. Then why doesn’t everyone have a garden or plant trees?

Let’s see what a landscaping business is worth. I share secrets of valuations so you can take advantage of my experience.

Landscaping and lawn care is a $70 billion industry with 600,000 employees spread over 95,000 businesses.

RULE OF THUMB

  • Landscaping businesses sell for 2-4x on SDE or 3-6x on EBITDA. The key is to find the right buyer.
  • Businesses worth less than $250k have difficulty attracting buyers. If you are selling to a competitor, you may not receive the best value as they will discount the value of your brand, equipment, and staff.
  • Competitors who focus on different locations, or strategic buyers like property management companies, or irrigation and storm water contractors may perceive the most value of your business.

FOUR THINGS BUYERS LOOK FOR – 

  1. Loyal Clients – buyers are looking for businesses with multiple long-standing commercial clients, that pay within 60 days, with long term contracts, and are along a dense route.
  2. Clean Books – keep your books clean so a buyer can apply for an SBA loan. Pay yourself a fair wage, hire legal workers, pay them at market, recognize all revenue and expenses, and show a profit year over year with a steadily growing client base.
  3. Reputation – online reputation, client testimonials, and loyal employees are the name of the game now. Businesses that have raving online reviews, pictures of their work, and client testimonials are attractive.
  4. Efficient Operations – integrating technology allows owners to run operations on autopilot.  Less owner involvement speaks volumes of the efficiency of the operation. Track your operation’s efficiency with revenue per employee KPI.  Managing your crew, checking the location of trucks, receiving payments, communicating with clients, and managing water irrigation is now all done via apps and smartphone.

The best way to increase your property’s value is to have a blooming garden with lush trees and landscaping. Definitely, a sure shot to make your neighbors love you. And what better way to do that than to hire a landscaping company…

There is a Chinese proverb – The best time to plant a tree was twenty years ago. The second best time is now.

Bharat Kanodia – Founder and Chief Appraiser

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