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BrettF
07-11-2009, 12:20 PM
Starting to give real consideration to buying one or two existing lawn care businesses in a given area. I'd greatly appreciate any thoughts on how to properly value an existing lawncare/landscape maint. business, experiences anyone has had buying an existing business, questions that should have been asked, but weren't, how you retained customers, where you found opportunities to create efficiencies, performance metrics, etc.

At the risk of getting pummelled, I'll tell you that I'm a lawyer in the banking and financial services industry. That I ended up doing that is almost a Forrest Gump story because I grew up in the midwest, in the country down a gravel road and should have been a farmer! :hammerhead: It's time for me to move on to the next phase of life and I'm attracted to the mix of owning my own business and getting back outdoors to make my living.

Anyway, as I said, I'd greatly appreciate reading about any of your experiences in buying an existing business.

PROCUT1
07-11-2009, 09:12 PM
Youre not going to make $350 an hour cutting grass.

What are you thinking?

wls
07-12-2009, 12:33 AM
I'd be real careful and do your homework. Make sure you are not overpaying for the equipment. If you think you are buying the name of the company, make sure it is a name you want to own and has a good reputation. Don't take the word of the seller that all the customers are happy and will stick around. DON'T OVERPAY FOR ACCOUNTS! Think of how much advertising you can do for the price that is being asked for the accounts.

Not sure of your financial situation but don't plan to make money for awhile.

I won't go into my whole story but have some experience in what you are thinking about doing and learned some lessons the hard way. There is money to be made in this business but there is A LOT to learn - it is much more than mowing lawns!

triadpm
07-12-2009, 01:22 PM
Even with a no compete clause I have seen former employees of the sold company take most all of the work. Happens all the time

tradeyouraccounts
07-14-2009, 12:50 AM
These are some common procedures normally taken during account transactions.

-Check the Account payment history. Check the history of the accounts to assess if the accounts are paid in a timely manner. Ensure that the person offering the accounts is actually the owner of the accounts.

-History of accounts. Get a complete history of the accounts. The history should show dates of services performed incase a warranty query arises. It should indicate when the account was billed and when payment was received. It should also show a guide to the prices charged for additional services performed and the age of the accounts.

-Make sure your comfortable with the account owner before entering into a transaction. Talk to the account holder and meet them to ensure youíre comfortable with them. If youíre new to the industry involved you should ask for a training period some times up to a month. You need to be comfortable with the account holder to smooth the transaction. If you are not it may not be wise to go through with it.

There is more info at http://www.tradeyouraccounts.com/thingstonote.aspx

BrettF
07-14-2009, 07:09 AM
Thanks for the great info.

bohiaa
07-14-2009, 06:10 PM
What I have seen here lately, a ton of companys are going into debt.... BIG TIME,
then there trying to sell the company....

and YES the new owner is responsable for this debt....

KNOW what your doing guys

BrettF
07-14-2009, 07:13 PM
great advice. In thinking about how to structure a deal I had pretty much decided I would go with an asset acquisition rather than buying the entity. That takes care of the liabilities issue, except that one would need to be sure the equipment is free and clear of liens. But, still, great thought and advice. Thanks.

triadpm
07-15-2009, 04:00 AM
What I have seen here lately, a ton of companys are going into debt.... BIG TIME,
then there trying to sell the company....

and YES the new owner is responsable for this debt....

KNOW what your doing guys

I was talking to my bank about a towing company for sale yesterday, and the Lady brought that exact point up. She said if you keep it in that company's name you are responsible but if you bring it under an established (your existing name) company no....not sure I will ask my CPA.I told her I couldn't use his name becuase it is lower than dirt around here. Basicaly buying trucks and his accounts, that should be transferable. He is known as a predator towing company and gets harassed by cops. I guess thats why the price looks so good. Anybody bought another company out lately?

bohiaa
07-15-2009, 08:42 AM
I was talking to my bank about a towing company for sale yesterday, and the Lady brought that exact point up. She said if you keep it in that company's name you are responsible but if you bring it under an established (your existing name) company no....not sure I will ask my CPA.I told her I couldn't use his name becuase it is lower than dirt around here. Basicaly buying trucks and his accounts, that should be transferable. He is known as a predator towing company and gets harassed by cops. I guess thats why the price looks so good. Anybody bought another company out lately?

This is NOT ALWAYS the case... I just attended a class " taxes " from the Government last week. and this issue came up. " it was fresh on my mind "
It simply depends on how the sale is conducted, and the contract.

Very tircky stuff guys. it would be best to consult an attorney. and make sure he has handled sales of businesses in the past.

tinman
07-15-2009, 07:43 PM
the clients you buy won't know you are feel connected to you so unless they are under contract it is likely you will lose a large percentage of them. If you can get the current owners to work with you for a couple months until the clients start to see you or hear from you personally that would help. That way everything will be done the same way on their lawn also. You get more hands on training because all lawn guys do not do the same things

scottgalat
07-17-2009, 10:37 PM
The accounts are the sole source of income. That is what you want to buy. You don't need their name. I ran ads for years with no name on them, just a phone number...and brought in thousands of new lawn accounts, more than any lawn company in this region. It worked so good, I ran it for years. You don't want their gear unless it is VERY low hours, because they have already taken the "good" years and you are buying the repair costs and down-time (which costs you more than the repair) High-end new stuff is pretty cheap to buy...and you establish good relationships with the dealers that will make them want to take very good care of you. Warranted, fast repairs will allow you to stay working, hence building a "reliable reputation". Junk gear will hurt you with down time and repair costs. Stay with new top-of-the-line stuff and keep your units out making money, cutting grass. Account transfers are simple. Mow them with the current owner, knock on the door, discuss your purchase with the homeowner or property manager. Those that are unavailable, try to contact by phone. Tell them your taking over and you'll do a great job and get their "blessing". Do not pay for any account that you have not conversed with. You want them to know who you are, and know you are the new guy, then you are officially the new guy. Do great work and you will retain all. No joke.
Do bad work and expect to lose many. If you do good work, are a nice person to do business with, and provide a good value in the product you provide, why would they ever want to change lawn companies? They have nothing to gain by dumping you, you are already the perfect lawn company. Your great work, great attitude, and great value you provide are your job security. Contracts are worthless. If you suck as a lawnman...you should be fired, give your customers that right...then don't suck.
Call me at 321-216-1837 if you want me to offer specific suggestions on your situation.