To value a landscaping / garden maintenance business depends on the following:-
How much turnover there is (Revenue per annum) It usually has to be over £250,000pa to get serious buyers looking.
How much net profit is made. The norm for this sort of business in the UK is about 4 - 6% which is low considered with other businesses, the closer to 20% the higher the value.
One-Off Jobs
If the business is heavily involved in doing one-off jobs then the value will be severely reduced.
Service contracts
Buyers love long-term contracts. They protect the business from volatility and allow them to predict revenue, earnings and growth years in advance.
From an operations viewpoint, they also allow you to estimate more effectively and plan denser routes for crews.
The more regular customers there are on repeat contracts the higher the value of the business.
So how much is a business worth? The answer is as much as a buyer is willing to pay. But as a guide, if the business has all customers on on repeat contracts, the revenue is in access of £250,000, and the net profit margin is around 20%, the value could be anything between £750,000 to £1.5m
There are two ways of looking at a business. (1) Taking on any type of work to earn money now. (2) Taking on repeat contract work only on a high profit margin, for the business to reach its highest value.
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I'm sure we all would like to sell our business when the time comes, but what about the one/two man landscaping business which takes nowhere near 250k,these type of landscapers live of repeat business so as you say is more appealing to the buyer.
Are you selling up Adrian ?
Would you share the source of this guidance?
dont know if i am working things out wrong but it would take 60 years of proffit to pay for the 750.000 dont get how the value is reached
nah no way would you get that kind of money on a gardening business - you might if you had a product or in hi-tech market. you need to show where this hspiens
I am part way through reading the biography of David “Jim” Penman of Jim’s Mowing, now the Jim’s Group in Australia.
A different approach, build the business up then sell off a group of customers as an established mowing round, then build the business back up and repeat the process.