Know Your Worth – Valuing Your Company

Know your Worth:
Valuing a Landscape or Construction Company

A business valuation is a general process of determining the economic value of a whole business or company unit. The two main reasons why someone would have their business valuation completed is to determine the sale value or to establish the share price for adding shareholders.

How are Stock Prices Determined - What Causes Stock Prices to Move

Valuing a landscape or construction company is very different from manufacturing or technology companies.  Preparing your company to sell takes several years if you want to maximize the return and value.

These top 10 tips will help you increase your company’s value:
1.  Consistent Margins and Profits: Consistent GP % and Net Profits = Higher
2.  Business dependence on the owner:  No dependence = Higher Value
3.  Company Sales Growth: +10% Growth rate = Higher Value
4.  Niche or Specialty: Companies with specialties tend to bill work at higher
rates = Higher Value
5.  Management team in place: Employee management team = Higher value

Value Proposition - Definition, Importance, How to Create

6.  Customer Base Sensitivity: Broad base/Diversified customer base = Higher
7.  Operational Facility: Long term lease in place or Company owns property =
Higher Value
8.  Industry Strength: Dynamic industry with Broad Rapid Growth = Higher
9.  Financials Reporting & Costing: Ability to drill down & determine job costing
= Higher Value
10.  Equipment & Technology: Continued capital investments made = Higher

Planning for your Future:
You may not be thinking about selling your business within the next five years, however, understanding what steps you take that will maximize your return will be most helpful.  The tips listed not only will increase your company’s value but are also good business tips as you operate your business today! A good business person always knows their own position and options so that they can make well-informed decisions.

Southbrook has extensive experience with the special business planning needs of contractors and has completed several business valuations within the last 2 years.  For help or questions regarding determining your contracting operations value, please contact Nathan Helder at 905-689-4371.