How to Sell a Landscaping Business – A Step-by-Step Guide

Relocating? Retiring? Taking advantage of new business opportunities? Through dedication and effort, you’ve established a successful lawn care business. Despite its current prosperity and profitability, you’ve decided it’s time to sell. Selling a landscaping company can be highly rewarding and is often simpler than you might anticipate.

Top Reasons to Sell Your Landscape Business:

People in the industry know—building landscaping companies requires significant time and effort. Establishing a successful company is another feat altogether. Despite the immense effort and dedication required to start your own business, parting with the lawn care business proves to be even more challenging than creating it.

Bear in mind, selling your business involves preparation. Allocating a month or two to get your business ready before listing it on the market is essential. This thorough preparation can significantly simplify the sale process and increase its financial rewards.

Generally, business owners want to sell when they’re ready to retire and prefer to liquidate their assets for financial security rather than pass the business on to someone else. Furthermore, you might consider selling your business if you are looking to diversify your financial portfolio. Selling your business can free up capital to invest in various sectors. By selling your company, you can convert its business value into liquid assets, giving you the financial flexibility to use the money as you see fit.

Steps to Get Your Business Ready for Sale

Thorough preparation is crucial for achieving a profitable transaction. Your lawn care business should be a turnkey operation, fully ready for immediate use by the new owner or a strategic buyer. Follow these initial steps to prepare your business for sale:

Thorough preparation is crucial for a successful sale. Your landscaping businesses should be a turnkey operation, fully ready for the new owner to take over immediately. Here are the initial steps to undertake before putting your business on the market:

1. Reduce Unsettled Invoices

Minimize the number of unpaid invoices to make your business more attractive to potential buyers. A lengthy cash flow cycle can deter interest, so aim to clear up your accounts receivable as much as you can to enhance your company’s overall liquidity. 

2. Reasons to Diversify Your Customer Base

What does a diverse customer base say about your company, compared to one that isn’t diverse? When the bulk of a company’s revenue depends on just a few clients, potential buyers might worry about the stability of future profits, particularly if these clients have personal ties to the owner. To avoid customer concentration issues, it’s crucial to diversify the client base and reduce dependency on a limited number of customers. To alleviate these concerns, aim to diversify your customer base extensively.

• Risk Reduction: Relying on a few large clients makes your business vulnerable to significant revenue loss if any of those clients leave. A diverse customer base mitigates this risk, making your business more stable and attractive to buyers.
• Increased Valuation: A broad customer base can lead to a higher landscaping business valuation. Buyers see diversified revenue streams as a sign of a well-established, resilient business.
• Market Appeal: Potential buyers are more likely to be interested in a company that serves a wide range of customers. It indicates that your business has a broad market appeal and isn’t reliant on a niche market.
• Revenue Stability: A diverse customer base ensures more consistent cash flow. This stability is attractive to buyers, as it suggests predictable income and less volatility.
• Growth Opportunities: A company with a varied customer base may have more growth opportunities. Buyers will see potential to expand services or products to different customer segments.
• Business Longevity: Demonstrate longevity and sustainability—diversification, along with a solid base of repeat customers, indicates that your business is adaptable and capable of meeting the needs of various clients.

Although a few current clients may leave under new management, possessing a substantial customer base can provide assurance to a prospective buyer that your business will continue to be lucrative moving forward.

3. Target Commercial Customers

Commercial accounts often generate the most revenue for a lawn care business. Although it’s important to include residential clients in your portfolio, ensure you also maintain a strong base of commercial clients. 

4. Ensure Your Equipment is in Excellent Condition

Make certain that all your company’s equipment is in excellent condition. A prospective owner won’t want to deal with replacing old machinery. While acquiring new equipment just before selling your business may appear counterintuitive, it frequently enhances its attractiveness and helps maintain fair market value.

5. Maintain Accurate Records for Your Employees

The landscaping sector often draws in a number of undocumented workers. While some prospective buyers may be indifferent to their presence on your staff, others will find it concerning. Typically, having a fully documented workforce will simplify the process of selling your business.

6. Promote Long-Term Agreements

Make your business more appealing to potential buyers by securing commitments from existing customers. Encourage clients to enter into long-term contracts. Prospective buyers seek assurances that your current customer base, built on strong personal relationships, is committed and unlikely to terminate services post-sale.

How to Market Your Landscaping Business for Sale

When you decide to sell your business, it’s crucial to announce it to prospective buyers. Marketing your business for sale is much like the advertising you do to attract customers, albeit with a slightly adjusted focus.

When promoting your lawn care business for sale, highlight all the features that set your business apart. The entry barrier for starting a landscaping business is relatively low. If an individual has the financial means to purchase your business, they are likely also able to establish their own company from the ground up.

Wondering how to identify your key selling point? Ask yourself, “What sets your company apart? What makes what you offer irreplaceable?” That’s your primary selling point. 

Highlight 3 Key Elements of Your Landscaping Business:

1. Client Support Team

Your current client base is one of your most valuable assets. Any new lawn care business will need to build its own customer list, a task that can take years. Ideally, your client roster will mostly include loyal customers who pre-pay and are engaged in long-term agreements, as this type of customer retention is most appealing to buyers.

Furthermore, you’ve already handled all the logistical groundwork. When someone purchases your landscaping business, they’re not just acquiring your clientele; they’re also obtaining a fully operational dispatch system that optimizes efficiency.

2. Services as a Selling Point

The offerings you provide are another selling factor. Many lawn care companies offer a range of standard services. While there is absolutely value in the fundamentals, you should also be sure to highlight any specialized services as part of your intangible assets.

Prospective buyers are also interested in a range of off-season services. A business that remains operational throughout the winter months is much easier for a new owner to keep profitable. A lawn care company providing snow removal, leaf removal, or holiday light installation during the off-season often attracts potential buyers.

Generally, the most profitable part of a landscaping service is regular maintenance for commercial clients, not tangible assets like lawn mowers and trucks. Highlight these high-revenue services when marketing your business for sale.

3. How to Showcase Your Staff

Ultimately, potential buyers tend to prioritize people over equipment. While equipment can be easily replaced, finding and retaining experienced employees presents a significant challenge.

Potential investors usually seek guarantees that the majority of your current employees intend to remain post-sale. The presence of a long-term management team is a significant selling advantage. Here are a few key ways to showcase the strengths of your staff to potential buyers:

• Highlight Employee Expertise and Experience: Provide detailed profiles of key employees, including their qualifications, years of experience, and specific skills. This can be done through a presentation or a written document that outlines the strengths and expertise of the team.
• Demonstrate Employee Stability and Satisfaction: Showcase employee retention rates and any programs or incentives in place that contribute to employee satisfaction and loyalty. Testimonials or interviews with long-term employees expressing their commitment to the company and enthusiasm for their work can be compelling.
• Organize Meet-and-Greet Sessions: Arrange informal meetings or virtual meet-and-greet sessions between potential buyers and key employees. This allows buyers to interact directly with the team, ask questions, and get a sense of the workplace culture.

Effective Negotiation Strategies with Interested Buyers

You’ve prepared and marketed your landscape business, and now a potential buyer is interested. But the sales process isn’t over yet—now, you need to negotiate to get the best purchase price for your landscaping services.

When it comes to negotiations, be sure to keep this mantra in mind: never hesitate to step away. Attracting one prospective buyer means you can likely attract others. If a deal doesn’t meet your desired selling price, don’t be afraid to wait for an offer that suits you better.

A key rule in the sales process of a landscaping business is to stay aware of and manage your emotions. Parting with your cherished company can evoke a range of conflicting feelings. Avoid turning down a strong offer by having an overly idealistic view of your business. It’s often beneficial to enlist an impartial expert, such as a business broker to negotiate on your behalf.

Advantages of Acquiring a Landscaping Business

Remember why a buyer might be interested in purchasing your business. Focusing on these benefits can help you stay confident, even during challenging phases of the sale process with sophisticated buyers.

The landscaping industry remains consistently in demand. A survey conducted by the National Association of Landscape Professionals reveals that 44% of all U.S. adults with lawns employ professionals for their upkeep. This represents nearly half of all lawns. Consequently, a lawn care business within the landscaping industry holds the potential to generate sustained profits over the long term.

Another advantage of purchasing an established landscaping business is the potential for acquisition. It’s not uncommon for a competitor to show interest in acquiring your company, recognizing its inherent business value. They can either merge your operation with their own or continue running the new business under the current name.

How to Organize Your Business for New Management

If a competitor or another lawn care professional purchases your business, they will probably bring their own methods and preferences for managing it. Yet, lawn care lacks a significant technical barrier to entry, meaning many potential buyers may not possess extensive industry experience. How can you organize your landscaping business for seamless operation by new management, ensuring a smooth transition and continued success?

To attract these buyers, aim to simplify the operation of your business as much as possible. As previously mentioned, your business should function as a turnkey operation. The new owner should be able to manage it effortlessly from day one.

Given your skills and knowledge aren’t something you can directly monetize in the sale price, it’s crucial to structure your business so that it continues to operate smoothly even after your departure.

The new owner’s transition is simplified by empowering team leaders to make decisions and implement ideas. Naturally, this process takes time, so gradually delegate responsibilities to your team throughout the course of your business, supported by an experienced management team.

Additionally, make sure to document your procedures. Provide explanations for your decision-making processes, including aspects like pricing, wages, scheduling, and more. Insights into past challenges and what hasn’t worked can be invaluable information for the new owner.

Final Reflections

Creating a thriving business is a remarkable achievement. Nonetheless, there often comes a time to step away and sell. As you get ready to sell your landscaping company, adhere to the steps mentioned above to optimize your profits and ensure your business has a smooth transition ultimately entrusted to someone who will continue your legacy with pride.

If you need help selling your business, contact our Murphy Business Brokers office in Sacramento, California, for a free consultation. Our team is standing by with answers to all your questions and concerns.