What’s Your Landscaping Business Really Worth? Debunking the 2x Revenue Rule

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Published June 2nd, 2025 by Strong Tower Valuations

In the world of small business ownership, few questions carry more weight than: What is my business actually worth?
If you own a landscaping company, chances are you’ve heard this phrase more than once:

“Landscaping businesses typically sell for 2x revenue.”

It’s a tidy, simple formula—and it’s also dangerously misleading.

While “rules of thumb” like this are commonly thrown around in industry circles, they’re not only incomplete—they can lead to poor decisions, unrealistic expectations, and missed opportunities. In this article, we’ll break down why the 2x revenue rule isn’t a reliable way to value a landscaping business, and what a more accurate valuation process actually looks like.

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The Origin of the 2x Rule: Where It Comes From

Let’s start by acknowledging where these rules come from. Business brokers, industry forums, and even other contractors often cite multiples as a fast way to estimate value. You might hear:

“Landscapers usually sell for 1.5x to 2x gross revenue.”
“A well-run business should go for 3x EBITDA.”
“You can just take your annual sales and double it.”

But these statements are based on broad averages. They do not reflect the specifics of your operation, and they certainly don’t hold up under professional scrutiny—especially in legal, tax, or financing situations.

The Real Factors That Drive Landscaping Business Value

So what actually determines how much your landscaping business is worth?

Here are just a few of the variables that matter far more than revenue:

1. Profitability (Not Just Revenue)

A $2 million business with a $500,000 net profit is not the same as one with a $500,000 net loss—even if their top-line revenue is identical.

Sounds obvious, right? Yet many owners still default to revenue multiples as their benchmark. Profitability shows the business’s ability to generate returns for a buyer. That’s what they’re really paying for.

2. Earnings Quality

Not all profits are created equal. If your business’s profits come from one big seasonal contract, for example, or are tied to a single client, that risk will lower your value.

Lenders, appraisers, and sophisticated buyers will evaluate how reliable, repeatable, and diversified your earnings are.

3. Asset Base & Equipment

A landscaping company may own trucks, trailers, mowers, snow plows, and other hard assets. But are they well-maintained? Fully depreciated? Recently upgraded?

A company with a brand-new fleet and no major capital needs may fetch a higher price than one that needs immediate reinvestment—even if revenue is identical.

4. Management Depth & Systems

Do you, the owner, run the day-to-day operations, do all the estimates, and manage every crew?

If the answer is yes, then a buyer is also buying your job—not a scalable company. On the other hand, if you have trained supervisors, clear processes, and CRM systems in place, your business becomes much more transferable—and valuable.

5. Geographic Market & Seasonality

A business in Florida that operates year-round may hold more stable value than a seasonal landscaping firm in upstate New York. That’s not a knock—it’s simply a matter of risk, market demand, and revenue consistency.

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A Real Example: The Landscaping Company Analogy

Let’s look at two landscaping businesses. Both generate $2 million in annual revenue.

Company A reports a $500,000 loss on their books.
Company B shows a $500,000 net profit.

Which one is more valuable?

Most would instinctively say Company B. But it’s not always that simple.

Company A’s loss may be due to a major one-time reinvestment—like a new fleet of trucks, trailers, or updated technology. Their cash flow might actually be positive, and depreciation may be skewing the net income.

Meanwhile, Company B’s profit might look healthy, but it could be coming at the expense of long-term investment. Are their trucks rusting out? Have they underpaid employees, leading to turnover? These risks hurt future performance.

That’s why revenue or profit alone doesn’t tell the whole story.

So What’s a More Reliable Approach?

Professional valuations rely on three primary methods, not revenue multiples:

1. Income Approach (Discounted Cash Flow or Capitalization of Earnings)

This looks at your actual earnings and projects them into the future, accounting for growth, risk, and return expectations.

2. Market Approach (Comparable Sales)

This method reviews recent sales of similar landscaping companies—adjusted for size, geography, margins, and risk.

3. Asset Approach

Used less frequently in profitable operating companies, this approach values the business based on the fair market value of its assets minus liabilities.

Depending on the scenario—buy-sell agreements, divorce, estate planning, or SBA lending—a certified business valuation expert will determine which method(s) apply and how to apply them correctly.

Why You Should Avoid “Back-of-the-Napkin” Multiples

While rules of thumb might be a decent place to start a conversation, they are not a substitute for a professional valuation.

Here’s why:

They fail to consider the specifics of your business model and risk.
They ignore how value may differ for strategic vs. financial buyers.
They don’t hold up in court, IRS audits, or financing applications.
They set you up for disappointment or leave money on the table.

If you're using a blanket multiple, you’re gambling with your future.

When You Should Get a Valuation for Your Rochester, NY Business

You don’t need to be selling your business tomorrow to benefit from a professional valuation. In fact, getting one well in advance gives you time to improve your value and correct red flags.

Consider a valuation if you are:

Planning to transition or sell your business in the next 3–5 years
Creating or updating a buy-sell agreement
Gifting or transferring shares for estate or tax purposes
Seeking investment or bank financing
Going through a divorce, dispute, or litigation

Ready to Understand Your True Worth?

At Strong Tower Valuations, we work with landscaping businesses of all sizes to deliver objective, defensible, and insightful business valuations. We don’t rely on generalizations. We dig deep—into the financials, the operations, and the real drivers of long-term value.

Whether you’re selling, planning, or simply curious, we’re here to help you get clarity—and peace of mind.

Call us at (585) 402-9499
Email: info@strongtowervaluations.com

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