buying existing company

[kdurkee]

I'm looking into buying a friends lawn maintance company. It would be 60 resd. and 2 bus. accounts. All new equip. and trailer.
hustler super z 52" deck
2 edgers
2 weed wackers
1 back pack blower
ALL NEW!!
He wants 38,000.
Just need some advice from outsiders..........Good deal????

[cobra5796]

find out what the equipment is worth and how much each account brings in. Do the math and see if the equipment and the accounts can pay for Your loan and give you extra money for yourself and your bills. Maybe it's worth it maybe not. At least if you do buy the Business you have everything u need plus the accounts.

[richallseasons]

well the equipment alone does not justify the amount he wants, and we do not know what the accounts bring in, do you have that info?

[PMLAWN]

Spend a 1/4 of that and buy your own equipment. The accounts will be easy to get-- No way that is a good price

[mr.we.mow.grass]

Man, do not do it if you what to continue to be friends! Thats way to much, I spent about $20000 for new equipment, 2 used trucks and we are going to finish the year out with 395 accounts.
just my 2 cents!

[thill]

The replies are right on. Way too much (without even knowing what his revenue or net profit are).


Price the equipment at 50% 25% or maybe even 20% of cost new. That part is easy.

Monthy revenue - closely check his books. If he shows a bottom line profit of 15% (that's pretty decent) and he has written contracts. You may want to settle on 3 or even 4 months of gross revenue. I would not pay more than 2months if contracts do not exist.

Another way to look at it - You can invest a lot less and build up a client base that size in one or two years.

Good luck
Tom

[kdurkee]

he brings in $3500.00 monthly.

[kdurkee]

he brings in $3500.00 monthly with no contracts at this time.

[Total.Lawn.Care]

he brings in $3500.00 monthly with no contracts at this time.
I bring in about $2500 monthly with only about 18 yards, part time right now. I have about $10K in equipment and I already had a truck and trailer. I think the $38K is to much as well. Counting the Trailer, he only has about $13K in equipment (New Prices plus tax). That means that he is charging you 60% of what his accounts are bringing in gross in a year. With no contracts, WAY TOO MUCH!!!

If it was like 25% of the annual accounts gross revenue, then maybe (about $10K). I would not go more than $20-$23K for the entire deal. Just my .02.

[RedWingsDet]

$3500 monthy is like $14 bucks a yard. Dont buy it.

[noseha]

no brainer for someone in lc.

[PMLAWN]

Run Away---Fast!!!!!!!!!!!!!!:walking:

[Bel Air Bob]

No way it's worth that much! 3500 from 60 plus 2 bus?!? I currently have 29 residential lawns and I bring in more than that! You'll be working yourself to death just to get loan paid back and no truck in that deal?

[thesargent]

60 yards and only 3800 a month!!?? youve got to be kidding!! i work four days a week with 20 account and alot of one time work and i make way more than that. i have a feeling there will be a lot of responses like this. run far far away from this. i say "No Deal".

[Prestige-Lawncare]

he brings in $3500.00 monthly with no contracts at this time.

This really makes no sense to me ... am I missing something here.

He has 60 accounts, and 2 commercial accounts ... and he only brings in $3500. a month? If you forget about the commercial accounts ... and figure 60 residential, mowed weekly (I am assuming) ... that would only average $14.58 a mow!

If that's what I was doing ... I'd be selling all my stuff too.
:weightlifter:

[kdurkee]

WOW!!!! Thanks guys!!! You've given me something to think about! But the only thing that makes me think is that it seems like almost all the companies arround here don't make much more than $15-20 a mow. And these acounts are all in the same neighborhood (20 on the same road). Alot of competion and to many cheap old people keeps the price low in this area. >>>>>>>>>>>But... that does'nt explain the price of the business.

[topsites]

Run Away---Fast!!!!!!!!!!!!!!:walking:

No doubt, and for more than one reason:
1) Do you have prior business experience? If not, you're asking for it. Really, it would be best if you had at least 2 years as Lco, but 4-5 years of most any business experience and you shouldn't get raped too bad (good times).

2) Do you have the money upfront or at least in some bank account? If so, fine. If not, it is bad news. I just bought an 8k machine on a 3-year 0% loan, but I do have the money, so there will be no default (in case the crap hits the fan, is what I mean). No offense, but you need some kind of hard cash to get started, the first year is unusually rough, it will be your 2nd year before you can see straight, and if you make it through, 3-4 years until you first see a real profit is completely normal. In all of this time, something has to pay the bills.

3) With no experience, plan on losing 20% or so of those customers in your first year, 10% right off the bat: That's IF your friend is willing to walk you through the process, going from customer to customer (yes, each one of them, with you there) and introducing you and explaining things himself... If he doesn't do that, I can not tell you what the loss of customers will be, other than it is far higher.

4) 35k and he's your friend? That's no bargain, evidently your friend sees business as business, a smart man but not necessarily your friend in this aspect (I'm not saying he's not a good friend, I am saying that concerning business, he's not concerned about the friendship aspect - translation: If you go into this, likely you shouldn't be concerned about the friendship either).

[Sandgropher]

My guess its worth around half the asking price, considering what info we have to go on at the moment.

If any bodys looking to buy a business do not worry to much how many accounts there is, a 60 round account can make as much as a 100 account if priced correctly, its called having quality accounts and you are not running around like a chook with its head cut off.

Offer him 16-$19,000 if your really keen on the idea and you can build it up a bit better over time, you have a foundation to start with, the best thing is he has 20 in one street so your hourly rate will be pretty good when you get quicker,,,,i do wonder why he has so many they but,,,to cheap perhaps???? give us any more info you can,,,,,print this out and show him later that the pros say he is to high then he may realise he is asking to much,,,,,,,,,,,,,,,,,,,

[WetWell]

I don't think it is worth over $19,000, cheap accounts and many to do. I doubt he ever sells this business for close to what he is asking. I think he is asking double what it is worth, you have to remember the expenses and labor involved in all those accounts.

[noseha]

No way it's worth that much! 3500 from 60 plus 2 bus?!? I currently have 29 residential lawns and I bring in more than that! You'll be working yourself to death just to get loan paid back and no truck in that deal?


29 acct. that would be $131.00 avg per lawn, 4 week month, 7 day mows,32.75 avg. per lawn mow.

[PMLAWN]

WOW!!!! Thanks guys!!! You've given me something to think about! But the only thing that makes me think is that it seems like almost all the companies arround here don't make much more than $15-20 a mow. And these acounts are all in the same neighborhood (20 on the same road). Alot of competion and to many cheap old people keeps the price low in this area. >>>>>>>>>>>But... that does'nt explain the price of the business.

So why go into this business at all, even at zero investment??

[ericlemson]

he brings in $3500.00 monthly.

Are you sure you said this right? Maybe you meant he net 3500/monthly after labor/all expenses...?? :confused:

[topsites]

Are you sure you said this right? Maybe you meant he net 3500/monthly after labor/all expenses...?? :confused:

That would mean he's grossing 35k a month.

[ericlemson]

That would mean he's grossing 35k a month.


Lol...sounds like a better deal now.