Purchasing an existing Gardening/Maintenance Business

[MowinginEureka]

Hi. My name is Neil. I have worked for a gardening/maintenance/landscaping company for 1 year. I was approached last week by my boss with the opportunity to purchase said business. I will only be purchasing the maintenance/gardening aspect of it because I do not have the ability or experience to get a contractors license to be able to utilize the landscaping portion much. I have been mucking about banks and the local SBA office getting the purchase process started. Does anyone have any advice or information that might be useful to me? I am looking for information on getting my spray license currently. I have worked here for 1 year and have a good grasp with the clientèle and area. I also am wondering if anyone would be willing to put up what they paid for their businesses and what the sales figures were when they took over. I am personally buying a business that has been around for quite a long time. I don't want to give specifics yet because it's not on the open market. It has 50 maintenance/mowing type accounts. Almost all of these account are full service, like spraying, pruning, mowing, hedge trimming, planting, etc... before expenses my half of the company brings in 115,000. After, it brings in a bit over 50,000. This includes my wages and one other employee. Without those wages, because the other employee is quitting. It brings in approx. 90,000. I will of course have to hire another employee which will bring it more down near 70,000. The purchase price I have negotiated is 135,000. That includes a fully decked out Walker mower, my choice of either a 90 gas manual F250 with aluminum dump bed, or a diesel 93 F250 automatic with aluminum dump bed. A 12ft? trailer. And sets(being 2) of toro mowers, stihl trimmers, stihl hedge trimmers, stihl blowers, and a handful of hand tools, a power trim edger and some spraying/fertilizing equipment. I am sure to be leaving something out. My main issue is getting the SBA loan. I am working on that with my bank. How does this all sound? I would appreciate any and all help in this area. Thanks. - Neil

[MowinginEureka]

bump bump bumpity bump

[JohnnyRoyale]

Personally, I wouldnt be interested in the equipment as it sounds dated, and it seems like the price for the business is high. I'm sure if you shop your equipment needs, you can roll out new equipment for an attractive monthly lease rate.

Secondly, i would approach the seller, and work out terms on the purchase of the business. Maybe give him a downstroke and something monthly. If he trusted you in the care of the properties as an employee, i'm sure he won't object to financing this move. Plus, banks and SBA's arent there to fund LCO's unless you know someone on the inside. Especially with the numbers your giving us.

The contracts alone aren't worth more than the paper they're written on unless the clients are happy with YOUR work and are willing to stay on for the long haul. We just took over a 200K portfolio, for 20K, with payment terms, and we met with all the clients prior to the transaction. If any client bails on us, we bail on the payments.

Over the years I have taken over a number of small companies to increase my revenue and business and have never paid more than 10% for the contracts alone. And thats for base contracts-whats guaranteed, whats on paper, not the extras that may or may not come.

What you have to consider is why the guy is selling, client payment histories, ...etc. This also dictates your payment price for the company. You definetely do not want to assume any of this guys liabilities either.

If possible, I would stage the transaction as if you were a silent partner in the original company, and you are parting ways and you will be taking over the maintenance side of the operation under a new company name. Some clients dont like the idea of being sold, and this approach may circumvent any issues to that respect.

Bottom line is, if you want it bad enough, you'll have to get creative with financing and your approaches and at the end of the day you have to make money. Good luck, hope this helps you and let me know if you need any other advice. I'm interested in seeing how this pans out for you as 15 years ago I had the same proposal made to me by my boss and I got creative enough to make it happen and today were grossing just over 2.5M/year and loving every minute and dollar of it.

[Atlantic Lawn]

Very good advice above, are you the Licensed Applicator for the spray and fert. programs or will that be subbed out ?

[MowinginEureka]

I will be applying for my Spray License very soon, we are going to work out something where he can continue spraying until I get it. As far as I have seen and heard from people it was a decent deal. But I do understand what you mean about the contracts. Client Payment Histories? I dunno. The thing is, I think why it is that high is because of the name and reputation of the business. It is the oldest gardening business in the area. 39 years in business going on 40. The accounts are very loyal, mostly older people. The equipment is not dated. The equipment is between brand new to 2 years old and well maintained. I should know, I usually maintain them. The Walker has like 100 hours on it. They are commercial units. The mowers have honda engines. etc... He will not carry a note. He is retiring. Health problems. He has Bone Spurs in his shoulder and is going in for surgery in June. His wife has a cancerous growth that is being removed Monday...He's ready to get out of the game which is why I was able to negotiate a lower price. Equipment and clients notwithstanding. What I am purchasing is mainly the name and reputation of the company. Plus I have talked to the local SBA and they seem to think it possible as well as my loan officer at my bank. But. I dunno. So you are telling me 200k worth of contracts is only worth 20k? That would still make this company without the name worth 40k...anyways. I do appreciate the advice and will take it into consideration. I just surely am not seeing anything like the numbers you are talking about available here, let alone heard of.

[JohnnyRoyale]

How do you come up with 40K if your contracts are worth 115k? Old clients are nice, but people don't live forever, and at your numbers, you better hope they live at least another 5 years, because thats what its going to take you finally turn a profit. Forget about taking into account the cost of having to replace the equipment at that point in your business carreer. What you have to realize is that its April and ask yourself how many other guys are in line to jump at this opportunity-probably not many. Secondly, what's going to happen to these clients when he doesn't show up in the spring and he hasn't sold the company. As I mentioned earlier, you can duplicate his equipment for a small monthly lease rate and go from there. I'm not suggesting you go after his clients directly, but reality is, they're worth zero to him if he cant sell his business to anyone else, and they'll have to go elsewhere to get serviced anyways. Paying him 40K for everything, including equipment is being generous, and in my opinion isn't a bad deal...130K is just ridiculous-remember...its friggen lawn maintenance. But then again, you seem to have it figured out and it all makes perfect sense to you-so knock your socks off, good luck with your new venture.

[MowinginEureka]

Its not that I seem to have it all figured out. I thought i did. I have spoken to the SBA and my loan officer at the bank. When I look at other business like this for sale, it seems to be comparable. Other gardening businesses that make about half this much but have only been in business for 10 years with no Walker I see being sold for 70k. Generally I have been told at least that you want to make enough a year to pay off the business in 3-5 years. At 50-70k a year that puts me at 2-3 years. That is if I were to put all money made back into the business. I mean if I could find a business like that for 20k that would be great...

[JohnnyRoyale]

Is that 50-70 net profits AFTER all your expenses as well as your salary?

[JohnnyRoyale]

Disregard last post-i read further into your post and got the answer.

Don't get me wrong, I hope you take the plunge into business. It can be very rewarding if you make calculated moves and work your butt off. It wont be easy initially, and you're going to have to make some sacrifices, and by buying an established business, you hope to have taken a few years off the growing pain stage. Have any of these loan people given you repayment terms, or have they discussed cash flow with you? How do you plan to fund this operation? What will happen if you can't come up with the payment at the end of the month for whatever reason? What about insurance? His costs to operate arent nessisarily going to equal your costs. Your going to have to start somewhere, and my last suggestion to you is to not show the seller how eager you are to pay his price. Put on a poker face, position him so he has to take your offer, whatever it is, and however crazy it may sound to you. Your in the drivers seat here...remember that, tell him that his company is worth 0 if he doesnt sell it, and your doing him a favor and the right thing by buying it VS scooping the contracts from him when he doesnt show up in the spring. By the sounds of it he has other pressing issues to deal with anyways. Lastly, think of how nice it would be to pay off your entry fee after your first year or even sooner. Good Luck.

[Rcgm]

I agree with Johnny. I have been doing this for 14 years and would not give that guy that kind of money for that business if I was a multi millionaire. Not saying I know all but I built my business from the hatch back of a mustang and a 21 inch lawn boy. What I am getting at just like Johnny said customers in the green business come and go quick and are not worth the paper they sign. What I have found out in my 14 years in business is customer to customer contact is a big key. People pass away, lowballers, family members start lawn business they let you go. Companys get sold and the new company has there company they have been using for years and let you go.People lose there jobs and can't afford you know more and so on. I would go purchase a truck and equipment spend some top dollars on advertising and would still be well under his asking price. Do some research on how to get customers rather than buy that business. I would also get a little more knowledge of the business under my belt before I went for Chemical license. I just think being in the business for 1 year is a little early to start to want to apply chemical.Just my 2 cents.

RCGM
Brad

[MowinginEureka]

Maybe you guys are right. Dunno, I do not think i need to really learn much more except maybe for breeds of trees and plants. I know how to do most everything...I mean, mowing is something anyone can do. We mow straight, all one direction, alternating patterns etc to not leave the permanent mower tracks. Spraying on the other hand, still not that hard. Its just that it is a big chunk of the business, like 30,000. We spray at all but 2 customers homes, plus, we have the contract for the mall.

[Grott]

The last time A business sold around here it went for less than 1/2 the owners original asking price. The equip and accounts were both discounted from a banks point of view...the VALUE was not there.

Also I would structure the deal with a down payment of some sort and a future payment or payments based on customer retention. Sell your offer to him, it will break up his tax liability, he will have an income stream for X months whatever. If you are too eager it will cost you.

Grott

[lifetree]

How do you come up with 40K if your contracts are worth 115k ? Old clients are nice, but people don't live forever, and at your numbers, you better hope they live at least another 5 years, because thats what its going to take you finally turn a profit. ...

I was thinking the price of the business is too high also !!

[MowinginEureka]

So, ok. Obviously the consensus here is that the price of the business is too high. Doesn't the fact it has been in business so long amount to much of anything? He doesn't even advertise except one ad in the phone book. Phone just rings all the time and he turns a lot of stuff down because he does not have the ability to keep up and wants to slow down more. He seems really firm on the price. I'm not saying there is not some way to go lower. I think there is something to be said for buying an established business. I am fairly certain it would be harder to start my own bank wise. Buying something preestablished is less risk, plus what helps me is that I know these clients. If I do not buy his business I do not think it will work out for me. I am not going to steal his clients either. Well, thanks for all the advice. Does someone know of a way to actually get a business evaluated to see what a fair market value is purchase price wise? Thanks. - Neil

[JohnnyRoyale]

Talk to an accountant.

[Rcgm]

Here is what I get from all that you have said.YOU actually think his business is worth what he is asking and you are defending his price. So pay him what he wants and go for it. You asked we answered more than 1 of us and told you that the business is not worth what he is asking. So I am out of suggestions.



RCGM
brad

[MowinginEureka]

Look. I'm just confounded that is all. I cannot find any business listed that goes for anywhere near what you guys are telling me it should be. Maybe I have the wrong information, Ive been also told that you buy a business at 1-3% of gross, hes asking about 1.5 is what it computes out to. So, maybe I misunderstood what he was telling me number wise. Anyhow, thanks. I will not be asking for any more advice on this, I am just offending people by not taking or believing their advice. My fault, I am sorry. Thanks. I will be in touch.

[Frontstreetlawns]

you cant find another buissness that grosses that much bc the cost of starting a buissness that can make that much cost more to build,( like a resturantis 100,000 for there equip) think about it your buying his customers sure thats an instant way to start but how long would it take to build that, ive bought out 2 people now and my total for both wasnt even 15% of that, my thinking is that the guy just wants you to pay for his retirement

[JohnnyRoyale]

Another great post from someone who's been there, done that.

[rebelsday]

One thing you guys have not noticed is he lives in california you make alot more and everything sells for alot more in california. So the price definatley could go lower but not that low. In Indiana mabey or louisiana. lol. But california is a whole different economy in its own self.

[Frontstreetlawns]

if you feel that way, how much would it cost to outfit a truck with that equip? maybe 25,000 in equip. i believe the price for a stihl is set by stihl so he would pay the same as me. fuel is more exspensive here right now, i know that for sure

[MowinginEureka]

So, update. Things are going fine. Bank seems to have no problem with the price, they think its reasonable. Business has been appraised at a much higher value than what hes asking currently. Thing is, if the SBA does not think it is worth that much, they will NOT back the loan. So, also, you guys were talking about buying the equipment. There is a lot more than I posted as well. Plus, the truck has an aluminum dump bed. There is a month training included, plus he will continue to spray until I get my license, but I still get paid for it. The current owner is going to have us both meet with every single customer and explain the transition. Theres 6 months consultation included for free. I also will be making even more than that because he numbers I posted were just for spraying and maintenance. Theres also landscaping that I will get from those customers. Even though I'm not purchasing the landscaping portion. So, thanks for the advice. I will keep you all posted.

[Frontstreetlawns]

try and get more than a month training, if you need to learn quickbooks it takes longer than that to figure it out

[mngrassguy]

Don't count on getting a lot of help from the prev owner. In my experience, no matter what is promised, as soon as he gets his money....bye

Only way that works is if you withhold some of the money and pay him after. Otherwise, what is his incentive to see you succeed?

[Grott]

I'm with MNGRASSGUY. Attempt to structure the payments so the seller has an incentive for you to be profitable. I know it may sound counter productive but a slightly higher sale price or not negotiating lower, can be offset by laying a portion of the risk back onto the seller. This is even more of a factor when he is responsible for running part of the business(spraying) and training you after the sale.

A possible structure would be for you to HIRE him for six weeks or six months...a year as part of the deal and he makes a salary, equal to the balance you owe plus what you would pay someone to do the job. Or a salary plus a bonus.

This lets the business write off the wages and ties him to you for training and spraying while you get your license.

Keep us posted,

Grott

[mngrassguy]

I tried the "salary" thing but that didn't work well either. Turned out to be my laziest employee. But thats just my experience

[Reliable Lawn Care]

Don't count on getting a lot of help from the prev owner. In my experience, no matter what is promised, as soon as he gets his money....bye

Only way that works is if you withhold some of the money and pay him after. Otherwise, what is his incentive to see you succeed?

Ditto this and most of the other post. Get an accountant and an attourney and do all the due diligence needed to confirm the numbers. I hope it works out for you, but it kind of sounds if you are trying to convince yourself that this is a good deal. I just know that you cannot buy blue sky period. Get the best price you can and work your butt off and try to keep growing. Not too fast, but always look for that next customer as all the others have posted, you just dont know for sure.

[MowinginEureka]

As regards to learning quickbooks, my bank offers free training programs as part of an incentive package deal with the business loan. I am covered there. Since I am already working there, I need minimal training. Pretty much what I need is training toward the structure of running the business, not the labor part.

[irishrpm]

So was the business bought or what?

Remember...The value is in the purchase price. Always.

[Bull]

I think that you possibly allowed your emotions and your relationship with the original owner to get in the way of your ability to negotiate. In todays business climate you need to be capable of wearing several faces depending on what you are doing. However I understand that you are young and if you survive in time those faces will come.

[k911lowe]

just make sure that your boss agrees(in the contract)that he will stay out of that aspect of the business for several years.make sure to get that in writing.

[MowinginEureka]

So, to resurrect a thread from the dead, it has now been just about 2 years since I posted here about this. If any of you are reading this thread that posted here originally, I seem to have made it through the worst of it. I still have been looking for a business here locally that I could buy for under what I paid that is similar, I have not found one yet. I am still grossing what the business was making when I bought it, and that's saying something with the crappy economy. It has been super tough, loan payments suck, and so does everything else. But it has been worth it. I have been learning and making a living doing it. I have my spray license and have been using it often. I lost a lot of clients this last winter to people moving, but, I have been having my phone ring a couple times a day (which is a lot here). For the record, I ended up paying 15k more than I posted on here, which brought the total to 150K, but, I ended up having to secure a personal loan from the owner to pay a down payment to the bank to finalize the deal. I worked on the profitability of the company, and I have succeeded. I now do the same work that took 3 people 5 days a week, with me working 40-50 hours and one guy working 30-40 hours. I work on my own equipment and I have switched to organic fertilizers so I have less grass to mow, but charge the same. I have been using craigslist to great success, doubled the size of my phone book ad and made it full color. I am working on company shirts, new signage, and door hangers. Next Spring, I am going to start testing for my contractors license. Wish me luck! I have to say though, the only thing that seemed to prove true is that the owner did NOT train me at all! Which didn't really matter, I found out that I knew all I needed mostly. I figured out the rest.

[maelawncare]

Hows it going now. lol

[AI Inc]

Would you like to invest in a solar panel producer based in freemont california?

[maelawncare]

I have a bridge n NY i can sell yea.

[32vld]

So, to resurrect a thread from the dead, it has now been just about 2 years since I posted here about this. If any of you are reading this thread that posted here originally, I seem to have made it through the worst of it. I still have been looking for a business here locally that I could buy for under what I paid that is similar, I have not found one yet.

I just read this thread for the 1st time. I'm glad you have done all right.

The thing is I have seen to many businesses sold where they never did the money the seller claimed they did after the buyer took over.

Next to me a business is only worth what it's physical assets can be sold for. And, that is different then what can be bought/replaced for which is always more.

Next one should make enough money to pay off a business in 2 to 3 years. That means if a business sold for $99,000 a business will have to net $33,000 minimum to pay off the loan/cash out laid. Net means all costs and "ALL" salary's including that of the new owner must not come out of the net.

There is no such thing as good will. I've seen too many customers not stay with the new management to risk my money.

You were one of the few that gambled and one.

[AI Inc]

Actualy he didnt if you read his current thread.

[HenryB]

All these posts are really pointless. Each LCO Biz is so different. I have two friends one has 80 clients and net's well over $100 grand a year the other has 350 clients and lives off his wife's salary; To him size matters. They both drive new trucks and appear wealthy. My point is my one buddy's biz is worth $300k easy the other's monster I wouldn't take for free.

[ny scaper]

Hows it going now. lol

Ouch...Do we know how old MowEureka is? Not that it matters, but just curious.

[MowinginEureka]

I still dont think the price paid for the business was unfair. What was unfair was a market filled with people buying houses who could only afford apartments, people refinancing houses and adding additions with inflated values, people getting in to interest only payments and thinking its a great idea. That collapsed the housing market as we all know. I was able to make it through it pretty unscathed. I was fine until just recently, when I lost a ton of accounts and business due to a local drop in economy and random chance. I opened a separate thread asking for some advice on how to refinance or make some different choices in the direction of my business, etc... I am now actually doing fine again. I fired my incompetent employees and hired a competent one. I am working more, and I have more business coming in than I know what to do with. I went with doing door hangers. My problem was that even though I had already been doing this, my target demographic was wrong. I had my head in the clouds and was trying to canvass all of the high income areas with green pristine landscape. I have found much more success by staying with my current demographic. Still green yards and nice hedges, just not million dollar houses. I actually consulted with quite a few specialists, and although the price I paid is high for you guys, the whole market here is ridiculously inflated and it was a fair price in the market 3 years ago. FYI, my net "ratio" was better than the 3 to 1 ratio you described. I just decided not to work as much as most people on here. I instead spent time with my family, and thus had a lot of payroll. Although, with the recent downturn, this was a luxury I couldn't afford. But, I am now working plenty and different advertising has paid off. So, thanks for the scathing remarks. Fortunately, they don't hurt as my skin is a bit thicker now. Thanks for the ones who gave clear, concise advice.

[HenryB]

I still dont think the price paid for the business was unfair. What was unfair was a market filled with people buying houses who could only afford apartments, people refinancing houses and adding additions with inflated values, people getting in to interest only payments and thinking its a great idea. That collapsed the housing market as we all know. I was able to make it through it pretty unscathed. I was fine until just recently, when I lost a ton of accounts and business due to a local drop in economy and random chance. I opened a separate thread asking for some advice on how to refinance or make some different choices in the direction of my business, etc... I am now actually doing fine again. I fired my incompetent employees and hired a competent one. I am working more, and I have more business coming in than I know what to do with. I went with doing door hangers. My problem was that even though I had already been doing this, my target demographic was wrong. I had my head in the clouds and was trying to canvass all of the high income areas with green pristine landscape. I have found much more success by staying with my current demographic. Still green yards and nice hedges, just not million dollar houses. I actually consulted with quite a few specialists, and although the price I paid is high for you guys, the whole market here is ridiculously inflated and it was a fair price in the market 3 years ago. FYI, my net "ratio" was better than the 3 to 1 ratio you described. I just decided not to work as much as most people on here. I instead spent time with my family, and thus had a lot of payroll. Although, with the recent downturn, this was a luxury I couldn't afford. But, I am now working plenty and different advertising has paid off. So, thanks for the scathing remarks. Fortunately, they don't hurt as my skin is a bit thicker now. Thanks for the ones who gave clear, concise advice.

I agree with you your thinking like a businessman. Most people on this site and in this industry are pretty stupid hate to say it but true. I say most not all hence why our industry gets under paid and disrespected. A bread, juice or cold cut route fetches $400 grand and we think a route that grosses $500g and nets $150g's is worth $10,000. Offer a Boars Head route the value of his truck and nothing else and see what happens.

[PlantscapeSolutions]

It's really tough to value a business especially if it's more residential oriented. A lot of times it's the owner's personality that creates much of the loyalty and value in a smaller business.

My sales have gone up and down from $330K - $260K in the past few years but just like you I've been able to my nose to the grindstone when required and cut down on labor costs.

I can usually take home about $80K in pay and benefits but I don't think anyone would value my business at much more then $100K if even that. The green industry is about as safe as the stock market where the value can really have dramatic ups and downs. The drought here in Texas may make a lot of million dollar businesses worthless in the near future.

If we don't get some flooding rain this winter the spring heat is going to turn all the once a week (water restrictions) irrigated yards pretty much brown. The Austin areas market is going to contract from just under a billion dollars a year to next to nothing. It may be time to get into the fake grass and dust suppression business.

[32vld]

I agree with you your thinking like a businessman. Most people on this site and in this industry are pretty stupid hate to say it but true. I say most not all hence why our industry gets under paid and disrespected. A bread, juice or cold cut route fetches $400 grand and we think a route that grosses $500g and nets $150g's is worth $10,000. Offer a Boars Head route the value of his truck and nothing else and see what happens.

The problem with your statement is if people in the cold cut world wanted to say ham and salami are the same because they are meats.

A boarshead route is a guaranteed area where no one else can sell boarshead products. If a store feels the need to sell boarshead product they have to buy it from the route owner.

Landscaping. Any one with a mower is your competition.

Anyone with a mower can claim they are grossing what they want.

An accountant hired by the buyer can verify how much product the seller has bought from boardshead wholesale and sold retail. And get very close to the truth of what the seller made.

Not so easy to verify claims with a LCO business.

I've heard this story too many times, and not just in lawn care:

Small business onwer claims his business grossed $250,000 a year for the last ten years. But he hid the cash income that's why his books show only $50,000

Buyer willingly believes this because he wants it to be true. Wanting and what is are not the same.

Buyer after the first year is making $25,000. He's scratching his head where did the other $225,000 of business go.

1st, the $200,000 of the $250,000 never existed.

2nd, the $25,000 of the $50,000 the owner took half of his customers away on the quiet.

When buying a business you tell the seller that an owner takes his money out while he owns it off the books or pays his taxes so he shows the company's true income so he can sell for top dollar. He can't have it both ways, especially when too many sellers have historically made false claims.

[32vld]

Also I'm lerry of people that have a business that is a gold mine and what to sell.

If a business is making so much money why not groom someone to run it day to day and you have income through their old age?

If a business is such a gold mine why doesn't he want his kids to take over?

If a business is such a gold mine why doesn't he offer to sell it to one of his nephews?

If a business is such a gold mine why doesn't he tell one of his friends that this would be a great opportunity for their son?

Why not help someone you know to have a good income before letting a stranger make a killing?

[thunderthud]

A bread, juice or cold cut route fetches $400 grand and we think a route that grosses $500g and nets $150g's is worth $10,000. Offer a Boars Head route the value of his truck and nothing else and see what happens.

I politely disagree with your comparison.

The problem with your statement is if people in the cold cut world wanted to say ham and salami are the same because they are meats.

A boarshead route is a guaranteed area where no one else can sell boarshead products. If a store feels the need to sell boarshead product they have to buy it from the route owner.

Landscaping. Any one with a mower is your competition.


I hate to use the term, but THIS.
I know a Boars Head guy, he was not pleased when he thought I was competing in his territory. My trucks are black on top and red on the bottom. After I calmed him down that my fleet of truck only had mowers in the back, I got some info about the business. He paid a premium for the rights to a specific territory. He can only sell to stores in a specific geographic area, and in return he pays Boars Head many dollars for advertising and marketing support and the intellectual property that makes Boars Head so tasty. (It could be evil, but damn it tastes good.) Boars Head competes with very few others because it is positioned, at least on the east coast anyway, as a premium product.

The original poster didn't buy a route protected by the company, he bought a business. It came with clients, but it had no built in marketing, wide brand recognition, and the ability to only sell the premium product in a selected market. The same goes for Dunkin Donuts or McDonalds. The value in the Boars Head business is the continuing relationship between Boars Head and the stores that carry the product.

It's not like MowinginEureka bought the exclusive rights to 'Dudes Super Awesome Widget Mowing' a nationally recognized company who mows lawns for $39.99 a yard and has extensive marketing support and a custom cut you can only get from Dudes Super Awesome using the Dudes Super Awesome Widget.

The value in mowing, because it has no intellectual property associated with it, and a very low barrier to entry makes the business worth less.


The value in a business is what makes it unique and can be sold. I hate to admit it, but the value in an at-will client is probably a month at most, perhaps two. The value of the equipment is a fixed cost based on what it would cost to liquidate the equipment. You in essence buying the right to continue to service the client versus buying a fully paying client forever. If you had a state or federal contract for mowing for three years, that would have some value add to the deal because it is guaranteed money.

Another way to value the business is to base it off profits before tax. Subtract out all the costs associated with the business including salaries, recurring equipment costs, and other recurring expenses. Then multiply by 1.5, then add the price your fixed equipment is worth( Anything smaller than a mower is worthless.) There's the value of your business at a hefty markup in a sale. The number will probably be painfully low. If you own a shop or equipment yard you may find the land is more valuable than the company itself.

[HenryB]

Thunderthud what do you disagree with?

[thunderthud]

The comparison of a Boars Head route to a landscape maintenance operation. The value of the equipment and IP in a Boars Head route is vastly different than a LCO.

If am misunderstanding your position I sincerely apologize.

I will agree with you that a Boars Head route offer of just the equipment would get you in your neck of the woods, and definitely my neck of the woods, a string of obscenities hurled at you.

[coolluv]

So how do you go from being in debt up to your @$$ and barely making ends meet to everything is just fine and dandy in a friggen week.

Maybe I missed something.

Dave...

[Fine Gardens Landscaping]

So, to resurrect a thread from the dead, it has now been just about 2 years since I posted here about this. If any of you are reading this thread that posted here originally, I seem to have made it through the worst of it. I still have been looking for a business here locally that I could buy for under what I paid that is similar, I have not found one yet. I am still grossing what the business was making when I bought it, and that's saying something with the crappy economy. It has been super tough, loan payments suck, and so does everything else. But it has been worth it. I have been learning and making a living doing it. I have my spray license and have been using it often. I lost a lot of clients this last winter to people moving, but, I have been having my phone ring a couple times a day (which is a lot here). For the record, I ended up paying 15k more than I posted on here, which brought the total to 150K, but, I ended up having to secure a personal loan from the owner to pay a down payment to the bank to finalize the deal. I worked on the profitability of the company, and I have succeeded. I now do the same work that took 3 people 5 days a week, with me working 40-50 hours and one guy working 30-40 hours. I work on my own equipment and I have switched to organic fertilizers so I have less grass to mow, but charge the same. I have been using craigslist to great success, doubled the size of my phone book ad and made it full color. I am working on company shirts, new signage, and door hangers. Next Spring, I am going to start testing for my contractors license. Wish me luck! I have to say though, the only thing that seemed to prove true is that the owner did NOT train me at all! Which didn't really matter, I found out that I knew all I needed mostly. I figured out the rest.

Great job!

I was thinking about using craigslist too but was afraid that I'd just get calls from lowballers. Could you talk a bit about how you effectively use CL to pick-up new clients and what your experience has been with them?