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View Full Version : offered to buy the business i currently work for


Jmp5us
07-25-2008, 03:19 PM
Recently the guy i mow for offered to sell me the business. this business right now is on the smaller side, about 25 accounts mowing, and during the winter some snow removal contracts (haven't gotten a number on how many there is for snow removal)

he offered it for $50,000
seems to be a very high number, but includes all of the equipment, including the truck and trailer.
F350 turbo diesel (2000 77,000 miles)
pace america 19ish ft closed trailer
All Exmark 70in, 60in, and 52in WB
2 echo weed eaters
1 echo edger
backpack blower
hand blower
2 echo hedgers
hydraulic 8ft snow plow
salt spreader

when i checked out values of all the equipment i came up around $45000

im still thinking on it, and want to see all the contracts i will be getting, i also plan on expanding the business if i am to buy it.

what does everyone here think?

Sweet Tater
07-25-2008, 06:06 PM
I have never bought a mowing business and have little knowledge, but from what I have read on here you need to check and make sure all those contracts will choose to remain with you if you buy it.

railman
07-25-2008, 09:35 PM
if you gonna pay that much you might as well start your own. you can start up on your own and get new equipment for less than that. hope all 25 accounts is under contract and make sure they stay with you if you decide to buy.

elite lawns
07-26-2008, 03:06 AM
That way to high. buy it new if your going to spend that kind of money
good luck

Cashio13
07-26-2008, 12:02 PM
Im with the posts above, you might as well buy all new equipment with $50,000. A couple of walkers, a nice 36 or 48" WB, a cheap push, trimmers, blowers, trailer, and the extraneous hand tools and equipment. Also, i would go to this guys accounts and tell them he is planning on selling and you are taking over with your new business. If they don't bite then with the proper advertising you can get 25 accounts in no time. Good Luck!

Jmp5us
07-26-2008, 01:52 PM
thanks for the thoughts guys, if i was to go with it, all the places we currently do know me, they would defiantly stick with me...

MileHigh
07-26-2008, 01:59 PM
if you gonna pay that much you might as well start your own. you can start up on your own and get new equipment for less than that. hope all 25 accounts is under contract and make sure they stay with you if you decide to buy.

yep.........

wheelsup
07-27-2008, 12:23 AM
I don't work in landscaping, or anything related, so I'm using assumed / made up numbers. Feel free to input your own.

I would figure it like this:

Revenue - Expenses = gross profit

So to use some numbers:

25 accounts x $30 each week x 4 weeks per month x 6 months = $18,000 in gross revenue

Insurance, gas, supplies, mx, etc., $4,000 (just a rough guess)

$18,000 - $4,000 = $14,000 in gross profit

So you spent $50,000 but made $14,000. If you're working 40 hours/week for 6 months that works out to about $14.50/hour. Although you essentially "bought" your job. Most folks can make that or more without spending 50g's.

--------------------------------------

Now, assuming you don't pay "all cash" for the business, but finance the $50,000 completely.

$50,000 financed, typical business loan, 10% APR @ 5 years, 6 payments per year to match your income season.

Payment of $2100/month, on gross profit of $2300/month ($14,000 gross profit/6 months) leaves you a grand total of $200/month before taxes...

All-in-all, not so good IMO.

I'm not a business pro or anything but that's how I would evaluate it.

topsites
07-27-2008, 01:20 AM
Considering you yourself figured out the worth of 45,000 and his offer of 50,000 I would think you're actually getting a great deal! Those 25 accounts count for something and not to mention this guy trained you, too.

Also your chances of retaining most of these accounts are slightly higher than anyone else, because most of those customers know who you are. A few will still likely leave you because you are not him, but it shouldn't be as bad.

Probably as turn-key as you can get, that's not to say you'll make it for sure or anything but if this guy is only 5,000 above your estimated street value of the equipment plus you get the accounts and all of that I would say this is a fair deal.

Most folks can make that or more without spending 50g's.

Yeah but they don't own their own business, they own nothing at all concerning the equipment and what have you.
Don't forget, when you own your own business you get paid LESS than when working for someone else, at least figured hourly or most any other which way in which employees figure pay rates it is almost always less!

Guess that blows that cherry red hot balloon of business owners making all the big bucks right out of the water,
oh well, somebody had to say it, business owners such as myself don't do what I do for the money, take that to the bank and pun intended.

Jmp5us
07-27-2008, 04:39 AM
right now i am looking at it as the same as Topsite..... i know with 50g's i could start my own business, BUT i would not be able to get near the equipment, nor the clients, i figure that i will be in debt for the first 2-3 years but after that, all profit.

i am defiantly not making any quick decisions, but am still thinking about it.... right now it is a small 2 person business so most all the clients know me and i doubt they will leave with me taking over the company. they like my work... as of now though it is all still up in the air

Roger
07-27-2008, 07:51 AM
That's quite an equipment list for 25 accounts. You speak of you and the owner, so there are least two of you working the 25 accounts. You don't say specifically, but the implication is that is full-time work to cover those accounts.

Following my thought, that would mean that each account has an annual value considerably higher than most of us work. Perhaps they are all larger commercial accounts, not residential -- again, an assumption.

My point is that there may be a long history of gathering these 25 accounts, and it would be hard to start fresh and gain 25 accounts to replace them. If this is the case, then they would be worth more than 25 residential lots, 1/4 acre each. Unlike other such posts that discuss a business buyout, this one may have a considerable asset value beside the equipment, truck/trailer.

I agree with a comment above -- since you have worked them, working along with the owner, you know them well in terms of the work scope and load. Maybe there are other contractual or financial issues that you are not aware.

Jmp5us
07-27-2008, 04:07 PM
these are actually mostly residential, which is why im pretty sure i dont need to worry about them finding a new company, his company has been around for about 7-8 years i believe, and we are pretty close with all of our clients.

we only work 3 days a week and very short days, 8-3 usually.

if i was to take it over, i would be turning it to a 4-5 day job and longer hours, as soon as i could.

contract and the financial issues are not present, the owner just wants to get out while he is in good shape... hes getting older and just does not want to do the manual labor anymore, he is also having some health issues..

thanks for all the input guys

ALarsh
07-27-2008, 04:27 PM
You need to know what he is grossing for the year for each services (mowing, plowing, shrubs, etc) to better evaluate what it is worth. If you could in turn sell all the equipment today for $45k then there isn't much risk on your part.

Allens LawnCare
07-27-2008, 04:28 PM
I'd offer $35-40,000 but first....What year is the equipment, how many hours....cost although sounds high...you can pick up accounts on a daily basis if you set your goals high....Market yourself...neighbors, friends etc....offer discounts to your current clients with refferals that sign on....being on your own and ligit....hit up every commercial account you can find. They love to spend money (Tax Right offs). I wish I could go full time I have 30 accounts (Ranging from 45-150 a cut)and started with a 21" push and grew from there......Best of luck!

Jmp5us
07-27-2008, 07:59 PM
thanks again for all the input guys, i am defiantly going to check out all the contracts that he currently has for mowing and plowing

Allens LawnCare
07-27-2008, 10:08 PM
How about some Baltimore Sox tickets in august for the advice

Jmp5us
07-27-2008, 10:53 PM
haha, if im not busy paying off a hefty loan... ill think about it

ALC-GregH
07-27-2008, 11:57 PM
Whats the name of the current business your working for. Also, whats your name? I lived in Frederick all my life up until a few years ago. Where do you guys mow at? Hell, I've probably seen you guys driving by! LOL

Jmp5us
07-28-2008, 08:20 AM
haha where did you end up moving to now? the company is Donshe lawn care, we do most work in walkersville, but have a few in brunswick and in frederick, my name's John Price, the owner is DJ Kline

ALC-GregH
07-28-2008, 09:59 AM
The name doesn't sound familiar. I moved to Waynesboro about 25 miles north of Frederick. I mow in Frederick on Friday's.

Jmp5us
07-29-2008, 01:31 AM
hmm... which communities do you hit in frederick?

ALC-GregH
07-29-2008, 09:33 AM
I only have 3 customers in the area. I'd like to get like 2 or 3 more to make it a day. I do one on the way into Frederick, and 2 others outside of Spring Ridge. I'm solo and don't need 20 lawns a day to survive, I could easily get by with 6 or so a day, 3 days a week. I'd like to end up with about 25-30 accounts total and make Frederick a full day. If you have any you can't get to, please, get in touch, I'd be willing to help. thanks

ALC-GregH
07-29-2008, 09:35 AM
I wanted to ask, do you know a guy by the name, Mike Strange?

Jmp5us
07-29-2008, 04:47 PM
no i dont, but i live right outside of spring ridge... usually dont decline any clients but if we happen to at some point ill let you know

ilovegrass
08-03-2008, 05:17 PM
i would not do it! a friend of mine did the same thing and just about lost everything.the people with the contracts went with someone else after all the stuff was signed.if you do make sure you have the contacts signed before the next year.it was a big mess

Jmp5us
08-03-2008, 11:13 PM
yea i have decided not to do it, i still have alot of school to go through and trying to be a full time student and operating a business would cause alot of problems i believe

stevenf
08-04-2008, 12:33 AM
I wouldnt buy it. If you are willing to pay that much. Then you are willing to buy a commercial mower, trimmer, and blower for around $7k, spend $3k more on good advertisements and you will have 25 accounts in no time with $40k less borrowd from the bank.