Exit Planning Strategies and Market Volatility
Industrial hydroponic greenhouse interior. | Photo: Adobe Stock
There is much volatility right now regarding immigration, wage rates, tariffs, climate, and even insurance costs — to name a few.
Much of it you can’t control. Let’s let the advocates and experts like AmericanHort and other political action committees who represent our industry’s best interests “work the issues.” While they are focused on fighting the fight, you need to keep your focus on your customers, your team, permanent and temporary workers, and suppliers, as they too are facing headwinds. You can influence, manage, and refine these elements in your business during unpredictable times.
The results of PivotPoint Business Solutions’ 2nd Annual State of Succession and Exit Planning in the Horticulture Industry survey, sponsored by Meister Media, will be released in July at Cultivate’25. This year’s “pulse” questions in the survey highlight how horticulture business owners are responding to the ebbs and flows of our industry. The findings also tell us that the impact on owners’ plans to exit their business is indeed being affected, with one in four respondents changing their exit timing.
When asked what the top business issues they need to be focused on:
- 58% stated building a team that can function without me.
- 49% said documenting my SOPs.
- 39% are focusing on attracting and retaining the right people.
- 31% said getting a better handle on my financials and cash flow.
These are business issues that are within your control as an owner that can help weather current challenges and increase the value of your business for future transfers or sales. Typically, not knowing will keep a business owner up at night.
According to the survey, here are the top “knows” that will accelerate the value of your business and a successful transition for you and your team (and get you more sleep).
Know Your Customer
Customer Concentration: Too many eggs in one basket can lower your value. 33% of respondents stated that their largest customer represents more than 11% or more of their total revenue.
Recurring Revenue: These customers return on a scheduled basis due to contracts or subscriptions. 25% stated more than 50%, which is highly attractive, while 46% stated 0-5%, a significant improvement area.
Customer Satisfaction: More than 71% don’t measure it or rely on verbal discussions. Qualified data is essential and can mean a much higher value when transferring or selling your business.
Know Your Limits
Owner-centricity is a major value killer in the green industry. This is much of the reason why 80% of businesses are not saleable — they may be sole proprietorships or simply too dependent on the owner. When asked where they spend most of their time, owners stated overwhelmingly operations and production, followed by sales and financial management. Strategy was a distant fourth.
Vacation is also an important qualifying question, with more than 34% stating they have never taken a vacation of 2 weeks or longer. When asked how their business would perform if they were out of action for 3 months or more and unable to work, 32% said it would suffer but survive, while only 20% said it would hardly suffer. This points to owner-centricity remaining a major value killer in the industry.
For the remaining two “knows,” read the full article on GreenhouseGrower.com.