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How to Increase Value and Sell Your Landscaping Business


Whether you’re thinking about putting your landscaping business on the market or you’re curious about its current value, we’re here to break down the complexities. We’ve interviewed hundreds of successful founders so you can learn from their wins (and mistakes).

This article is filled with useful theory and actionable tips for increasing your landscaping business’s value – so are you ready to increase your confidence and maximize your exit for when the time comes to sell?

How to value your landscaping business

The 4 most common methods of valuing your landscaping business are:

  1. Asset-based valuation
  2. Comparables
  3. Multiple of your Seller’s Discretionary Earnings (SDE)
  4. Multiple of your Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

Let’s delve into each method so you can decide the right one for your business.

1. Assets-based

Best for: a simple valuation

Asset-based valuation is the simplest way of valuing your landscaping business. You’ll calculate its value based on the market value of its hard assets. 

This could include:

  • Vehicles: Trucks, utility vehicles, and trailers for transporting equipment and crews to job sites.
  • Equipment and Tools: Lawn mowers, blowers, trimmers, edgers, chainsaws, and other specialized gardening tools.
  • Heavy Machinery: For larger-scale jobs, assets might include excavators, skid steer loaders, and other heavy equipment.
  • Inventory: This includes plants, trees, soil, mulch, seeds, fertilizers, pesticides, and other landscaping supplies.
  • Office Equipment and Furniture: Computers, desks, chairs, and other office supplies necessary for the administrative aspect of the business.
  • Maintenance Facilities: Storage sheds or warehouses where equipment and supplies are kept secure and in good condition.
  • Real Estate: Any owned property from which the business operates, such as a storefront or a greenhouse.

Estimate the resale value of your assets and subtract the total liabilities. Now, you’ve got your net asset value. 

To note

Generally, this method produces the lowest valuation because it assumes you have not created any “good will”. Good will is an accounting term that is defined as the market value of your business, minus its hard assets. If the best you can do is sell your assets, you haven’t created any good will. That’s why we recommend using one of the other valuation techniques described below.

2. Comparables

Best for: an insight into the value of similar landscaping businesses

Comparables is a valuation method which involves comparing your company to similar landscaping businesses that have been sold recently. Look at ones that have been sold specifically in your region to gauge the market value. You could consider factors such as revenue, customer base, location and services offered. 

How does your company compare? You can find out what landscaping businesses are selling for by asking around at an industry conference like ELEVATE Conference & Expo and the NALP Leaders Forum

While this method is a great rule of thumb, it’s not always accurate, and it can be hard to find like-for-like landscaping businesses.

3. Multiple of SDE

Best for: valuing a small landscaping business with less than $1 million annual revenue

The most common method of valuing a small landscaping business is to use a multiple of your Seller’s Discretionary Earnings (or SDE).

The SDE method reflects the total financial advantage your company offers a full-time owner and is the best metric to use if you run a small landscaping company with less than $1 million in annual revenue. This is because smaller businesses are likely to be owner-operated. Usually, companies with higher revenue will not have an owner-operated buyer.

SDE is better for valuing smaller landscaping businesses, as these companies are likely to be owner-operated. As revenue grows, so does the probability of a business having a management team – making a multiple of EBITDA a more appropriate valuation metric (see below for more details on valuing a landscaping business on a multiple of EBITDA).

Calculating your SDE

To calculate your landscaping business’s SDE, carry out the following equation:

Net Income + interest expense + depreciation expense + amortization expense + owner’s salary + taxes + discretionary expenses + non-recurring expenses = SDE

Add back non-recurring (e.g., legal fees) and discretionary expenditures (e.g., personal phone and fuel) as they don’t reflect mandatory operating costs.

The potential buyer will likely step into an owner-operator role, so you need to reincorporate the salary you’ve allocated to yourself.

4. Multiple of EBITDA

Best for: valuing landscaping businesses with over $3 million annual revenue

Multiple of EBITDA is very similar to SDE but with one key difference: EBITDA assumes the buyer won’t be an owner-operator. Instead, a market-value salary is factored in.

This is likely to pull in a higher multiple, because:

  • EBITDA values are ordinarily lower than SDE due to the owner’s salary differential, necessitating a bigger multiple to bridge the gap.
  • Larger companies (that are often evaluated through EBITDA) can command better multiples, which buyers will oblige.

Similar to SDE evaluations, a range of multiples is applied to your EBITDA. This gives you a more accurate scale of minimal and maximal purchase prices for your landscaping business.

How to calculate your EBITDA

Calculating your landscaping business’s EBITDA involves similar add-backs as SDE valuations, barring the owner’s compensation.

For example, if your annual compensation is $280,000, but a manager with an equivalent skillset could be retained for $200,000 per year, the $80,000 difference is added back. This increases your EBITDA by $80,000.

Factors Influencing Your Landscaping Business’s Value

1. Owner Dependency

The more your business relies on you, the less appealing it may be to buyers. Aim to reduce your direct involvement in daily operations. Start by creating detailed operation manuals and ensuring your management team can run the business in your absence.

How do you prove your landscaping business can run without you?

Standard Operating Procedures (SOPs) are a great way of proving your business can run without you. This helps you standardize tasks, assign clear responsibilities and provide training for your staff to remove points of failure and ensure excellent customer care.

2. Accurate Financial Records

Transparency in financial dealings is critical. Unreported earnings can significantly reduce your business’s value. Remember, every unrecorded dollar can potentially decrease your business’s sale price.

3. Customer Diversity

A varied client base reduces perceived risk. Over-reliance on a few big customers can deter buyers, so be sure to focus on smaller contracts too.

4. Efficient Capital Management

The time it takes to receive payments is crucial. Extending customer credit for over 30 days may limit a buyer’s financing options. Improving your accounts receivable process can make your business more attractive.

5. Business Scale

Consider the size of your business. Small businesses may face financing challenges. Growing your business before selling could be beneficial.

Enhancing Your Landscaping Business’s Value

Recurring Revenue

Landscaping businesses with recurring revenue streams are far more appealing to buyers. Consistent income, such as regular maintenance contracts and seasonal care packages, will demonstrate predictability in revenue and make your business far more attractive.

Customer Base Expansion

Blend commercial contracts with residential services to broaden your market reach and stabilize revenue, especially during economic fluctuations.

Operational Independence

Reduce the business’s reliance on you. Empower your team through training and standard operating procedures to make your business more autonomous. Remember, a self-managing business is an attractive business.

Not sure how much your business currently relies on you? Complete our self-managing checklist now

Use video to document your SOPs

Built to Sell has helped thousands of business owners document their all-important SOPs using VidGuide, a plug-and-play tool that lets you display video instructions inside the software your team uses to run your landscaping business.

Integrate VidGuide with the landscape management software your business already uses, such as:

  • LMN (Landscape Management Network)
  • Jobber
  • Service Autopilot
  • DynaSCAPE Manage360
  • Real Green Systems
  • Aspire
  • And more.

Avoid the painstaking process of creating written instructions by shooting a quick video of your screen to create digestible step-by-step instructions. Try VidGuide today for free; there’s no credit card required.

Local SEO Investment

Building a strong online presence through customer reviews and a robust Google Business Profile attracts more customers and adds to your business’s appeal.

Working Capital Optimization

Streamline the process of how quickly you turn services into cash. This not only improves your financial health but also makes your business more appealing for acquisition.

Equipment Quality

Investing in up-to-date equipment can increase operational efficiency and business scalability, making it more attractive to buyers. Setting up recurring revenue streams can help fund this.

Preparing to sell your landscaping business

Before preparing to sell, you’ll need to know what kind of buyers would be interested in your landscaping business.

Types of Buyers

Individual Landscapers

Small landscaping businesses generating less than $1 million in revenue are often attractive to individual buyers. These could be people leaving larger landscaping firms or those looking to start their own business. They typically finance purchases through bank loans or seller financing. Selling to an individual landscaper is ideal if you want someone who shares your business ethos to continue its legacy.

Strategic Buyers

These are companies within or related to the landscaping industry, such as larger landscaping firms or home maintenance businesses, seeking to expand their services. They are attracted to businesses with significant earnings, often those with at least $1 million in annual revenue.

Private Equity Buyers

Private equity firms are increasingly interested in consolidating landscaping businesses. Their aim is to streamline operations and leverage bulk purchasing for supplies and equipment. They typically look to acquire a collection of businesses and sell them off within a 5-7 year period. These buyers are interested in businesses with strong financials and the potential for growth.

Story’s From Owners Who Have Sold a Landscaping Business

When the Hunter Becomes the Hunted, by Tom Farinacci II

Tom Farinacci II built Houston Green Leaf up to 35 employees when he solid it to Grounds Control, a national landscaping company, for around four times EBITDA.

Building to Sell Through a Crisis, by Brian Clayton

Nashville-based Bryan Clayton was running Peachtree, a landscaping business, when the financial crisis of 2008 hit hard. Clayton told them that the road ahead would be challenging, but he would do everything in his power not to cut staff.


Let’s recap

  • Choose the right valuation method for your size of business
  • Keep squeaky-clean financial records
  • Remove yourself from the business
  • Diversify & expand your customer base (blending both B2B & B2C)
  • Improve your accounts receivable process
  • Scale your business first to maximize your exit
  • Set up recurring revenue streams (such as seasonal care packages)
  • Create Standard Operating Procedures with VidGuide
  • Invest in Local SEO
  • Speed up the time you turn services into cash
  • Invest in the latest equipment
  • Learn about the type of buyer who’s likely to be interested in your business

Ready to get started?

You should now have a clearer understanding of the different landscaping company valuation methods, how buyers perceive risk and what you need to prepare before entering negotiations. For more valuable resources, take a look at our best-selling books, interactive courses, informative blog posts and our business podcast. Become a better business owner and maximize your exit for when the time comes to sell.

Get started with a thumbnail of what your landscaping business is worth.

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