Regarding your search for information about selling a landscaping business in Iowa.
We are KKBA Nationwide Business Advisors, we work very closely with owners who are thinking of selling a landscaping business in Iowa and buyers who are seeking acquisitions in the landscaping industry.
What is your landscaping business in Iowa worth?
One of the first questions we get from owners like yourself is – What is my Iowa landscaping business worth? That might seem like a very simple question, but nothing could be farther from the truth. Basically, your business is worth what someone who has the means to purchase and run your business and, who is not under compulsion to purchase your business might think it is worth to them. All the theoretical analysis by valuators notwithstanding, that’s how much your busines is worth.
Using a “Multiple of Earnings” or “Rule-of-Thumb” to value a company.
The Multiple of Earnings Method of valuation is arguably the easiest valuation method one could use to value a business. However, being the easiest method is also its biggest weakness. One need only consider the fact that there might be a difference of opinion between valuators as to the definition of the term “earnings” to conclude that no valuator worth his/her weight in salt should ever recommend looking at this method only to determine to any level of certainty the value for a business.
In the linked video Wharton Professor Rick Lambert explains two accounting methods to calculate the value of a company. Valuing a company is extremely difficult to do well. Companies are complicated entities — engaging in many activities that we only get limited information about. Moreover, firms last an indefinite length of time; most of their important value-creating activities haven’t even happened yet!
Sometimes Business Brokers will refer to the “Multiple” method as a “Rule-of-Thumb” method for determining the value of a type of business. Depending solely on the Multiple of earnings method for valuing a business completely ignores the individuality and uniqueness of a particular business. It is our opinion that the Rule-of-Thumb Method should only be used when valuing thumbs.
If you want to learn more about valuing a company, I suggest you purchase a copy of “The Art of Business Valuation.” The owner of KKBA, James M. King, assisted the author in the development and writing of the book. You can click on the image of the book to purchase a copy from Amazon.
 Excerpt from WhartonForFinance is property of WhartonForFinance