View Full Version : Value of lawn business
01-11-2000, 09:32 AM
how would u value a lawn/snowplowing biz if your could buy out someone? guy i know has approx`16 lawn accounts and 40 snowplowing. he keeps a guy busy 40 hrs a wk doing all lawn work and extrawork in the summer, he has a seperate job and does all snow removal himself and sands by hand. has 5 by 8 trailer, bobcat walkbehind and chevy 1-ton pickup with plow along with misc. tools and supplies. he wanted 20k for equip and 25k for accounts and i told him he was nuts. i would pay 20-25k for everything but this guy thinks he's got a goldmine. On the books he bills 700/week and his laborer doing all the work runs him approx. 300/week how would u value a lawn business. in another scenario i am thinking about selling my biz here in NY and going back to school to finish my bachelors, but that's another discussion.<p>----------<br>Stephen<br>
01-11-2000, 10:08 AM
Stephen, The accounts is way to high. If you kept the guy to do the extra accounts, you would take in about $1000 a month after paying the help and that's not deduction for gas, depreciation or anything. Figuring 7 months of mowing a year, it would take over 4 years just to pay the 25K off. I would not pay more than a 10th of that. I have heard of guys that buy accounts and I think they gave the previous owner 1 months mowing for it. <br>About the equipment, you didn't mention the age of the truck or mower, so it's hard to give you any help on that. <p>----------<br>Eric@ELM<br>http://pages.prodigy.net/eric.erickson/index.html
01-11-2000, 10:59 AM
700.00/week <br>40 hours labor<br>17.50/hour<p>Gold Mine?
01-11-2000, 02:29 PM
sorry forgot to add pickup was 94 and mower was about 4 years old.<p>----------<br>Stephen<br>
01-11-2000, 02:36 PM
the going rate is some time hard to determine. Let the seller put his money where his pride is, consider paying him a percentage per month for a set period of time or as long as the clients remain yours whatever comes first.
01-11-2000, 04:28 PM
Hi, I will answer a question with a question, andd maybe somebody can help me as well. How do you buy a lawn mowing account from another when most of the time (around here anyway) it is such a personal thing with the homeowners. If another guy showed up at my customers and started mowing their yard they would have a problem with it. If it ain't on paper, and you ain't buying an iron clad contract, then you ain't buying nuttin brother. Those people could bail on you in a minute and then you would be stuck with a big debt and no way to pay for it. I don't see this as a business you could sell like a restaurant or gas station! If I sell mine I will ask for my eqipment and thats all. I know some around here that sold a business for $100,000.00. He bought accounts, trucks, 10 year old mowers and started losing customers, I picked up some of them and others picked up more. Looking at figures may be deceiving, looking at your new customers may be reality when they say see ya!
01-11-2000, 05:32 PM
i have payed only 1 to 2 time the cut for accounts, the mower up to you on the price for it . truck is a 94 with plow so it may have seen so hard time plowing <br>just my 2 cents
01-11-2000, 05:50 PM
I bought a business from another person. Before any money changed hands I worked with the guy for a week, met about 80% of the customers face to face and explained what was happening. He carried 70% of the asking prices and our contract had stipuations built in for customers changing to another lawn service. In other words if the customer list dried up, I did not have to pay. How can 16 lawn accounts keep a guy busy 40 hours per week? I worked alone and could do 60 residential per 5 day week. Not bragging.. Hope this helps <br>PS without the seller having something to lose, he could sell you a list of names...
01-11-2000, 05:51 PM
Sorry..rambled<br>I paid 3 weeks income for the accounts and fair market value for the equipment.
I have paid luckly about 1.5 times per cut, when most companies...well actually the going rate in Northern California sell/buy at 3 times per cut (account).<p>I think here in Northern California 3 times per cut (account)is just right and fair for both parties. Equipment...don't know really.
01-11-2000, 06:25 PM
Something you need to consider when determining the value of buying accounts is: <br>How many accounts could you pick up if you spent $25K on marketing and advertising as opposed to buying some one else accounts?<br> One benefit would be you would be picking and choosing your customers as opposed to getting some one else headaches. We have a guy in this area who lines up customers, does their yard for a while then sales the route to a rookie. He has done this 5 or 6 times in the last 3 years. Basically all you are buying is a list of names unless they are under written contract.
01-11-2000, 07:23 PM
Well I have been on both ends of this I have bought accounts and a company and also sold part of mine. I would only pay for signed contracts and only pay 10 percent of what they gross per year thats going rate. $25000 is nutts. As far as equiment find loan vaule on it this is lower then blue book or any other form of seeing market value and thats all you should pay. Also with the accounts put in the buy agreeement a percent 10 to 20 % hold back its a good faith hold. It is so if he turns over the list to a buddy or if his old employe goes into business for himself you have somthing on him still. Also try to have him hold a percent of the price as a loan pay him x amount per month. He will be more term to help you keep the accounts. Also make sure he signes a no compete agreement saying he will not start a new company up with in 100 miles from you. Buying a business can be a good investment. Or a very bad deal. Just make sure you cover all aspects in writing. Plus you must remeber whom very is selling a businesss has put time efert and care into it so they always will be a little nuts at first. Make him a realisc offer he might laught or say get lost but in a month when 20 others have laught at him he will call you back and say lets make a deal. !6 account is not that many put out some fliers you will get that in 1 days time. Good luck
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