We know that we will manage what we measure. A buyer will look at many of the same key factors that an owner would when considering whether a landscaping company is a good investment. Some of these are obvious like profitability, revenue growth trends, competitive gross margin, “sticky” customers and more. (See my webinar – 15 ways to screw up the sale of your company.) As you evaluate your company’s strengths in preparation for sale in the near future or further out, consider the benefits of these actions to improve your company’s value.
- Develop a strong web presence that is professional and easy to use. Consult with Harvester Chris Darnell for an assessment of your website and social media presence and its effectiveness in delivering your sales. Invest in search engine optimization (SEO) and build your organic search position. Become the go-to place for information about your products.
- Understand your balance sheet. Working capital and debt to equity ratios are important to buyers. Focus on reducing your accounts receivable days outstanding and past due amounts. Consider how to reduce your inventory, if applicable, and sell obsolete inventory to get rid of it. Make sure your balance sheet tracks to your tax returns.
- Separate your sales into product or service lines and measure gross margin for each line separately. Make sure you have the relevant items that should be in your direct costs (COGS) properly reflected for each line. Track your gross margin by each product line and benchmark to industry standards.
- Decrease overhead but not beyond what is needed for efficiency and effectiveness. Make sure you have the right number and type of employees. We’ve had clients who discovered that they had more than one employee that wasn’t needed in that role once they improved their processes.
- Carefully evaluate the profitability of your customers. Who is the least profitable and why? Are you keeping lower profit customers because they are friends or because they are complainers? A buyer will look at the quality of your sales and whether you are just adding sales without an eye to profitability.
These are just a few additional ways to “dig in” and look at your company’s strengths and potential weaknesses. In future blog posts, I will add new ones for your consideration. Our goal is to help you maximize your company’s value now and for future owners or buyers. If you’d like to discuss your company’s readiness for sale, buying a company, help with an existing acquisition or sell your company, please let us know. In the meantime, if you have questions or comments, I can be reached anytime via email: [email protected] or phone at: 224-688-8838. We’re here to help you Harvest Your Potential.