Buying a business

[mueller3128]

I have the opportunity to buy a business. Any suggestions, advice, rules of thumb for buying a business with equipment and clients. Thank You

[Big Bad Bob]

I have the opportunity to buy a business. Any suggestions, advice, rules of thumb for buying a business with equipment and clients. Thank You

I have never bought or sold a business. I have, however, known a couple of fellers, in my area, who paid as much as $1000.00/ customer, without a contract. Foolhardy if you ask me. They are both out of business as of Sept and I am picking up some of their customers for free. Last year I picked up some customers from one because he doubled the size of his customer base but was unwilling to put the extra time and effort to satisfy all of these customers. He tried to sell me his equipment and his last 9 customers just last month. I didn't realise how bad it was for him at the time but the bank repoed his truck, trailer and both mowers the very next week. I'm just waiting for the auction.
I kinda feel like a vulture but I guess that's business.payup

[NC Greenscaper]

Mueller,

I have never bought a business, as well. Is this a lawn care business or landscaping? What type of business. Look at the customer base. Are there contracts? If so, are they transferable. How old are the contracts? What do the tax returns (of the business)look like. What will the customer base generate in income (over the cost of the business). How good do you think you will do retaining the customers? Lot's of questions. Work the numbers on the customers and then work the numbers on the fixed assets (equipment) how old is it, what will need replacing? What will the estimated maintenance/repair cost be?

I've heard lots' of rules of thumbs. Such as 3 months contract revenue some say 10% of gross annual revenue. Personally, I would look at each contract on its own. Make sure they are priced so you can make money. What kind of profit can I make on each individual contract. Must have a provision for customers droping you. Some will not like your service no matter what you do. They just like the other guy. I know some that have bought a business and are doing quite well and some that have dissolved the purchased company in just a few months.

What about you? Have you done this work before? Some (alot) get into the business to find out its not their cup of tea. Might be an expensive lesson. Up side is you start with a customer base and you can build on it with income coming in.

[Wittapp]

I am sure that it varies in different parts of the country. Personaly, I have never bought a lawn business. I have however, considered it. I have always found that the bottom line never justified paying more than the current value of the hard assets (equipment, truck, trailer, etc.) and most people trying to sell as a going concern are unwilling to accept that. It has already been said, but, the contract thing is very important. If a customer has no contract, there is no value there.
Good luck and safe time
Dave in Dayton

[Big Bad Bob]

I have the opportunity to buy a business. Any suggestions, advice, rules of thumb for buying a business with equipment and clients. Thank You

I guess the best thing I can tell you is that you are probably better off just buying some good commercial equipment, possibly from the guy you are considering and put the money he wants for the customers into advertising. build your own customer base. With no contract you are at a very high risk of losing any monies you have invested in his customers.

[tradeyouraccounts]

These are some things to consider

Average age of accounts:
The average age of accounts is the amount of time that the owner of the accounts has had the accounts. If there are 10 accounts and some are 10 months old others are 14 months old the average age would be one year.

Covenant Not to Compete Period:
This is the amount of time that the person offering the accounts agrees not to compete on the accounts that are being sold or traded. A common time frame is normally 5 years.

Guarantee Period:
This is the amount of time that the seller guarantees the accounts. A common time frame is 30-90 days and during this time if an account cancels service through no fault or negligence of the buyer the seller guarantees to replace the account with one of similar value and location or agrees to return the amount paid for the account.

Payment History:
Payment history is details on whether the accounts (Customers) have paid in a timely manner for their regular service.

[ibleedgreen]

forget maitenence move to fl and buy into my company where the real money is....pest control!

[topsites]

After you been through what I have it don't feel like being a vulture at all,
so the real question here is why are they selling, why should I buy it, and
what happens if nobody does?

That's what I like to ask these men who approach bearing gifts,
and then watch if and how fast the smile wipes right off their face.
Because I dare say in most cases it's over right then.

Now if they didn't lose any face and they're still willing to sell after those questions have been posed, then I might be interested,
but otherwise I'm just as glad they're going the way every other Johnny-come-lately has gone and without a penny to their name.

And I am sorry to hear things are tough, but I'm not sorry enough to bail them out.

[CHUCK'SLAWN]

There is no value in contracts. legally you or the customer can get out in 30 days. So even with 100 contracts in hand you could be holding worthless paper after one month. Here in Florida there are many lawn maintenance businesses for sale but the price they are asking is out of this world.

[Jas1n]

forget maitenence move to fl and buy into my company where the real money is....pest control!

Too much compittion and low ballers down there. Terminex basiclly owns FL. Alot of money in new york though. Hell You can charge 500 bucks a room to do bedbugs no gurrentee for the work and it costs you like 30 bucks in chemical cost. Tap insulation only pest control componies can do. Charge 5 grand for a attic. After labor say you pay your guy 500 dollars a day. gas insurence and all that **** you will net hundreds of dollars an hour profit.

[ibleedgreen]

first of all terminex is owned by true green and they both suck nuts the only reson they are big is they buy companies built buy individuals and they sell 10 lose 5 sell10 lose 7....... new york sucks and so does bed bug treatments if you cant fix something and make people happy why are you doing it. Its not just about the money!!!!!!!!!!!!!P.S. nobody owns this market do some research like i said its a gold mine

[Jas1n]

first of all terminex is owned by true green and they both suck nuts the only reson they are big is they buy companies built buy individuals and they sell 10 lose 5 sell10 lose 7....... new york sucks and so does bed bug treatments if you cant fix something and make people happy why are you doing it. Its not just about the money!!!!!!!!!!!!!P.S. nobody owns this market do some research like i said its a gold mine

lol did I say terminex was good lol? Its the biggest company and they do own fl as far as accounts go. I know they suck.They low ball the ****. Lol new york sucks huh well move to fl and do a termite job for 500 bucks lol up here in ny 2-3grand.ny is where the money is. We do it to make money.Yes it is just about the money. If you put that in your business model you would make alot more money for yourself. unless you are happy making 40-60k a year. Any company that gurreentees for bedbugs will be out of bussiness.You will lose money. Nothing works on them. Even if you do kill them. Next time someone who has bedbugs stays a night in a hotel room bingo they have bedbugs again. Oh i hae done research on it. Open a Fl phone book you will see like 200 pest control componies prob all new non of them will be in business long becuase they pay **** none of them will keep employees and they do not charge enough. I knew a guy who use to do pest control down there. No money in it down there. ALready to much competition. You think there are lowballers in lawncare lol. Try pest control componies charging 12-18 dollars for a monthy contract. I would'nt drive by to say hi for 12 bucks. You do some research lol. Call these componies up and ask them how much they charge for there services call each state. whatever state has the highest price is the state you wanna be in. NY, CA,MA all very hard to own a pest control business there for eliminates alot of lowballers and fly by night operations.

[ibleedgreen]

I am a certified operator in termite, ghp, and l&o yes three of four possible.Been in the business 12 years worked at lesco studied my ass off and today im still learning new things thats what drives me. I have never done a termite treatment for less than 1000,ghp 300 per year min with one treatment/one hour, l&o is my specialty avg 50 per month do some numbers ....big money.Look at what these companies sell for hundreds of thousands to the millions daily this is happening.Look at what middleton sold for three years ago ....65mil with 90% of their business in fla,plant it earth which I was the manager of sold for 1.6 mil after three years of business 1300 cust you havent even heard of anything like that going on in spew york too many rules and regs # 1, and b (LOL) youve got nothing on our growth rate here you are all moving here ........WHY is that..... maybe cuz your cost of living is right in line with the money that you make and it balances out to be the same to live well there as does here with one major differnce here I sold 15 new lawn accounts yesterday avg price af 45 month wheres your new business at big dog? Nice Pissing match.....I love it!!!!!!!

[White Gardens]

I have the opportunity to buy a business. Any suggestions, advice, rules of thumb for buying a business with equipment and clients. Thank You

I agree with all the posts. You have to make sure the business is sound, and you can retain the clients. If you can just buy the equipment then you might get one heck of deal for good equipment to start out with.

It would help you get a start and generate income, but your paying for it. In Lawn-care and landscaping, I feel you can get the same return in the same amount of time if you start from scratch, it's just a matter if you want the initial debt or not.

Image is everything, and if your buying into a business with no image or well-known reputation, you risk not getting any more customers through the business you bought. It seems like that's how some of them get dissolved, because it's not worth it to maintain the image.

[Jas1n]

I am a certified operator in termite, ghp, and l&o yes three of four possible.Been in the business 12 years worked at lesco studied my ass off and today im still learning new things thats what drives me. I have never done a termite treatment for less than 1000,ghp 300 per year min with one treatment/one hour, l&o is my specialty avg 50 per month do some numbers ....big money.Look at what these companies sell for hundreds of thousands to the millions daily this is happening.Look at what middleton sold for three years ago ....65mil with 90% of their business in fla,plant it earth which I was the manager of sold for 1.6 mil after three years of business 1300 cust you havent even heard of anything like that going on in spew york too many rules and regs # 1, and b (LOL) youve got nothing on our growth rate here you are all moving here ........WHY is that..... maybe cuz your cost of living is right in line with the money that you make and it balances out to be the same to live well there as does here with one major differnce here I sold 15 new lawn accounts yesterday avg price af 45 month wheres your new business at big dog? Nice Pissing match.....I love it!!!!!!!

Its not a new business. I work for someone right now and working with someone I know who owns there own pest control business already. Going to be doing tap insulation with him. All the rules a regs in new york helps and hurts pest control business.Its limits competition becuase ppl do not want to do it. Less competition higher prices. I actually know 2 guys with there own business. One has 5,000 accounts spread out in 3 different states. Also have conection with big contractors to do Tap with. Get into custom house building. People with millions of dollars wanting the best, will want Tap. If your not doing Tap friendly advice go on to the site call them up talk to them about it and get yourself a business package mailed to you. Do that andyou will be cruisng in a lambo next year or 2.

[Dreamscapes Services]

Buy is tough, and there is far more involved that most purchasers or sellers realize. I suggest getting in touch with a broker, hire them (pay the money) to help advise you. They will know if the valuation on the business is to much or just right.

Keep in mind that most people selling a business, of any kind, is usually linked to many years of hard work and investment. They will always value the business on the high side.

Do not be afraid to make fair offers, and with that do not be afraid to offend someone.

USE A LAWYER, someone you know and trust. Also, keep in mind the job of the lawyer it assess and advise of risk. Thats it. Once he advises of the risk(s) you need to decide to leap or not. Also, he will draw of the purchase agreement.

Best of luck

[jerrydean]

I have sold customers to Truegreen and purchased customers. First I want to say that Customer Lists are virtually worthless if you do not handle them right. They feel betrayed at being "sold" and almost always quit. I suggest you service these people and use invoices that say the old company's name. Use vanilla trucks. After a full year, contact the people and try to convince them to stay. You'll still lose 30% at least.

Truegreen has a neat Idea to counter this. They pay you 1/2 of the agree price up front and then rest at the end of the season, based on how many people actually stayed with them the entire time. Great way to protect yourself.