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View Full Version : Formula for buying business?


indylights
02-17-2009, 04:29 PM
Hello,

I am in the process of negotiating to purchase an existing lawn and landscape business. The revenues consist of $100,000 annually mowing and $150,000 annually landscape, fert., pavers, snow removal, etc. I'm not worried about equipment, I can price that out on my own. The question I have is, is there a set formula or industry standard for what you should pay for a current business. A set percentage for the mowing, and then maybe a different percentage for the business that is less consistant, a percentage of total sales, or is there no standard? Any input would be greatly appreciated. Thanks

AbelLawn
02-17-2009, 09:17 PM
I have always been told, whatever you would revenue in 4 mowings is what you should pay for the accounts. If you would make $1000 after one round of all the accounts, they are probably worth $4000. It will only take 4 weeks to pay off your investment, but you also run the risk that the customer will not stick with you. As far as the landscape income goes, I am not real sure. If you will be changing the name of the business, I highly recommend that you make sure the current owner has communicated his intentions with his customers to minimize the drop out rate once you buy.

bohiaa
02-18-2009, 11:34 AM
Glad to see that your NOT getting equipment too, as you know most people think there stuff is worth more than it relally is.

there is a "rule of thumb" as you know we are in the customer service business. if and when a new owner comes into play you will loose 35 to 50% of customers.
that is unless your going to keep all the same employees, and have the same front man.

Now. if there is NO customers that you have direct contaic with, the number goes wayyy down, as in forclosed homes and such.

I think I would ask the ole famious Question. Why are you selling?
Best of luck.