Valuing, Selling, or Buying a Landscape Business – Minnesota – Part I
HOW TO BUILD, BUY OR SELL at LANDSCAPE MGMT COMPANY:
In the last 6 months, several people have asked me for advice on valuing their business or to evaluate a business they are considering buying. There is a lot of interest and a lot of activity this year.
So what is the value of a business?
To help you figure it out, you should follow three general rules.
1. Start planning TODAY! You never know when an opportunity will present itself or when a disaster will strike. Ideally, you’ll want at least 2-3 years of planning before you sell a business.
2. Hire a professional or ask an industry expert to help you
3. Maximize the guidelines listed below to get the highest price.
The first place to look is your own business. This is a complex process, but here are the basics.
As a business owner, you should always think about the intrinsic value of your business and how you have achieved it. Most contractors look at the income statement (if they have one) at the end of the year and say “I made $100,000 net!” But, using the same financial data, you may have increased the value of your business by $350,000 or reduced the value of your business by $50,000. So having the correct information could mean an actual change in value of $400,000 instead of a profit of $100,000. Do you see how your daily decisions will be profoundly affected by this new knowledge?
You have assets that you can sell, but I’m here to tell you that you’re not buying or selling “hard assets.” This article may be reprinted as long as the listed author information is included in the article.
Steve Hoogenakker
763-213-2410
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