How can I tell whether a landscaping business is profitable before I buy it?

The profit on a seller’s summary is the profit with the seller in it. In landscaping, the owner often runs a mower, drives a truck and quotes jobs, and none of that shows up as a wage. Your job is to rebuild the numbers as they would look when you pay for every hour of work, then see what is left.

Put a wage on the owner’s hours

Ask the seller to list what they do in a normal week: cutting, estimating, buying supplies, fixing machines, answering calls. Decide which of those you would do yourself and which you would pay someone to do. Ask your accountant how to account for each job in the reported profit. Many small operations look healthy only because one person is working two or three jobs for free.

Look for deferred equipment costs

Old mowers, trailers and trucks keep running until they do not. If the books show little spending on replacements, the profit may be borrowing from the future. Walk the yard, note the age and hours of each major machine, and ask when each will need replacing. Your accountant can help you spread that cost across the years it covers.

Check the off-season and the weather

Most of the revenue arrives in the warm months, but insurance, storage, loan payments and some wages continue all year. Ask for monthly statements, not just annual ones, so you can see how the business carries itself in the slow stretch. Also ask which season was unusual. A very wet or very dry year can lift or cut results, and one year is a poor guide.

Find the margin by crew or route

If the seller tracks hours and revenue by crew, route or contract type, compare them. Often a few contracts carry the business and others barely cover their labour. See also how to assess equipment condition and what to prepare for handover.