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MowHouston
06-14-2008, 05:25 PM
So I was piddling around with the thought of having all of the equipment I wanted and how much I would need. I'm sure we all do that.

Well I submitted my information about my company to an investment site. A week or so later, I get a guy that is interested. Boom, I send him my business plan. He says it will be reviewed.

Today, I come home with an email with a Letter of Intent from his investment company that they are in favor of the investment.

The terms are a 25% equity holding of the company, which of course can be bought at the end of the 5 year exit, I get first dibs on buyback or they can choose to sell it to whomever they please.

Collateral is a stock certificate worth $50,000. I would need to incorporate first to do this I think. I'm still not certain how to issue stock like this. :hammerhead:

Payment terms are 15% of net profit for 5 years.

I havent made a decision yet, but what would you do if you were still starting up and had plans to grow your business at a fast pace in mulitple cities?

I dont want the feedback saying that you wouldnt want to grow that fast, I'm asking you for feedback as if you did.

It could be a lifechanging decision, very good or very bad.

lawnspecialties
06-14-2008, 08:08 PM
Sounds like too much hassle to me. I began my business in '99 with a $400/month contract for my church. I immediately went to Home Depot and financed a Scott's 25/54 garden tractor, Ryobi trimmer/edger, and Echo backpack blower. I picked up my first residential account a few months later.

In early 2000, I picked up another commercial account and went out and bought a Cub Cadet Tank which I financed. I still had the other stuff and slowly started to upgrade my handheld equipment to commercial quality units.

I've been doing this same "business plan" all the way up to now. I have an '05 F-250 with three trailers, a New Holland tractor, four ztr's, 5 trimmers, 4 blowers, etc., etc., etc.. Everything's paid for as of this year.

Yes, it would be nice to have had all this equipment from the start but you have to remember a few things.
1. Just because your trailer is full of shiny new equipment, people aren't going to just start flocking to you.
2. Going out everyday with minimal equipment but minimal financial commitment is a whole lot better than the opposite.
3. Commercial equipment purchases are easier than ever these days. If you land a nice contract and need something specific, some dealer out there will find you a way to get you financed if you don't have the cash and they'll get it to you quick.

People ask me how's business going and if I ever get tired and run down in this wicked heat. I always tell them business is great but I do get mighty tired. But I'm so thankful I'm not sitting at home with all this stuff waiting for the phone to ring.

Be careful :)

Groh's Mows
06-14-2008, 08:36 PM
Is your business plan based on accounts you have already talked to, or have some kind of a comitment from? If not what are you basing it on? Do some searches on here about expanding or growing and you will see that it takes time to grow. Don't assume just because you have a high capacity that a large volume of work will come your way.

MowHouston
06-14-2008, 08:40 PM
The main issue seems to be that just because I've got the capacity to do volume, that I wont have the customers.

With my current advertising, I land about 15 new customers a week. Actual customers, not leads. I feel that is great compared to other start ups on these forums. But I'm held back by my equpment. Thats one of the main reasons.

I know I could do it all by cash. Most people do. But I want to expand and not just in this city. At least statewide. And I dont want to take 10 years doing it.

I still dont know what I'm going to do. I've got a lot of thinking to do and I am really going to sit back and take a look at my numbers and see what would be best for me, the company, and my family.

Thanks for the input guys.

Military Lawns
06-14-2008, 08:49 PM
T
With my current advertising, I land about 15 new customers a week. Actual customers, not leads. I feel that is great compared to other start ups on these forums. But I'm held back by my equpment.

Care to shed some insight on your advertising?

DJ-

ALarsh
06-14-2008, 08:54 PM
The main issue seems to be that just because I've got the capacity to do volume, that I wont have the customers.

With my current advertising, I land about 15 new customers a week. Actual customers, not leads. I feel that is great compared to other start ups on these forums. But I'm held back by my equpment. Thats one of the main reasons.

I know I could do it all by cash. Most people do. But I want to expand and not just in this city. At least statewide. And I dont want to take 10 years doing it.

I still dont know what I'm going to do. I've got a lot of thinking to do and I am really going to sit back and take a look at my numbers and see what would be best for me, the company, and my family.

Thanks for the input guys.

15 customers a week in the Houston market? I don't think that is anything out of the ordinary in such a market..... In such a market, don't all you guys run small walkbehind mowers...

GrassBustersLawn
06-14-2008, 09:10 PM
Well let's see.....If you want to take on a PARTNER that WON'T BE DOING ANY WORK...and he'll be LOOKING OVER YOUR SHOULDER (and books)....and taking 15% of your money....THEN GO FOR IT.

Personally, I like to keep my own money.

Green Finger
06-14-2008, 09:30 PM
If they tell you there is an application fee of $1.00-2000.00 and up it is a scam. Don't be duped.

Check them out. Ask for their Dunn and Bradsteet Rating and number. Go to thier PHYSICAL location.

Be careful and watch who you get into bed with. Into business.

Do your homework.

All Season Lawn Care
06-14-2008, 09:52 PM
Good luck if you do it 15%n of your profit is quite big.....

johnnybravo8802
06-14-2008, 10:07 PM
I was going to do the US Lawns thing several years ago and backed out after I did a lot of research. Sometimes, things aren't what they seem. To me, a good business isn't what you gross, it's what you put in your pocket after everything is said and done and how hard you have to work to get there. I knew of a guy several yrs ago with the largest lawn service in Atlanta and he was grossing 5 mill./yr but he was working 7 days/wk and only putting $60,000/yr. in his pocket. He got fed up, sold all but one truck and had two helpers and now makes more and is home more. Size isn't everything like she may think!!:laugh::laugh:

Az Gardener
06-14-2008, 11:09 PM
If they tell you there is an application fee of $1.00-2000.00 and up it is a scam. Don't be duped.

Check them out. Ask for their Dunn and Bradsteet Rating and number. Go to thier PHYSICAL location.

Be careful and watch who you get into bed with. Into business.

Do your homework.

Ditto to this. I would be very surprised if there are venture capitalists out there willing to spend time for a paltry 15% return on 50-K sounds too good to be true it probably is.

All that said play it out and see where it leads. Go big or go home you know. If it is legit congrats to you, no sense wasting time life is too short. If it works great! if you fail the sooner you can move on to something else. I see it as a win-win if it is legit. I'm a glass is always full kinda guy though. Keep us posted.

topsites
06-14-2008, 11:23 PM
No offense but I have to take with the consensus that someone's trying to get the best of you, and it's almost funny
but unfortunately the temptation bit throttles my enthusiasm.

To have stock, to go public, just for starters you need at least one million dollars, cash.
I'm not joking, then you need some kind of proven financial assets on top of a 5-10 year or longer track record of annual income both gross and net with figures so high it's not even within 100 years for guys like us, look if you're still not sure why bother with these folks just go to like Wall Street and find out what it takes.
Which, if it makes you feel any better as you can see I've been down this road before :p

topsites
06-14-2008, 11:36 PM
The main issue seems to be that just because I've got the capacity to do volume, that I wont have the customers.

With my current advertising, I land about 15 new customers a week. Actual customers, not leads. I feel that is great compared to other start ups on these forums. But I'm held back by my equpment. Thats one of the main reasons.

I know I could do it all by cash. Most people do. But I want to expand and not just in this city. At least statewide. And I dont want to take 10 years doing it.

I still dont know what I'm going to do. I've got a lot of thinking to do and I am really going to sit back and take a look at my numbers and see what would be best for me, the company, and my family.

Thanks for the input guys.

Right, but don't put the cart in front of the horse, slow down and let the horse pull the cart even if it goes at a snail's pace.
I understand what you mean about the equipment, I am sorry about that but you as a person need this time for growth too, believe it or not it's not just the equipment that's messing you up... The best way to look at this is, things are about the way they should be, sure it sucks, first years always do heh...

Just keep working every day lalala and save up your money then maybe by next year you can buy one or two pieces of better equipment and the next year after that one or two more and just keep doing that. If you absolutely have to have another piece of equipment, seeing how you're already 'refinancing' to consider the loan, instead of worrying about the loan what I would do is use the figures you glean from doing that paperwork to see if maybe you can get yourself something soon, like say by end of summer or maybe even now, and maybe the figures tell you that you have to wait, either way I would do it that way.

And yeah sure it will take 4-5 and 6 years and longer but that's where I am today, that's just how I did it, one small step and one lawn, and one day at a time.

Peace

DuallyVette
06-15-2008, 01:00 AM
And I thought that equipment was easy to get.

Employees that can actually do what you ask them to do ( especially when your not looking ) are the HARD part.

I've got 2 extra trucks, a backhoe, and a brush chipper, and a couple of extra mowers sitting around, wishing they could leave the yard without ME

Varsity L&G
06-15-2008, 02:03 AM
No offense but I have to take with the consensus that someone's trying to get the best of you, and it's almost funny
but unfortunately the temptation bit throttles my enthusiasm.

To have stock, to go public, just for starters you need at least one million dollars, cash.
I'm not joking, then you need some kind of proven financial assets on top of a 5-10 year or longer track record of annual income both gross and net with figures so high it's not even within 100 years for guys like us, look if you're still not sure why bother with these folks just go to like Wall Street and find out what it takes.
Which, if it makes you feel any better as you can see I've been down this road before :p

I do not think he was referring to publicly traded stock.

MowHouston
06-15-2008, 02:36 AM
I do not think he was referring to publicly traded stock.

Correct, I think it would be a preferred stock certificate that would show the par value of each share then the amount of shares on the certificate...

Or, a Debenture stock certificate. Not sure yet. Have to wait till Monday to talk to an attorney for advice on the whole thing.

There are no upfront fees. I've talked to the guy in person already. Its not a scam.

As far as 15% return on 50,000, its more like 15% on what the company nets in the next five years. While I've got my business plan and everything, I still need to look at it and see how that cut will affect me and what I need to be planning for and striving for if I go through with this.

For the guy asking about my advertising, I use google adwords. I suspect I get so many customer because of the Houston Metro area. Many many people here. If you tried running google ads in a small town, forget it. you may not get any leads. I havent even fully explored other means of advertising that would bring even more to the table.

Thanks to you all for your advice.

topsites
06-15-2008, 04:11 AM
Well somebody's pulling MY leg then because the first fool to offer me THAT loan would get took!
First 5 years 15% on the net, where'd this guy fall off?

Hell all I have to do is make sure my expenses are as close to gross as possible,
since labor is an expense if I want it to be so then I can show a net of
$100 for the year and that fool can have his 15 dollars.

Better yet, why don't I just lose money for all of those years?

But you ain't telling me that he's this stupid, either.
Sounds to me more like a carefully worded loan shark type of deal, if you ask me.
If it's anything even remotely like what you speak of, another one of them "we offer
quick cash for homes in ANY condition" deals.

Now you don't expect to call this guy and throw this crap in his face,
then have him do a turn around and fess up to it, do you?

Because I got a bridge you can buy.

Richard Martin
06-15-2008, 06:00 AM
I'd sooner take the business plan to the bank and see what their terms are. I'd be willing to bet that you could do better than 15% annual interest and not have to fork over 25% of the company.

JNyz
06-15-2008, 07:11 AM
I do not think he was referring to publicly traded stock.

Correct I wish people would read the whole post.

N.TX
06-15-2008, 10:05 AM
Just start small if you have to.... that just sounds like a problem waiting to happen.

fool32696
06-15-2008, 12:16 PM
If you can't pay cash or get financed through traditional means, don't do it. Buying equipment is the EASY part. Keeping good people on it and busy is the hard part. Seriously, if you're growing as fast as you say with 15 new clients a week, money shouldn't be an issue at all.