It could also be viewed as risky if you’re too reliant on a given service. Landscape installation contractors learned that lesson all too well a few years ago. Even maintenance contractors learned this first-hand during last summer’s drought. When the grass stops growing, you stop mowing—so you better have something else to offer, whether it’s tree trimming or aerating or whatever you can think of.
Recurring revenue streams also help to make a company more valuable. For a landscape contractor, we’re largely talking about maintenance services: mowing, tree trimming, snow removal, lawn care, irrigation system checks/upgrades, etc. Since 2008 many landscape contractors have rebalanced their service mix so that least half of revenue is coming from maintenance-related services.
Multi-year service contracts and multi-phase construction projects that extend over a longer period of time can also be useful. Again, this helps take some of the risk out of a business because revenue is coming in continually over a period of time.
There are a lot of things that add value to your company that are more difficult to measure than EBITDA, sales growth, profit margin or number of customers. Still, they are very important and require the diligent attention of the company owner.
One is your management team. Skilled, trained leaders in your company make your company more valuable—period.
Your company’s brand strength is also important. It means a lot if you’ve been around a while and have a good reputation.
Your company becomes more valuable when it possesses unique competitive advantages which the customer greatly values. This might be the ability to provide multiple services. It could also be something as simple as they way you communicate with customers and respond to questions or issues. The point is that you don’t want to merely look and act just like all of your competitors. That’s not valuable, that’s a commodity.