With Halloween this Saturday, the team of value specialists at Ceibass got together to shed some light on what scares them about lawn & landscape companies and business owners.
“What scares me? Owners without an exit plan. I’m constantly amazed at how many owners I talk to that have no plan on how they will exit their business. They have no strategy, no working plan with the end game in mind, said Tom Fochtman. “What happens if they’re in their 60s and they drop dead? Or they get terminally ill and pass quickly without a plan. The spouse now owns a company that he or she has no business running. They don’t get top dollar for the business. They are forced into a fire sale. Leave lots and lots of money on the table. I find that scary and irresponsible for owners.”
The team went on to add to the list of things that they are frightened about when they think about lawn and landscape business owners. What scares them?
Owners that have no idea what their business is worth.
Owners that do not understand EBITDA and the power of EBITDA.
Owners that do not having a strong #2 person to work themselves out of a job.
Owners that get complacent and don’t try to grow every year.
Companies that are not taking advantage of 3-4% interest rates or free interest deals that equipment manufacturers are offering. In most cases, the after tax cost of money is as low as 2%. Never been a better time to have some smart debt on your books.
Those owners that are not Investing in their facility, equipment or people.
Old and outdated processes, technology and IT. Go as paperless as you can. Have a billing system that allows you to bill daily. Mine your data. Know what customers spend money and what they don’t spend money on.
Small jobs that you can’t make money on. Replace with larger ones. Figure out what size job is your sweet spot and sell into that segment.
Those companies that are not going through their data and P&L’s and finding that extra .25% – .5% of cost that can be saved. Be relentless on getting more efficient.
Owners that leave money on the table by not getting a minimum of a 3% increase on maintenance accounts every year. Ideally annually, but for sure every other year, minimum.
Owners without a marketing and sales strategy to close more deals.