The Step-by-Step Process to Sell Your Lawn Care Business

In this in-depth episode, we sit down with industry veteran Jim Parker to unpack everything you need to know about selling a lawn care or landscape business—from accurate valuation and timing the market to avoiding costly mistakes most owners make. Whether you're thinking about exiting in the next year or five years from now, this conversation reveals the exact steps and strategies that turn your company into a highly desirable (and highly profitable) sale. Jim Parker - (407) 927-899 🎟️ Equip Expo 👉 Save 50% off Equip Expo Ticket w/ Promo Code PAUL: Register Here https://bit.ly/EQUIPEXPO 📚 Level Up Your Money (New Release) 👉 Get Your Paperback Copy! https://pauljamison.org/book 🎧 Level Up Your Money (Audiobook) 👉 Listen on Audible https://pauljamison.org/audiobook Rehlko Engines - Guiness World Records Attempt https://pauljamison.org/4oUln4C 📲 Connect with Paul - Visit Official Website https://www.thepauljamison.com/ 🛠️ Paul's Recommended Tools & Professionals 📚 The Landscaping Bookkeeper – Know your numbers, stress less: thelandscapingbookkeeper.com https://thelandscapingbookkeeper.com/ 📈 Lawn Care Launch: Click Here https://thelandscapingbookkeeper.com/lawn-care-launch (new program for business owners) 🌐 Footbridge Media – Get a pro lawn care website: footbridgemedia.com https://www.footbridgemedia.com/paul-jamison?ref=pauljamison 💻 Horizon360 – All-in-one contractor business software: gethorizon360.com https://gethorizon360.com/ 📞 CallRail – Track where your leads are coming from: callrail.com https://partners.callrail.com/cc4gs529efdp 📦 Business-Building Resources by Paul Price Increase Letter Template https://www.thepauljamison.com/resource_redirect/landing_pages/2150230978 Contract Templates https://www.thepauljamison.com/resource_redirect/landing_pages/2150230978 📚 Paul's Most Popular Business Books How to Build a Thriving Lawn Care Business: Buy on Amazon https://www.amazon.com/dp/B0D4K835L4 Cut That Grass and Make That Cash: Buy on Amazon https://www.amazon.com/dp/B08SP7MQ13 Level Up Your Money (New Release): Buy Now https://pauljamison.org/book

• 0:00Speaker 00

  This episode is brought to you by Motive. Growing a landscaping company means more trucks, more trailers, and more equipment, and more revenue doesn't always mean more profit. Motive gives you one platform to see where your vehicles and equipment are, cut idle time and fuel waste, and protect your crews with AI dash cams. Motive customers report 20% annual savings on maintenance and fuel. See what it could do for your business at gomotive.com. Again, that's gomotive.com.

• 0:31Speaker 01

  Hello and welcome to the Green Industry Podcast, your go-to guide for building a more profitable and thriving lawn care and landscaping business. Your host, Paul Jameson, is the author of five bestselling books, including Cut That Grass and Make That Cash, and his latest, Level Up Your Money, all available on Amazon and Audible. Now get ready for more expert insights and practical strategies to boost your business and level up your life. Here's Paul Jameson.

• 1:08Speaker 00

  I'm super excited to be interviewing a business broker today who has sold hundreds of businesses, and he has seen a lot of money left on the table. So he specializes in lawn care businesses, and we're going to just pick his brain about how we can build a business that's more sellable, get the maximum amount for our businesses one day, and why you should now start thinking about selling your business one day, even if you think, "I'm not going to sell my business one day," Jim may just persuade you. So, welcome to the program, Jim.

• 1:39Speaker 02

  Paul, thank you so much for having me. I really appreciate it.

• 1:43Speaker 00

  Yeah, this is really exciting because I heard Joey Coburn interview you, and you told the story of this 72-year-old man that went to sell his business. And what happened after that?

• 1:57Speaker 02

  Oh my goodness, that was probably one of the hardest, hardest things in my life, Paul. I had a gentleman approach me, he was 72 years old, and he wanted to sell his business, he wanted to retire. And first time we met, he said, Jim, this is gonna, the sale of this business is, the money from the sale of this business, I'm gonna need to retire. So I really hope that it's a lot of money, and I hope that I'm gonna be okay in retirement. And it turned out, Paul, I looked at it, and it wasn't even sellable, let alone talking about a price. And, you know, it broke my heart to go back to, you know, a 72-year-old gentleman and say, you know, your business is not sellable, how it is right now. And, you know, here are some things you need to correct, and come back, and let's talk in a couple of years. It was hard.

• 2:42Speaker 00

  Yeah, and I think I've heard you mention before that 10 to 20% is how many businesses are sellable. So 80% of lawn care businesses out there are run so raggedy that they're not even, they're not even sellable. Is that accurate?

• 2:58Speaker 02

  Yeah, kind of accurate. What it is, it's estimated out there that 80 to 90% of the businesses for sale currently on the market aren't gonna sell. I mean, it's just an estimated national average. Hopefully, knock on wood, I'm selling 100% this year. I sold 90% of my listings last year. But, you know, unfortunately, a lot of times, people make the same mistakes over and over again, Paul. Whether it's going to the market, and they're asking way too much money, when they're not supposed to, you know, when they're not able to realize the kind of money they're looking for. But even things like, you know, people run a lot of personal expenses through the business. They're trying to reduce their tax liability. And, you know, so they run personal expenses through the business, where they are not reporting the cash. And then when

• 3:41Speaker 02

  they go to sell the business, you know, the lenders, the banks, the financial institutions, the buyers, they're not going to be looking at that monies that the personal expenses being run through the business, the cash that's not being reported. I mean, they may look at some of the personal expenses, and they may accept some of them. But how a lot of these business owners are running their business, and they're using their business debit card or credit card as a personal debit card or credit card, it's really gonna kill them when they go to sell the business. Either they're not able to sell it, or they're not able to maximize their sales price.

• 4:14Speaker 00

  So I want you to explain what clean books are, clean finances, and just to put it into perspective for everyone, most businesses you sell, you get the person selling the business, one to five million seems to be your wheelhouse. And sometimes you sell businesses even beyond that. But going to someone who's listening right now, what does it mean for them to have clean books or clean finances so that they can maximize their business when they sell it one day? What does that mean? Clean books?

• 4:42Speaker 02

  Paul, the biggest advice I could give your listeners right now, if they're thinking about selling in the next couple of years, even if they're not thinking about selling the next couple of years, I can't tell you how many business owners I've talked to who say, "I'll never sell my business. I love my business." Then something unfortunate happens, something that they didn't foresee happens, whether it's a health issue, or death in the family, or their spouse gets offered a job out of state, whatever it is, then something unexpected happens. So even if you're not thinking about selling your business, you should always be in a position that you can sell your business if you need to. And the number one piece of advice that I can give your listeners is stop running personal expenses through the business. Keep your books clean, meaning don't, you know, keep it to just

• 5:26Speaker 02

  the expenses that the business is actually incurring. And any cash that you may be receiving, report that. And make sure that you're using an accountant, CPA, or a bookkeeper. You know, you want to be able to have your financials done on a monthly basis. Buyers love looking back. They obviously want to see your year-end tax returns. They want to see your year-end P&Ls. But a lot of times, they want to see those interim financials on a monthly basis for the last couple of years. So you want to make sure you have that. And just make sure all your information is organized, that you have, that you know where your tax returns are. You know where your profit and loss statements, your balance sheets are.

• 6:04Speaker 00

  Can you walk us through that process of somebody that comes to you and says, "All right, Jim, I'm thinking about selling my business," whether it's this year, next year, two years from now? What's the process from that initial, initial free consultation? At least, I know back in the day, you have free consultations. You can sure?

• 6:20Speaker 02

  I do.

• 6:20Speaker 00

  Okay. So from that initial conversation of, "I'm thinking about selling my business," to the day the sale gets finalized, can you walk us through that timeline and that process?

• 6:31Speaker 02

  Yeah, Paul, that's great. I'd love to do that. And I don't know if I've ever done that on a podcast, so I'd love to do that. I, you're going to give it a very quick, I'm going to take a few hundred hours worth of work for us as a company, and we're going to boil it down. Obviously, it wouldn't be that much for the business owner. But the first thing is just having a conversation with the seller. And a lot of times what I'll do is I'll sign a nondisclosure agreement with them, so that they know anything that they share with me, I'm not going to repeat. Obviously, there is a little clause in there that if they decide to move forward with me and list with me, the NDA is completely null and void, because obviously then I'm need to be able to talk to potential buyers about the business. But that first phone call is really, really important because it gives me an idea of what the business is doing, what services they provide,

• 7:16Speaker 02

  what the owner's role in the business is, and I'm going to ask some pinpointing questions. What I'm trying to see is how sellable is the business right now? Is this something that can be taken to the market now, or is this something that we're going to, you know, we're looking at a couple of years down the road? And a lot of times I talk to business owners, they are planning to sell in a couple of years down the road, not right now. And it's great, because now we can have these conversations, like I said, oh, you know, you should probably fix this, or you need to do that, or you need to do this before you take the business to the market. And more times than not, it's those simple, it's just simple things that they need to do, that are not very difficult to do, that can make the biggest difference in not only selling the price, but maximizing the sales price. It just takes time for it to play out, like the financials, you know, just keeping your finances clean for a couple of years.

• 8:01Speaker 02

  So that's what that first phone call is about. After that, after that call, the business owner wants me to do a broker's opinion of value to determine what the most probable selling price is, which I don't charge for that. There's no obligation to use my services. I'll set up a share file system for them, so that they can upload their financials, and I'll start looking over their financials, analyzing them, and then while the financial call, we're asking some questions about their financials. And then after that, I'll come back to them with a broker's opinion of value. And if I think it's going to be an individual buying the business and not a private equity group or an industry player, I'll already have it pre-qualified for an SBA loan as well. If the person decides they want to move

• 8:40Speaker 02

  Forward, this is the one thing, Paul, that I do want to say it that is a negative on my practice. Most brokers can take the business to the market the same day or the next day. It takes us about two to three weeks to get a business to the market. We're dotting the i's, we're crossing the t's. I'm interviewing the seller twice and we're hiring a professional writer and a professional graphic designer to write, write and write and, and, um, design our advertisements and our confidential information memorandums, that type of a thing. And, um, so we're dotting all the i's and crossing the t's because when we go to the market, we go to the market very hot and heavy and I love to talk to you more about the wave.

• 9:22Speaker 02

  Um, but I'm going to skip over that right now for now, Paul, but, um, we come out hard and heavy and, um, we're pre-qualifying the buyers and getting to, in, in front of as many buyers as we possibly can. And then from there, we're taking next steps like, you know, the buyers that we think are qualified, that we think would be a good, um, a good buyer for the business. We're setting up buyer seller phone calls and, uh, we're helping the seller negotiate the contract and then work from contract to closing. And that's kind of, I'm just doing it really, really quick, Paul.

• 9:51Speaker 00

  Yeah. So let's dive a little bit deeper on the financials. You have that shared files. What documents, um, reports are you going to request?

• 10:03Speaker 02

  Typically, I'm going to request business tax returns for the last two or three tax years, plus profit and loss statements for that same time period, a profit and loss statement for the, uh, the current year, um, up to date and usually the same time period for, from the year before. So a year over year comparable. And then usually a trailing 12 months, uh, P and L and a balance sheet. And I know some of this terminology, people out there listening may not know, but I'll explain it to them and obviously the best place to get this information is from their CPA anyways.

• 10:36Speaker 00

  Yeah, totally. And so, once you have that information, what kind of numbers are you crunching to come up with this probable sale price?

• 10:46Speaker 02

  Yeah, so we're doing this. We're putting it out into a spreadsheet and we're putting all the years back to back so that we can see the changes from year to year, you know, the changes in cost of goods, for example, labor, things like that, to see if there's anything like the all of a sudden the cost of goods dropped 10% or increased 10%. Those are questions that we're going to need to know right now upfront before we go under contract with a buyer and they're doing their due diligence. So we want to make sure everything's kosher on that front as far as the financials. And then when we're doing polls, we're going through and, you know, we're taking the net profit of the business. This is the thing, most business owners are trying to do what on their tax returns? They're trying to reduce their tax liability as much as they possibly can, so they pay as little in taxes as they possibly can. And their CPA is

• 11:31Speaker 02

  doing the same thing. So with their help, we're unwinding all those tax advantages that them and their CPA are taking, so that we can determine how much somebody can really make from the business at the end of the day. So we take that net profit of the business, and if we think it's going to be an individual buying the business, meaning the business is going to sell for a couple million dollars and under, we will add back the owner's salary because we're going to assume that whoever buys the business is going to be an owner operator. So we're going to add the owner's salary to the net profit. We're going to add interest expense to the to the net profit because the sellers can be paying that loan off on the day of closing, so the buyer's not going to have that loan. Now, the buyer may have their own loan for buying the business, but they're not going to have that loan. So we can add that back. We can add back depreciation and amortization

• 12:15Speaker 02

  expense 100%. Maybe we may need may need to do an adjustment for capital expenditure, but for the most part, we're going to add back depreciation and amortization because they're a non-cash expense. And then we're also looking for like weird one-time expenses that are unlikely to occur for a long time. So if somebody put an air conditioner, let's say they put two air conditioning units on the top of their roof a couple years back, and that costed them $20,000, we can add back the $20,000 because that's probably not going to take place for another 15 years. And then we're adding back any benefits they're receiving from the business. If they're running some kind of 401k plan, or retirement plan, or health insurance, life insurance, anything

• 12:56Speaker 02

  that they're they're getting personally as far as a benefit, we're adding back. And yes, there are some personal expenses that we can add back and we can get away with, but for the most part, don't do it. Don't do it. You're smarter just not to do it.

• 13:13Speaker 00

  Okay, then can you explain to us what the EBITDA is and how that is calculated?

• 13:21Speaker 02

  Yeah, absolutely. You know what, Paul? Thank you, because I was talking about something and then I forgot to tell you. So what I just described to you is called discretionary earnings. And discretionary earnings is basically how much somebody thinks that they can make, how much somebody can make from the business if the business continues to operate in the same manner. So discretionary earnings, the definition of that is what I just told you. Net profit plus owner's salary plus depreciation and amortization plus interest expense plus some personal expenses plus benefits and then plus, you know, strange one-time expenses. So that's discretionary earnings. And Paul, you're asking about EBITDA. And EBITDA is earnings before interest, tax, depreciation and amortization.

• 14:05Speaker 02

  And we're usually going to run an EBITDA on businesses that are going to sell for a couple million dollars or more. So remember when I first started talking about the discretionary earnings, I said we're going to add back the owner's salary if it's going to sell for under a couple million dollars if we think it's going to be an individual buying it. If we think that it's going to be an industry player or a private equity group or some kind of investor that's going to buy the business and hire a manager to run the business, then what we're going to do is we are going to add back the owner's salary, but then we are going to put an artificial number in there, what the fair market salary is for a manager to run the business. And that obviously may not be the same as what the owner's getting paid. The owner could be getting paid more, they could be getting paid less.

• 14:48Speaker 02

  But we need to put a figure in there of the fair market salary for a manager. So that's the only difference between discretionary earnings and EBITDA is that EBITDA is going to be a lower number because it's going to have that owner, the manager's salary in there. Discretionary earnings is going to be a bigger number because we're going to assume whoever buys it's going to be an owner-operator. But when we go to price the business, the multiplier with an EBITDA situation is higher than a multiplier with discretionary earnings. So we're going to end up about the same price anyways. It's just use discretionary earnings when things are going to be an individual buyer buying it,

• 15:26Speaker 02

  use EBITDA when you think it's going to be a private equity group or a national or industry player buying the business.

• 15:34Speaker 00

  I'm tracking. That makes a lot of sense. Now, Jim, my main core audience listenership would be in three categories. And one is someone whose main services is lawn mowing with that reoccurring revenue. And obviously, it's different here in Florida. I used to live in Atlanta, Georgia, versus the folks who are up in Minnesota and Wisconsin. And, you know, we're there, seasons shorter, but still, it's reoccurring. The grass is growing in growing season. And whether it's an eight-month season or a 12-month season, you know, the lawn mowing revenue is very consistent. The other folks that we have a lot of listeners of are guys who own fertilization

• 16:18Speaker 00

  and weed control programs. And typically, they do either six, seven, or eight applications a year, whether they're in cold climate, or they're down here in warmer season turf. And then, last but not least, we have a lot of guys that do landscape installation. So I know those are three very different businesses. But can you kind of give us an idea of how they're evaluated? And what, you know, the differences are?

• 16:44Speaker 02

  Yeah, absolutely. I'm gonna start with the lawn maintenance. You know, hey, that's what most people think of when they talk about the lawn industry is lawn maintenance. And what the appeal is to lawn maintenance companies is that reoccurring revenue, like you mentioned. People looking to buy those kind of businesses, that's the first thing they want to know. What's the monthly reoccurring revenue? So, you know, that's what they're buying the business for is recurring revenue. And usually, those buyers, they'll buy the business if there's landscaping involved or not. But for the most part, what they're zeroing in on is lawn maintenance. And I would say that out of the three that you just mentioned, that's probably the second most popular one, as far as buyer activity out there. And there's, when I say the second most,

• 17:29Speaker 02

  there's a lot, a lot, a lot, a lot of buyers out there. So don't feel, you know, slighted at all, but I'm saying it's the second most popular one out of the three. Paul, as far as fertilization goes, by far, and weed control, by far, that is the number one thing out there that buyers are looking for. Buyers love fertilization businesses. There is a huge roll up going in the entire industry. But fertilization right now is getting Ridiculous multipliers on it. So out of the three categories, that is going to sell at the highest price every given time, every time, even if they're all doing the same amount

• 18:13Speaker 02

  of money, bottom line, fertilization businesses are just in huge demand. And a big thing that they're going to want to know on that is getting to, you know, what, what, you know, how many, how many customers do you provide, you know, do you service a year? Like you said, do you service six, seven, eight treatments a year? And then another big thing they're going to want to know is what your retention rate is. And the higher you can have, lower, I mean, high eighties, low nineties, as far as like 88, 92% retention rate, buyers will be tripping over you. And then the landscaping space, still a lot of buyers out there. There's a ton of buyers out there. I got a couple, couple of those under contract right now. And there's a lot of buyers out there, but be honest, that probably

• 18:55Speaker 02

  is the third most category that's most exciting for buyers out there is the landscaping space. And there'll be less buyers for that. And out of the three that, I don't know, that probably sell for the same as a lawn maintenance, maybe a little bit less.

• 19:11Speaker 00

  Okay, that makes a lot of sense. And I heard you on Joey Cobra Lee's podcast say that kind of $1 million is your threshold because your team, you know, it doesn't make sense to sell a business for less than that. But you sell a lot of businesses between one and 5 million and some beyond that. So I'm curious, what would the net profit need to be to sell a business for $1 or $2 million?

• 19:36Speaker 02

  Okay, so, you know, let's say, you know, and it depends on the category, you know, the different industry types, because every subcat industry is different. Like I just, we just went over lawn maintenance and fertilization and landscaping or install work.

• 19:52Speaker 02

  The, you know, for a lawn business, a million dollars, to get a million dollars, you're probably looking at a discretionary earnings number of 350, 350,000.

• 20:04Speaker 00

  Okay.

• 20:05Speaker 02

  Then you probably, I would probably say the, the same for all three of those is right around there. I think when you start seeing the separation between the categories is when you start talking about numbers of six, $700,000 in discretionary earnings, that's when the big players can be coming in on the fertilization businesses and they're going to be trying to outbid each other.

• 20:29Speaker 00

  Okay. And then what's some of your success stories with, with selling businesses? Are there any businesses that you sold where, you know, you really enjoyed that?

• 20:41Speaker 02

  Yeah, you know, I, I love selling all the businesses. I really do. Um, there's, there's one success story that, I mean, I just, there's so many, but there was one that, um, it was really nice. I, I don't want to go into too far into details, um, because I don't want to, I don't know, don't want to go too much stuff for that's a private to the buyer and the seller. But, you know, basically the first time I talked to the seller, they weren't even sure they wanted to sell the business. They knew they wanted to retire, but they were thinking about, you know, selling off their equipment and, you know, just closing the business down. They didn't know if they wanted to go through the hassle of actually selling the business. I said, I totally understand. Let me do a broker's opinion of value for you anyways. See if it's a, you know, a number that you guys, we get you guys excited about.

• 21:26Speaker 02

  And, you know, it's a pretty big business. They had a couple million dollars worth of furniture fixtures and equipment. Well, anyways, I did their broker's opinion of value and I, I gave them a price on what I thought the business were going to sell for. Now, when Paul, this is the important thing. When you think it's going to be a private equity group or an industry player buying the business, you go to the market with an undisclosed asking price. That's how you're going to get maximize the sales price. Individual buyers, they can't wrap their head around an undisclosed asking price. You got to go to the market with an actual price or buyers are, you know, because they see so many businesses that are overpriced that they're just going to assume that it's going to be overpriced. I've tried in the past, you can't do it. But when you're talking about professional buyers, private equity groups, industry players, you're starting to talk about a business that's going to

• 22:11Speaker 02

  sell for a couple million dollars or more. You want to go to the market with an undisclosed asking price. They go to the market saying, hey, this business is up for sale. Obviously, you're doing it in a confidential way. Nobody knows that it's actually John's Lawn Service is up for sale. There's no name attached to it or any information. Anybody can guess what business it is up for sale. We're giving general information out there, but we're not giving a price. And then what we do is we do what's called a structured sale. And we're basically having all the buyers submit offers. And that's how you're going to get the highest offer. So going back to that one deal, the sellers decided to do move forward. They were kind of shocked that they could get as much money as they were going to be able to get for their business.

• 22:54Speaker 02

  And so we went to the market and obviously went to the market with an undisclosed asking price. And what I told them they were going to get, they should expect to get, they got about 35% more than that.

• 23:07Speaker 00

  Wow.

• 23:08Speaker 02

  And the reason is, is that we had on that deal, we had over 150 inquiries. We had over 50 actual offers and granted as a structured sale. And I think in the end, we had like, we narrowed it down to six or seven top ones that we, we interviewed. Me and, me and the sellers interviewed together. Obviously, me and my team interviewed everybody. But the, we had a couple of industry players slash private equity groups saw in this business what nobody else saw in the business. Not because they didn't see it, but there were certain things, and I have to be careful what I say.

• 23:47Speaker 02

  But there were certain things that were, that had good synergies with the buyers, with a couple of buyers that typically weren't there. So these people looked in their eyes, they valued it a much higher price than people normally would. And that is why when you're taking a business to the market that's going to sell for a couple of million dollars or more, you go to the market with an undisclosed asking price. Is at that point, you don't know what synergies, nobody out there knows what synergies might be in play for a buyer, except for that buyer.

• 24:24Speaker 00

  That's so good. So your broker's opinion of value, how accurate would you say those are? In that case, you were low, you know, and, and, and the guys, uh, whoever sold the business got 35% more than what you projected, but how accurate is that initial?

• 24:41Speaker 02

  Yeah. By the way, by the way, we had, we had over 50 offers and I think we had three that were one, one we went with like blew everybody else's out of the water. The other two that were out of the category were, were decently out of there, but all you've got to remember all those other 50 were falling, falling in that, in that price range. My valuations are pretty darn accurate, I would say. Obviously you could give the information to 10 different people and they'd come up with 10 different answers, but if you're giving it to people that know what they're doing, and this is the thing, don't give it to your CPA or your financial planner or your buddy. There's only two people that we should be doing a valuation on your business and that's

• 25:20Speaker 02

  a, a, um, business broker that specializes in selling businesses in the lawn space and the, in the green industry, or an actual business appraiser. But your CPA shouldn't be doing it, your financial planner shouldn't be doing it. And, you know, I've been doing this for 25 years. I do a lot of businesses in the SBA world and, um, uh, in that world, the SBA, when they're doing an SBA loan, it's a requirement, there's an actual appraisal done a few weeks before we close. And in my 25 years, only had one business appraiser appraisal come back that said that it was off, knock on wood, I've only had one in 25 years.

• 26:04Speaker 02

  And actually the appraiser themselves were making assumptions that were not true. So, and I don't blame them for the assumptions they were making. They were normal assumptions that I can understand why they're making them. But when I went back and I said, hey, these aren't the assumptions that you should be assuming, these are the assumptions and why, he revised his valuation, said it, sent it back over. So really I have a hundred percent accuracy, um, following within the SBA guidelines for, for valuations.

• 26:34Speaker 00

  Fantastic. So what's been the biggest mistakes you've seen when somebody gets ready to sell and you're like, man, it'd be worth a lot more if you would have done this, or if you would have done that, what, what mistakes are being made?

• 26:47Speaker 02

  Okay, I'm gonna go beat a dead horse, but running your books cleanly, you know, stop running personal expenses through the business, start reporting that cash. Start moving beyond that. Let's start talking about employee situations. You know, we're in the green industry. You know, we know it's like out there, it's hard to find employees. You know, this is really tough one, but you gotta make sure that the employees are e-verified, that they are, you know, have the right to work here, they're legally allowed to work, and that they're actually W-2 employees, not book them as 1099 when they should be W-2, because that's gonna be frowned upon when you go to sell a business. Buyers aren't gonna like that at all. You're gonna lose a lot, a lot of buyers. And I know you can

• 27:30Speaker 02

  say, "Well, they can always transfer them to a W-2 post-closing." No, you need to transfer them to W-2 before you go to sale. Another big one is client concentration. You know, try not to have a client that makes up more than 10% of your business. If I sold businesses that had higher client concentration than that, yes. Once you start getting over 10%, buyers start to get a little bit nervous. They start asking, because they're worried about, you know, you got a client makes up 80% of your business, Paul, and then you lose that one client, you lose 80% of your business overnight. So, you know, 10% and under is good. 15%, they can usually swallow the pill. When you start getting 20%, they're gonna start getting nervous, and that's gonna change the terms of how you're gonna be able

• 28:11Speaker 02

  to sell the business. So, that's another big one. And then the owner, if the owner is the business, you know, make yourself less being the business. If everything needs to go through you and the business can't function without you, I mean, I think a good test of this is, are you able to take a one or two week vacation a year and have very few phone calls during that time period? Or can you not take time off, and when you do take time off, your phone's blowing up? Obviously, you wanna be in a situation where your phone's not blowing up. You know, buyers don't wanna buy a business. And that's another thing, too. Buyers don't wanna buy a business where the person's working 80 hours a week to maintain the business. You should have like 40, 50 hour work week.

• 28:54Speaker 02

  Or less. And one last thing, there's a bunch of things, but I want to touch the big things. Another big thing is the licensing issue. Let's take fertilization, for example, Paul. You know, every state is different. You know, Kentucky, you know, you use hardly anything you need to do for a fertilization license up there. Here in Florida, it's a pain in the butt and it's really hard to do and there's a lot of criteria for it. So you need to check whatever licensing is required in your state, see how hard or easy it is to get that licensing and make sure the licensing is going to be set up there for the next buyer. So meaning, would you be willing to qualify as the business owner selling your business?

• 29:35Speaker 02

  Would you be willing to qualify the business for a year or so with your license? Do you have an employee on board that, you know, they just need to go out there and take their test? And if they do, encourage them to go out there and take the test and give them a little bit of a raise. Because now you've got a buyer that's going to come along and want to buy your business and say, yeah, hey, I'll qualify your business for a year on my license. And I also got a partner, I mean, an employee that just got their license. So you've got to look at, how is that license going to take place post-sale? And it's nice to say, well, the buyer's going to have their license, but that's not always the case. I mean, sometimes you find buyers that are very, very qualified to own and operate the business, but they don't have the license in your particular state. So licensing is something you need to think of.

• 30:23Speaker 00

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• 31:35Speaker 00

  So, somebody who has more than 350,000 of net profit, they come to you and you do the broker's opinion of value, they're like, "That sounds good, let's move forward," and you take it to the market. What does that look like then? I'm assuming it's private equity or international buyer. What does that look like then when it actually gets sold? How do we get paid and what happens at that point?

• 32:03Speaker 02

  Okay, so you actually get paid on the day of closing. So, just like you're selling your house, you know, the buyer put up the monies and you get your paid out on the day of closing.

• 32:14Speaker 00

  Okay.

• 32:16Speaker 02

  And then, I wanted to talk to you a little bit about the wave. Is that okay, Paul? Because I think that was also what you're hinting at too. So, like after we do the broker's opinion of value, and let's just put it this way. So, I've said that 80 to 90% of the businesses out there on the market do not sell. Most of the buyers have been looking for businesses, have been looking for a couple of months to a couple of years, if they're an individual buyer. They've been looking for a couple of months to a couple of years. And the other buyers, the private equity groups and the industry buyers, they're professional buyers. They're looking all the time. So, they've been looking for a long time. So, people know when a business hits the market, they know when it's overpriced, they know when it's a bad business. You know, they've kind of self-educated them on this. So, you know,

• 33:01Speaker 02

  what I love about all these overpriced businesses and all these bad businesses that are on the market is that it helps sell the businesses that I bring forward that are good businesses that are priced reasonably. And, you know, my whole philosophy is this, I call it... You can't look this up. This is something, well, you look it up, you're gonna, it's gonna probably be all me because I made this term up, but it's the buyer wave. And this is what happens. This is what me and my company follow, or my practice follows when we take a business to the market is this buyer wave. When you first take a business to the market, all these buyers have been looking for a couple of months to a couple of years, their eyes are on that business. And if it's overpriced, if it's not a bad, if it's a bad business, or if it's a business that's not being handled properly,

• 33:47Speaker 02

  you know, and the strategies are not being used, they're gonna look at it and go, yeah, just another bad business, just another one I'm not interested in, and they're gonna move on. And then you could sit there and you could drop your price every month for the next six months. You finally are down below what it should have been to begin with, you're less than you should have went to the market with to begin with. And you finally get one buyer after six months that's interested in your business. And now they want to negotiate. And I don't care how good of a negotiator you are, or how good of a negotiator I am. Good negotiation starts with having a good hand. And, you know, after six months, you finally got one buyer that's interested in the business and they want to negotiate. You really don't, you're basically bluffing at that point.

• 34:29Speaker 02

  What you want to do, you want to go to the market and you want to hit that buyer wave. And you want to hit that buyer wave as hard and as strong as you possibly can right out of the gate. All those buyers eyeballs, if it's good business, it's being priced right and is being handled properly, you're gonna have so many eyeballs on your business. And what you're doing is you're creating this competition between these buyers. And our goal, we go out to the market, that first 30 days, we hit the marketplace so hot and heavy. It takes us two to three weeks to get your business on the market. You know, our competitors can do it in a day or two, take the business to the market. But when we do go to the market, we're going heavy, we're going strong. And our, and our goal is to get the business under contract or under an LOI within the first 60 days that we get it on the market.

• 35:14Speaker 02

  And almost every time we list a business, that happens. But the important thing is, is knowing as a business owner, when you, you've only got one real shot. When you go to the market, you want to grab that wave and you want- Want to ride that buyer wave. If you miss that buyer wave, most of those buyers are not going to come back. You know, you could lower your price, you could change things, they're not going to come back. But you know, what we do is when we, okay, yeah, that's kind of in a nutshell, Paul.

• 35:41Speaker 00

  Yeah.

• 35:41Speaker 02

  I'm sorry, I get excited about this stuff.

• 35:43Speaker 00

  Yeah, you, you got me fired up and, and I'm sure you got a lot of other guys out there. Uh, fired up. If you were to go out there and start a lawn business, Jim's Lawn Care, whatever, whatever it would be called, what would you do from? Day one to get, start that business in order to just sell it for, for max dollar. Walk us through if. If that was your blueprint, I'm going to go start a lawn business and I know I'm going to sell that thing one day. What, how would you kind of build it? And what year would you sell it? And, and how would you build it to, to get max dollar?

• 36:12Speaker 02

  I would, uh, so, you know, the first thing is I, I would pick the fertilization. I mean, if I'm going to pick anything in the green space, I'm going to pick the one that's probably in the most demand. It's going to get paid the highest amount. So I'd take a fertilization business. And, um, I would document everything, how to do everything properly and correctly out there in the field. Uh, so that as I bring on my first tech, I'm teaching my tech and I'm training my tech. But I'm also giving them something that they can follow as a guideline as well, as well as checklist, anything else. It all starts, you know, when you start removing, because I'm imagining this scenario, I'm a one man operation.

• 36:53Speaker 02

  And so I go out there and I know how to do the work. So I don't need to document it, but I would start documenting as soon as I can. So that as I grow and I bring my first tech on and I start training them, again, I'm handing them something, they're seeing it, they got a checklist, they got standard operating procedures. I would continue to, to run my business, the financials extremely clean. I know I keep beating that dead horse. And I would just market and advertise like crazy out there and try to bring in as many clients as I possibly can. And I would, but I would grow the business. Steadily, I wouldn't grow too quickly and I wouldn't grow too slowly. You know, just kind of do it. I think you need about a five year exit strategy. I don't, I don't, it's hard question out answer Paul, because there's probably a million things that I would do.

• 37:37Speaker 02

  But those are probably the main ones.

• 37:40Speaker 00

  But you, you think you could grow it with all those great standard operating procedures and clean books and paying your employees as W2 employees? If you did all of that with, with really fine tune marketing and advertising at year five, you think you could sell that thing for multiple millions of dollars?

• 38:00Speaker 02

  No, maybe, maybe not, maybe not year five. That's, I guess that year five comment Paul was more coming from a need. Really as a business broker, I would probably need the business to be in business for at least five years. Whether somebody can hit that goal that quickly, that's another story. That's, that's probably, you know, could be pretty difficult for most people to do.

• 38:22Speaker 00

  I got you, but you like to look at five years of, of all of the tax returns and profit and loss and everything. That's kind of like the minimum of what you need.

• 38:30Speaker 02

  No, I look at usually two or three years for the financials, but buyers usually want a business to be in business for at least five years. To make them feel good. And obviously longer the business has been in business, the better, you know?

• 38:43Speaker 00

  Yeah. You did mention some of those big, bigger sales beyond the five million. I know you can't share names and, and specific details, but is there any generalized information you can, you can share of some of the, the bigger sales in your career?

• 38:59Speaker 02

  Yeah. Um, what kind of information are you thinking, Paul?

• 39:04Speaker 00

  Well, like how much it sold for and allegedly and think, you know, things of that nature.

• 39:09Speaker 02

  Hmm. I had a different one last year that I, I've said, I, this is the hard thing. That's the hard thing, Paul, is that I'm under NDA on a lot of the bigger businesses because the private equity groups make you sign an NDA.

• 39:24Speaker 00

  Okay.

• 39:24Speaker 02

  You know what I mean?

• 39:25Speaker 00

  Yeah, no, I completely understand.

• 39:27Speaker 02

  Their competitors don't know what they're bidding. You know what I mean?

• 39:29Speaker 00

  Yeah, no, I.

• 39:31Speaker 02

  And that's why I think you need a broker that's in the green space because like, you know, actually, I'm involved in these transactions. So I see them. You know what I mean?

• 39:42Speaker 00

  Yeah.

• 39:43Speaker 02

  But I'm not trying to not give you.

• 39:44Speaker 00

  No, I completely understand. I'm just trying to offer hope to people who are listening in their truck right now, running their business and seeing the light at the end of the tunnel of doing all these things you're saying accurately so that one day that can be them getting the gigantic exit.

• 40:03Speaker 02

  And you know what? You know what, Paul, too, is I don't know if you're going to put my name and number up, but you know, I encourage anybody that's looking to sell them now or in the next couple of years to reach out to me and let's talk. I mean, I'm not, I'm not going to try to sell you anything. I'm just going to talk to you, we can talk about your business and any advice I can give you. Fantastic. Whether you use my services or not, and I'm not going to charge you, you know, to me, it's just like what I, I look at it as, I don't, I don't charge for all this stuff, Paul, but I look at it as I'm building relationships with people so that when they are ready to sell, hopefully they're going to keep me in mind when they're looking, when they're, when they're looking to sell because I've given them valuable advice in the past that made their business more sellable.

• 40:42Speaker 00

  Yeah, well, you can go.

• 40:43Speaker 02

  But they're not obligated.

• 40:44Speaker 00

  Yeah, you can go ahead and share that contact information right now. The video editor can put it on the screen and everything. And then the audio producer, Mr. Producer, he can put the information in the show notes so folks can reach out to you. But go ahead and share kind of like the, the threshold, be like, don't call me if you're under this or call me if you're beyond this or whatever, whatever prerequisites you have there. And then what's the actual contact information for someone to reach out? And again, guys, this is so Jim's going to have this initial conversation with you. So then down the road, when you're like, okay, I'm ready to sell now, you're going to call Jim again and be like, all right, let's go.

• 41:21Speaker 02

  Yeah, and again, like if you just want to call and hey, I'm thinking about my selling my business in three years and I don't know if it's ready or not, we can just chat about it. We'll talk about it. Yeah, so typically I sell businesses that are going to sell for a million dollars or more. So, and then my contact information is, if you want to go to my website, it is www.theLawnBoss.com, theLawnBoss.com. My email address is jim, J I M, at theLawnBoss.com. Don't forget the email and the website. And then my cell phone number, please give me a call on my

• 42:01Speaker 02

  cell phone number at 407-927-8999. And I'd love to chat to you. Obviously, I like talking, right, Paul?

• 42:11Speaker 00

  Yeah, no, this has been, this has been very, very helpful. Is there anything, and again, we'll have all that contact information in the show notes, and then we have a wonderful video editor. We'll put this up on YouTube and whatnot, and we'll have all that information on the screen so people can reach out to you. Because as they're, as they're, the way SEO works, as they're searching, you know, selling my lawn care business, hopefully over time, this video will pop up and we can connect you with the right people. But is there anything we're leaving out here that that needs addressed?

• 42:41Speaker 02

  You know, I want to say this, you know, we said a lot of negative stuff today, like, hey, don't do this, don't do that. And you know, I want to say this is that if you're out there, you're listening to this, if there's something like, oh, I'm not doing this, I'm not doing that, like, a lot of the things that, the difference between your business selling and not selling, 80 to 90% of the businesses out there for sale are not going to sell, you want to be in the 10 to 20% that does sell, it's not, it's not that complicated to make the changes themselves. It's just they take a while to play out. So if you're out there and you're thinking, oh, I need to get out of my business for whatever it is, I'm planning on doing it in a couple of years, you know, reach

• 43:23Speaker 02

  out, let's have that conversation. But I'm telling you, the most time, you can make it happen. And I am talking to a couple of people. Right now, Paul, that are really growing their business. They've got good, solid businesses where they're making really good money, but they want to hit a certain target before they actually sell the business. And every year we just update the broker's opinion of value and we talk to them and you know, we see what's going on and they're, they're reaching their goals. And that's what I like to see with everybody out there.

• 43:53Speaker 00

  Yeah. And my philosophy I've been preaching for years on this podcast is build your lawn care business to sell it. Even if you don't sell it one day, if you build it from day one with the intention of selling it, then you're going to be in good position when they call you. Because, and I've heard you share this on other podcasts, maybe your wife gets a job out of town. Unfortunately, maybe there's an illness or death in the family and you, you know, I just have a friend who moved from the West Coast and he had to move to Minnesota for a family emergency and he never, you know, everything was going great and he never expected he's going to have to move across the country one day, but he needed to be there for an ill family member. And so if you've done everything from the get go,

• 44:36Speaker 00

  as if you're going to sell it one day, whether you sell it or not, you know, it's going to be nothing but good for you to do these things.

• 44:44Speaker 02

  Yeah. And you know what about this too? Cause I know people are thinking, well, if I pay my personal expenses through the business, I'm not, I don't pay my personal expenses through the business. I'm going to get more taxes, which is you're absolutely right and will. I mean, first of all, you should be running your books properly. I'm not here to judge. I mean, it's the reality of the world. I totally understand why people do it. But you know, you legally should be doing it and too, your financials will be a lot cleaner. So that when you're running your business and you're looking at your financials, you know, month to month, or this month over last year, last year's month, same month, what do they look like? You can compare them easier because it's not junked up with personal expenses. But the most important thing is even if you're in the highest tax bracket there is,

• 45:29Speaker 02

  you're paying 37 cents on, on the dollar in taxes. So every dollar that you're running through the business that's personal, you're saving 37 cents on that dollar. But when you go to sell, you could be losing out on that same dollar, $3, $4, $5, $8, $10. I don't, depends on the size of your business and it depends on what, you know, category that you're in within the green industry. But the point is that you're saving pennies and you're losing out on dollars when you go to sell.

• 45:55Speaker 00

  Yeah, that is so good. Well, Jim, I really appreciate this. This has been very insightful. And again, you guys can can reach out to Jim. Just look in if you're watching on YouTube, just look in the description, or if you're listening on Apple or Spotify, check the show notes. We'll have Jim's contact information in there and reach out to him. So I really appreciate your time today.

• 46:20Speaker 02

  Thank you so much. I really appreciate having me on, Paul.

• 46:23Speaker 00

  You got it. Well, guys, this gets me pumped up and in some ways regretful because I wish I could have done things from, you know, and I've shared my story on the podcast many, many a times. I started my lawn business in 2011 in the Honda Accord. And literally, I folded up a raggedy Walmart lawnmower. I think the brand was called a Murray or something like that. I mean, this thing was not self propelled, but the one feature it did have is it folded. So it could actually, you know, be pretty small and I could pick it up and put it into the trunk of this Honda Accord that I had. And then I take a weed eater and I put it in the backseat behind the driver's seat and I put it diagonal

• 47:09Speaker 00

  through the passenger seat and then it was too big. So it had to put the window down and then put the head of the weed eater out the window. And then I had a little steel handheld blower that I put in the backseat. But that's how I started my lawn business. But what if I would have documented everything from the first transaction?

• 47:33Speaker 00

  And, you know, a lot of customers that first year were paying cash, you know, everything should have been separated, like a business account for all my business income and all my business expenses. And then everything separate for the personal and keeping that clean for 10 years or however long you run your business. And documenting everything so that new employees know, you know, first of all, they're paid as W2s and then they know exactly what to do. And just everything Jim talked about, I could have sold my business for so much more. I left, I don't want to say millions, but probably millions of dollars on the table because I was sloppy and I didn't understand

• 48:13Speaker 00

  how all of this stuff works. So hopefully, everything he shared about doing everything correctly, it's really in the long run for your benefit. And so anyway, we'll put Jim's information 407-927-8999 in the show notes. Again, a net profit, you know, in the hundreds of thousands of dollars is, you know, potentially worth millions of dollars, you know, million dollars. I think he said $350,000 net profit. You could probably easily sell your business for a million dollars or more. And it goes up beyond that. So anyway, any questions that

• 48:52Speaker 00

  you have, he can do that broker's opinion of value of what he thinks your business has worked. That's worth, that's such a valuable call. And even if you're not there yet, if you're, if you aspire to be there, I'm sure he'll, he'd love to talk to you because then if you do go to sell your business one day, he obviously wants to earn your business. So, so feel free to reach out to him at 407-927-8999. I think that's the first time in 1,600 episodes, producer, someone's gave their cell phone number on the show. Very, very generous of him. Alrighty. Well, hey, quick reminder, Equip Expo is right around the, well, it's not really

• 49:33Speaker 00

  right around, of course, about a year away. But hey, Equip Expo is coming up in the dates, I don't have the dates in front of me, but October, every year, we have the Equip Expo, and they are offering half off, 50% off to Greenshrew Podcast listeners if you use the promo code PAUL. So that's promo code PAUL, P-A-U-L, and your Equip Expo ticket will go down by 50%, half off. So you can get those are in the show notes as well, the link to register for the Equip Expo and save half off your ticket. So. Never too early to plan for that. I'm really pumped up for this upcoming Equip Expo. Got a lot of, lot of, lot of really cool things happening. So hopefully you can make plans now

• 50:16Speaker 00

  to join us in Louisville, Kentucky for the Equip Expo. Save half off your ticket with the promo code PAUL. All right, this one was very, very, very informative. Thanks for listening all the way to the end. I hope you learned as much as I did. This is powerful. I'm taking notes here as you can see here, Mr. Producer. A lot of notes. Why didn't someone tell me this stuff earlier? Hey, that's why I make, that's why I come in the studio and serve you hopefully at the highest level possible because now you have this information and you can go do something about it and sell your business for a million dollars or more one day. And you can shoot me a DM and say, thanks, Paul. Thanks for having Jim Parker on the program. I just sold my business for X amount of dollars. Just wanted to say

• 50:59Speaker 00

  thank you. Hey, yeah. We had another, today's our batch podcasting day. So I got another podcast in five minutes. I gotta go get some water and use the restroom and be back at it to record another one for your listening pleasure. So I gotta run. Thanks for listening. Hope to catch you on the next one.

• 51:33Speaker 01

  Hey, it's Marty, producer of the Green Industry Podcast. This episode is over, but check the episode notes for links to products and services that you heard about during the episode. And thanks for listening.