Buying a business, whether it be landscaping or otherwise, is something that should never be rushed. It can not only your finances but also your quality of life. However, if you have the cash flow and think you’ve found a great deal on a landscaping business, there are some key things to consider before buying to maximize the odds of success!
Buying a landscaping business is worth it if you’re willing to continue working hard on it. But, before purchasing an existing landscaping business, you should look at the finances and legal requirements, assets, inventory, services, and expansion. As with any business, always do your research well.
Buying an existing landscaping business
Buying an existing landscaping business is a great way to get your foot in the door. You know that saying, “The grass is always greener on the other side?” Well, it’s true in the landscaping business. You’ll be tempted to buy an existing landscape business because it looks good on paper, and you can benefit from someone else’s hard work. But before you jump in headfirst, there are a few things to consider.
Buying an existing business can be a great decision for many reasons, but it’s not for everyone. Here are some things to consider before purchasing:
- Look for a stable cash flow—Ask if the company has been making money consistently (not just based on the last year or two) and how many clients they have. If they have a consistent history of earning enough money to pay employees, pay bills, and stay afloat, their business is probably strong enough to continue running without too much difficulty. A good way to do this is by performing an audit of their books (if they’re willing) or by hiring an outside accountant or attorney who can perform such an audit and help negotiate the purchase price based on these findings.
- Make sure that you like what the vendor does and that it’s something you would enjoy doing for at least five years.
- Look into whether or not local zoning laws allow landscaping businesses like theirs (for example, this might not be allowed in certain residential areas).
- Check out their equipment—If the landscaping business has all new equipment purchased within the last few years, it will be easier to get started than if your predecessor used old equipment that needs maintenance or replacement. You may want to consider having any major purchases done before taking over so as not to add them to your financial burden. However, this might also mean losing out on some tax deductions since they were with profits from someone else’s company; rather than yours.
- Is there an opportunity for growth, and will it be easy to expand and grow the company?
- How long will it take to break even on your investment?
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Finances and legal requirements
Now that you’ve researched, it’s time to check out the landscaping business’s finances and legal requirements to determine if it’s worth your time and effort.
- Check with an accountant.
Ask about their past years’ financials and if they’re audited by a third party (a good accountant will have been through an audit at least once). The more transparent the business has been with its accounting in the past, the easier it will be for you to trust them moving forward.
- Look at their books from last year.
How much debt did they carry? Are there any unusual payments or vendors that seem questionable? If they’re willing to show you this information before signing on as a partner, it’s likely because they want someone who can take over some of these tasks when needed and not just blindly sign documents without knowing what’s happening under the hood.
- Are there any major costs I need to be aware of?
For example, if they have employees or contractors who work on commission, those costs will increase by X% every year. This includes everything from utility bills and insurance premiums to payroll and equipment maintenance.
- What is their tax situation like?
How much do they owe in taxes yearly based on their profits so far? What are their current liabilities (do they owe money), and what are their assets (what do they own)?
- Do you have a budget set aside?
How much money do you have to invest? What’s your risk tolerance? Are you able to absorb financial loss? Can you handle a business loan, or do you need a partner?
- What kind of reputation does the business have locally or online?
If there are any negative reviews online, what can be done to change that perception – or is it even possible?
- What type of customers does this business have?
Lawn care clients who pay by the month, those who pay once per season, etc.? Is it easy for customers to pay through credit cards or other electronic means? If so, then this might make things easier for your business down the line.
Assets, inventory, and services
In addition, you’ll want to consider the following in your landscaping business: assets, inventory, and services.
Assets
The first thing to look at is what assets you have available for your business. Are there any tools or equipment that your new business can use? Landscaping companies can have large pieces of property that they use for storage and maintenance and plenty of equipment (such as lawnmowers). If this is the case, then you should look closely at everything—and what is left behind for your new company to handle on its own. That way, there aren’t any surprises later down the road when trying to sell off extra inventory from previous owners who didn’t do regular maintenance or repairs before selling their businesses off. If not, you’ll either purchase new tools or rent them from another company.
Inventory
Another important aspect of starting your own business is inventory. Do you have enough supplies on hand to get started? If not, you’ll need to purchase supplies before hiring employees or taking on clients. These supplies can include mulch, fertilizer, and other materials used in landscaping projects.
Services
Finally, one of the most important aspects of starting your own landscaping business is offering services that homeowners need. Some common services landscape contractors provide include lawn care and maintenance; fertilization; pruning; irrigation installation; planting; hardscaping; drainage installation; retaining wall installation; tree removal; shrub removal; stump grinding; and mulching.
You can focus on expansion
It’s a good idea to focus on expansion. You may have an idea for your business, but you don’t yet know how it will grow. Now that you’ve already established the foundations for the growth of your business and made some initial investments, it’s time to start thinking about how far it can go.
It would help if you also focused on marketing at this stage. You’ll need to think about who your target market is and what kind of marketing strategies are most effective in reaching them.
You should also focus on customer service during this period because if they’re unhappy with their experience working with you, they won’t return when they need additional work done – which would mean less revenue for both parties involved!
It’s important at this point, too, that any employees at our landscaping companies are given enough training to understand what needs to be done before starting any project. Otherwise, there could be costly errors later down the line once projects have been completed!
The best thing about a landscaping business is that there are many ways to make it work for you. Whether you’re looking for something low-risk or high-profit, this industry has plenty of options that match your needs and preferences. Rather than setting up a new company and spending time getting clientele, you can start expanding as soon as possible. Having access to existing clients means focusing your attention on bringing in new ones while still keeping your current customers happy. And, with the right business plan, even part-time effort can yield some serious rewards.
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Frequently Asked Questions
Do I have enough capital to purchase a landscaping business?
Capital needed to buy a landscaping business usually starts around $250k. You may need to look into financing options or grants for businesses if you do not have enough capital. It is up to you to figure out if it is worth it in the long run.
Will I have time to devote to this landscaping business full-time?
To figure out if you will have time to devote to this landscaping business full-time, consider your current schedule to see if you need to make any changes to work on your business. Remember, when starting, you can devote your weekend to landscaping and gradually increase your time when you can.
Is there an opportunity to increase profits in a landscaping business?
Yes, there is an opportunity to increase profits in a landscaping business. But, how do you find those opportunities? You can begin by targeting repeat customers by adding more services or packaging your services. Ads and marketing can also increase profits in other areas outside your norm.
To learn more on how you can start your own landscaping business, check out my startup documents here.
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Meet Shawn Chun: Entrepreneur and Landscape Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a landscape business owner at a job site, driving down the road or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Landscaping Business Boss: I want to help landscape business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.