Selling or Buying a Small Business/Selling a small business


I have a small interior plantscaping business.  We have no employees, so I do all of the work.  I install (sell) and then maintain the plants in 23 different commercial buildings.  The income last year was $22,225.
The maintenance fees all differ according to how many plants each account has.  It is mostly a service business except when we install new plants for new customers.  It takes between 12-16 hours a week to service the accounts.  So this is very much part time.  I want to sell the business, but I have no idea what it is worth.  The economy here in Grand Junction, Colorado is not very good right now.  I have no inventory, only supplies for maintenance.  I use a watering tank valued at $800 new and it is about 6 years old.  How much would this plant business be worth?  Thank you.

Hi Chris

Thanks for your question. I apologize for taking a while to answer.

Almost every business is value is based upon one main thing: income. But it's not gross income, nor is it net income. Business value is based upon adjusted net income .

Adjusted Net is found by taking your net income (gross - expenses = net), and adding back into it any seller perks, along with depreciation, amortization, taxes, and interest.

The most detailed part of this analysis is seller perks, because seller perks vary with each owner, each business. Seller perks are essentially anything that benefit the owner but are expensed through the business. Items such as gas for your personal car, auto repairs, meals and entertainment, and health insurance premiums. There are many other items that could be considered "add-backs".

In most cases, equipment is not considered in the overall value of a business. However, inventory usually is.

Some businesses have goodwill value. This is also called blue sky, or going concern value. In a nutshell, goodwill value is the name, reputation, and presence of a business that gives it value and money-making ability.

Once you have that adjusted net number, you multiply that by a "multiplier" which varies according to industry. Most service businesses use a multiplier of 2-3. So, if your adjusted net came to $30,000, your value would come in around $60,000 - $90,000.

The process of valuing a company is never so simple, but this will at least give you a basic idea of what it should be.

My best,


Selling or Buying a Small Business

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Rhett Kniep, CBB


I advise others on how to value a business, how to sell a business, and how to buy a business, and give guidance on critical issues such as negotiation and growth strategies. I have knowledge and experience in real estate investing, including company entity structures and raising investment funds.


I have been a licensed agent and broker for over 12 years, selling commercial real estate, residential real estate, and businesses. I am a licensed building contractor of more than 20 years, and have both designed and built commercial and business structures, in addition to selling them.

California Association of Business Brokers, Contractor's State License Board, CA Association of Realtors, Better Business Bureau

The Contractor Investor, published by Phi Logos Publishing 2011, by Rhett Kniep (book on real estate investing for building contractors) Ezine Articles Diamond Author Blog

Certified Business Broker, California Association of Business Brokers, AA communications and am a student at Lincoln Law School in Sacramento. I have done numerous trainings over the years in real estate investing, real estate sales, and marketing.

Awards and Honors
Stormy Sebring College scholarship, Service Award Good New Rescue Mission, Film School certificate

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