It is pretty difficult to look at your own landscape business like a buyer would. But that is exactly what you should be doing, at least if you want to maximize the value of your business when it comes time to sell it.
Do you understand the obstacles you may be facing in selling your landscape business and how to avoid them? Selling your business is a process and one of the very worst things that can happen when selling a business is a last-minute surprise which can derail the whole deal, even when you think you are close to the finish line. Last minute surprises can cause deals to get cancelled or delayed and make buyers reconsider the value they have placed on the business.
Fortunately, there are some ways to reduce the risk of that happening to you as a business owner.
One way to create value when you sell your landscape business is to take a hard look at your business now when you are first making your plan – months or, much better, a year or more in advance.
Some things you might include in your look:
· Accounting and financial statement issues
· Billing processes
· Tax Returns and tax issues
· Human Resources issues and compliance matters
· Workers Compensation and safety programs
· Fixed asset records and maintenance plans
· Insurance Coverage
· Regulatory and environmental issues
· Ownership issues – who has an ownership interest in your business.
· “Red flags” that need to be addressed?
Some business owners are very detailed oriented. Others are not, opting instead to put their focus on the high-level health of the business and the day-to-day opportunities and threats we all have to deal with. That can result in tunnel vision. With tunnel vision, you may not be aware of important issues in your business outside your day-to-day focus.
One simple example: When business owners are asked, they will usually say that their I-9 files are in good shape and comply with applicable laws. But they may not really know until someone asks to review them. That responsibility may have been assigned to an overworked office manager who hasn’t gotten around to making sure everything is in place. Incomplete I-9 files can be a big issue with an acquisition.
It is very difficult for most business owners to look at their businesses as a buyer would. Owners usually don’t have the objectivity, training, background or experience to make a realistic assessment of their own business.
As a result, most business owners considering a sale would be well advised to seek assistance in this process. That might come from one of your existing advisors – perhaps your CPA or another advisor. It might be possible to enlist the help of a peer who has been through it. There are also firms which specialize in this kind of work and may be able to assist you in the most effective way at a reasonable cost.
For larger businesses, there are opportunities for sell-side due diligence and “Quality of Earnings” Reports, usually prepared by a large accounting firm. These firms who often are engaged by private equity firms to participate in the due diligence process can look at your business just like a private equity firm likely will and can improve the odds of a successful transaction
No matter the size of your business, if you are interested in taking a hard look, we can guide you in the right direction and recommend professionals who have experience with this type of project.
Going through this exercise of “taking a hard look” is likely to permit a smoother process at the time of sale and produce a higher value. Even if you don’t intend to sell your business, it can help you identify your blind spots.
It is worth thinking about.