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View Full Version : Would you buy this business, if you were me?


VAMower
06-18-2008, 09:55 PM
First off thanks for taking the time to read this.

I am curious what everyone's thoughts are on this business that I am considering purchasing. I have been mowing with a family friend for the last 4 months and am considering purchasing his lawn care business for about $20k. The purchase would include the following equipment:

Ford Ranger, very low mileage, very good condition
small trailer
48" Exmark walk behind
2 36" Exmark's
1 21" mower
2 Echo Trimmer's
2 Echo Blower's
1 aerator
1 broadcast spreader
numerous tools and garden equipment

all the equipment is regularly serviced and maintained.

The purchase would also include a little over 50 lawns that gross about $85k a year in sales from mowing fertilizing, leaf removal and small planting projects. Currently we mow about 2.5 - 3 days a week. Most lawns are in very good clusters from 3-7 with very few singles. Average lawn price is $38. Most of the current clients have been customers for 5+ years, no payment/collection issues, very loyal. Its a completely legit business with insurance and licensed.

I have been reading this site for a while and have been very impressed with the knowledge of the members. Please let me know if you have any questions. My plan is to go full time and increase the customers and offer a few more services in order to increase revenue.

Thanks in advance.

Az Gardener
06-18-2008, 10:00 PM
I think the accounts are worth about 7-k. You would have a better grip on the equipment value. Is he offering any favorable terms to sweeten the deal?

Big C
06-18-2008, 10:01 PM
First off thanks for taking the time to read this.

I am curious what everyone's thoughts are on this business that I am considering purchasing. I have been mowing with a family friend for the last 4 months and am considering purchasing his lawn care business for about $20k. The purchase would include the following equipment:

Ford Ranger, very low mileage, very good condition
small trailer
48" Exmark walk behind
2 36" Exmark's
1 21" mower
2 Echo Trimmer's
2 Echo Blower's
1 aerator
1 broadcast spreader
numerous tools and garden equipment

all the equipment is regularly serviced and maintained.

The purchase would also include a little over 50 lawns that gross about $85k a year in sales from mowing fertilizing, leaf removal and small planting projects. Currently we mow about 2.5 - 3 days a week. Most lawns are in very good clusters from 3-7 with very few singles. Average lawn price is $38. Most of the current clients have been customers for 5+ years, no payment/collection issues, very loyal. Its a completely legit business with insurance and licensed.

I have been reading this site for a while and have been very impressed with the knowledge of the members. Please let me know if you have any questions. My plan is to go full time and increase the customers and offer a few more services in order to increase revenue.

Thanks in advance.

Seems like a lot to take on for a solo newbie....are you sure that you can handle it?

VAMower
06-18-2008, 10:14 PM
Yes, the terms are very attractive. I went to business school and the ROI from ongoing operations is pretty strong. The equipment is in pretty good shape, its been serviced by a pro twice a year and maintained regularly. I know this because I have done or seen a lot of it. No failures on any of it this season.

As for handling the business I plan on hiring one or two helpers. Also, the current owner would still continue working with me part time. I would become the owner and handle the business end of things from here on out. He would just be able to mow and offer advice.

Thanks for your responses, I hope this helps.

Big C
06-18-2008, 10:19 PM
Yes, the terms are very attractive. I went to business school and the ROI from ongoing operations is pretty strong. The equipment is in pretty good shape, its been serviced by a pro twice a year and maintained regularly. I know this because I have done or seen a lot of it. No failures on any of it this season.

As for handling the business I plan on hiring one or two helpers. Also, the current owner would still continue working with me part time. I would become the owner and handle the business end of things from here on out. He would just be able to mow and offer advice.

Thanks for your responses, I hope this helps.

Go for it.....good luck ....keep us posted on your progress!!!

Honey Do Property Mgmt.
06-18-2008, 10:23 PM
Sounds like a deal to me!!!!

Az Gardener
06-18-2008, 10:24 PM
Terms are as important as price in my book. So if the terms are good I would give it my blessing. Good luck

VAMower
06-18-2008, 10:43 PM
I figure by going full time adding about 10 more lawns and doing more projects on the existing properties I should be able to keep pretty busy but still be able to focus on the quality of the work being done without getting stretched too far.

When the mowing/landscaping is done for the day how much time do you guys spend on non-mowing/landscaping related activities (accounting, returning calls, general management/ownership issues)? I imagine that this takes up about 1 day a week, hopefully its the rainy day. LOL.

jiggz
06-18-2008, 10:55 PM
ok heres my advice

BUY IT..

Ane The reason I say this is

One of my friends had the opportunity last season to buy the company her worked for.. funny thing is the numbers were almost identical 20 something grand for about 120,000 threw out the season .. but he graduated college and really wanted to use that degree so he said no.. to make a long story short.. two other people bought it..and they hired me to run the crew.. this is how we became friends and he continued to work there till the summer was over.. the dudes that bought the company just didn’t care they weren’t good people..anyhoo they let us go at the end of the season after telling us that we would be taken care of during the winter..

Fast forward to this season.. they didnt start cutting until May wich is about 3-4 weeks late in Jersey and a lot of the customers got other people to cut.. when they finally did get around to going out they hired people that just didn’t give a **** and do horrible work.. I know because I have my own company this is my first season ans I have picked up a HUGE portion of there customer base.. he is doing it aswell on his own this season and picked up like a block of 15 houses that that were so unhappy with there work..

Now when we talk hes always like maaaan im kicking myself for not buying that company..And im pretty sure you will be doing the same

I would like to make a suggestion though.. I consider myself to be an extremely honest person. But theres times you have to bent truths a little bit.. When he introduces you to the customers.. you both should tell them that you have been helping him part time for the past few years.. I know it sounds stupid but it really will comfort the clientele when they understand that you have been taking care of the property for some time and there will be absolutely no changes ..ive seen it happen where the quality of the job is the same but the people just miss the old guy so they nitpick Mistakes that he might have made and would have gone un noticed, but if you’re “”the new guy” its gonna be a pain in the ass…

good luck.. if there good clients and you can do a good job i say go for it..

topsites
06-19-2008, 12:28 AM
Sure if I had 20g cash.

ein999
06-19-2008, 01:25 AM
Just make sure you arent the third guy buying the business and the guy has a helper that will end up with your accounts or kick your ass if you dont pay or move out of his way. I would do it if i were you it sounds like a good price. Oh and dont sign anything saying you cant get your money back either. Lots of screwballs out there and some gullible ones also. Dont get used.

Make sure you arent getting screwed.

stevenf
06-19-2008, 02:51 AM
Sure if I had 20g cash.

$20,000.00 is equal to $17,000.00 cash when your buying something from an induvidual. I always offer cash for my vehicles and I get a nice chunk taken off.

hackitdown
06-19-2008, 06:08 AM
Buy it. It sounds like a deal.

VAMower
06-19-2008, 07:11 AM
Thanks for the input. I will look into an all cash offer to see if that will change the terms. Is this how most of you got into the business or did you start from scratch?

Carolina Cuts
06-19-2008, 07:59 AM
2.5 days/week = $85g's/year....
I must be doing something wrong.

VAMower
06-19-2008, 04:16 PM
"2.5 days/week = $85g's/year....
I must be doing something wrong."

Let me clarify, thats revenue, not profit and it includes a half a day or maybe a full day a week in cleaning or little planting projects. We wouldn't be doing hardly any business during January or Feb. The area is a rather expensive area with most homes in the $800k - $1.6 mil range. Very good honest customers though. None of them have ever looked down upon us because we are the lawn guys.

All Season Bill
06-20-2008, 08:57 AM
Are you buying his list of customers too? Be careful about buying lists....the equipment is OK though....customers will cancel because.......well, just because you're not them.
I know first hand!

topsites
06-20-2008, 09:22 AM
Are you buying his list of customers too? Be careful about buying lists....the equipment is OK though....customers will cancel because.......well, just because you're not them.
I know first hand!

Yup, I learned this too, I dare say at least 10% will leave for just that reason right off the bat.
Another 10% on top of that leave in the first year, at least that was my experience.
It gets into customer loyalty, is what I am thinking it boils down to.
But like you said, just because you are not them.

$20,000.00 is equal to $17,000.00 cash when your buying something from an induvidual. I always offer cash for my vehicles and I get a nice chunk taken off.

Oh no, if it ain't priced right to begin with I don't want nothing to do with it.
If it's worth 17 then price it 17, no haggling for me.
And either way I want cash, even if I am selling and the buyer has to get a loan that is fine but I want the cash.

ein999
06-20-2008, 09:47 AM
not true always

VAMower
06-20-2008, 02:14 PM
I think a 20% turn over is realistic. I hope to minimize it because the current owner will still be mowing with me for the next year.

Have any of you guys bought a previous business and had turn over? Any advice?

Thanks in advance!

Brianslawn
06-21-2008, 04:34 PM
i wouldnt pay over $15k

ed2hess
06-21-2008, 06:00 PM
To retain upscale customer you will need to be onsite for a long time. And you haven't worked those accounts long enough to understand what it takes to keep each individual happy. This obviously isn't a mow and go type of accounts. Also it is kinda a small gross to support a couple workers.

nancy.simerson
06-22-2008, 06:00 AM
also get a no compete clause dont want him starting back up in the bussiness and takeing your customers back at least a five year no compete , also have him start introdusing you as his partner and slowly let the customers no he will be moveing on to do other things, also when bidding jobs always be the man talking money, dont let the old boss run the company hes now there as a consultantto you start letting the customers see you as the man and not the kid who helps him also remember apperance speaks volumes all way keep a clean shirt handy and deoderant so you can stop and bid a job its one thing when they approch you at a job its another when you stop at there home or bussiness, always have bussiness card ready o yea start there get it all transfered in to your name may also want to change banks,not that your old boss is crooked but he will have no acsess to the new owners money also where do the customers mail there bills now make sure its coming to you that may take awhile customers not like a lot of change collect at the house when you can sorry for rambling on but dont want to see you get burned also why dose he want to quit you never said remember no compete clause. good luck

uktaurusbulba
06-22-2008, 08:08 AM
Honestly, if he is going to stay on, I think the accounts will most likely too so I think it is a very good deal. I know in the business world, companies are bought out at 3x cash flow, which would be alot more than the 20k posted here.

But a business is worth what someone is willing to pay so its always up to negotiation. Honestly, if I felt that his accounts were going to come to me, I would do it myself now. I have a business in NJ and Ill probably do about 120k in sales this year, but thats including a few construction jobs. A 20k investment for an additional 85k in sales for me would get me to the point where im making like 120k/yr.

A little about me:

I started a lawn cutting business while I was in college back in 1996-approx 1999. I was very immature at the time but managed to bring the weekly lawn cutting revenues up to about $2400/week. I sold it for $20k in 1999, accounts included.

I then became a licensed equity trader for a number of years and to make a long story short, I started a landscaping business up in 2007. The first year, I grossed $85k off a low investment. This year, I am doing construction too, and it looks like I could hit $120k, but $100k looks like a sure things. The positives about it are I invested very little my 1st year and this year I obtained alot of new work through referrals. I am a veteran in business and especially landscaping/lawn maintenance. If my business could only get me 20k or so, theres no way Im selling. Even off what I did last year, I was taking home like 50k or so. Why would I sell it for $20k? I know that alot of other businesses price 3x income, or in my case, $150k based on last year. Now I wouldnt pay that for my own business bc of the nature of accounts but I think it could be worth 75k or so. Just my opinion. Take a look at bizbuysell.com to see what people are selling for.

supercuts
06-22-2008, 09:19 AM
unless i missed it, no one brough up equiptment. is this stuff old, new??? is the truck a 1985 with low miles, or a 2005?? these questions make a huge difference. if the truck is worth $10K +, and the mowers are worth $2-$5K, $5k is really cheap for all the accounts that you have been training to do for 4 months. if the truck is old, as are the machines, it may be a bit over priced.

VAMower
06-23-2008, 11:36 AM
Let me try to answer these questions:

The current owner is getting out of the business because, well for lack of a better term, he's getting old. He is well into his 50's and can't keep doing this much longer. He's still in great shape but just can't keep going like he used to. I'm not worried about him starting another operation.

The truck is a 2005 model with less than 35k miles. One 36" exmark is well used but very well maintained, the other 36"exmark is a couple of seasons old but might have 15 hours on it, its the back up and rarely ever makes it out of the garage. The 48" exmark is about 3-4 seasons old but isn't used much because it can only cut front yards and a couple of back yards due to fences. The string trimmers work well but probably only have another season or two in them. The blowers are only a year or two old. The trailer is probably 4-5 years old. I will probably replace this first. The aerator is in great shape.

I never thought about completely switching banks, great idea. I am probably going to incorporate the business and establish a business account with a local bank.

I really appreciate all of your feedback. You all have brought up some great points of concern and ideas. Keep them coming!

MUDFLAP
06-23-2008, 02:25 PM
Dont pay more than the equipment is worth, the customer list just sweetens the pot.