PDA

View Full Version : Selling a business


Jammmower
11-12-2010, 03:48 PM
I own a small central Kansas mowing business of about 90 clients. I am near retirement age and would like to sell my business. How do you put a value to a business? Been in business 22years.

santafe
11-12-2010, 08:33 PM
There are all kinds of threads on here about this. I have searched this topic wanting to buy one. I would say about 2months worth of billing (no contracts) and value of epuipment. If you have contracts then it would be more but i don't how much.

gene gls
11-13-2010, 07:39 PM
Depends on the quality of your business and how egar your buyer is to attain your accounts. First time I downsized I tried for 3 months service for each account but setteled for 1 month, 30 of my better accounts. I barttered another 20 accounts to a friend and got shafted. Next time I downsized, I just gave 12 accounts to a friend who was in that service area. I sold my business back in January, 25 accounts for 1 month service plus a dollar value on the equipment. I found its very depressing to try and sell a landscape business. Every one wants everything for nothing, and they expect new equipment for pennies on the dollar. Good luck and enjoy your retirement. I'm only semi retired, care taker for my best account.

DitchDr
11-15-2010, 04:07 AM
Once again, ANY BUSINESS IS ONLY WORTH WHAT SOMEONE IS WILLING TO PAY.

You may have equipment worth hundred's of thousands of dollars, you may have accounts with a yearly gross in excess of 5 million a year. Does this make your company worth 5 million plus? Nope not even on a good day.

On the other hand, I hear people throwing the "2 months of billings plus equipment" crap around a lot also. Yeah that dont fly either.
According to that model your value is 90x's X x's 2.
To make it simple lets go with the average price of 35 per mow
now we have 90x35=3150 per week. If all 90 are weekly accounts
now take the 3150x the number of weeks in 2 months. lets say 9 to be fair
so that looks like 3150x9=28350.00
so your looking at less then 30K to sell your company plus equipment. Unless you have rock bottom invested in this.

If it were my company I would start at a asking price of 150K, after your current customers agree to transfer to the new owner, and agree to sign a no compete contract. 150K for a established business with a good name, is a good deal. Think of the time , money, sweat, and sleepless nights it would take job blow from off the street to buy equipment, get marketing, acquire repete business, and get his brand known as a good brand to go with?


DONT SELL YOUR SELF SHORT

topsites
11-15-2010, 04:17 AM
Statistically speaking, the sheer number of folks on LS who have been running
their lawn business for the number of years they're claiming is not possible.
It's not even close.

So you've been running your business twenty two whole years and you don't know what it's worth.

I can tell you one thing...
If you're a small or solo operation and you have a one-on-one rapport with your customers,
I can almost guarantee that it wouldn't be a wise idea to "sell" your accounts.

txgrassguy
11-15-2010, 01:57 PM
Pretty much all depends upon how your business is structured, the licensing you possess, the services you provide, your credit rating, plus a whole bunch more.

I am in the process of selling my business and I can sure tell you it isn't based on that bullcrap two months of revenue plus dollar value of equipment. Then again I don't just mow and blow - me and the guys are licensed for irrigation, chemical applications, accounts are under contract, etc.

All of this said my company negotiation is nearing being finished and we are settling upon upwards of 85% of the YEARLY revenue generation, established fair market value for the equipment and are finishing the negotiations for how long I will remain with the new company and at what yearly income and benefits.

Will P.C.
11-15-2010, 02:56 PM
The first places I would start would be my books/software, accountant, and some research to see what other companies have sold for.

santafe
11-15-2010, 10:10 PM
A couple of you guys seem to be hard on the assesment of 2 months plus value of equip. but i am telling you what i have found on this site and on the avgerage that is what it is going to be. now you can ask what ever price you want to, but on the avg the 2 months thing is what you are going to get. also, i did say if there were contracts in place it would be different. So ask what you want, but if you are solo and basically just "own your job" and not a business. good luck getting more than the two months.

txgrassguy
11-16-2010, 10:03 AM
First of all what I have found on this site is less empirical knowledge and more supposition.
Secondly, if I am "harsh" as you put it concerning the popular rumor of business valuation - so what, I am running a business and not a feel good center.
What I see as the single biggest detractor to new lco's actually becoming a thriving business is their owners' steadfast refusal to place the "love" of mowing aside for the aspects of proper business organization and management.
I have a small business, just me and one guy - yes it used to be more but through a series of events I decided to downsize rather than run my butt into the ground maintaining over 250 acres of property per week.
Through the proper application of astute business principles not only am I okay financially, the price I am getting for my business means in a little under ten years I have been able to turn a $35K start-up cost to actual cash in my pocket approaching eight times the initial amount.
It wasn't hard to do - just run a business and not a "love" of being outdoors.
I know plenty of broke outdoor guys.

topsites
11-16-2010, 05:09 PM
First of all what I have found on this site is less empirical knowledge and more supposition.

Absolutely, fine.

What I see as the single biggest detractor to new lco's actually becoming a thriving business is their owners' steadfast refusal to place the "love" of mowing aside for the aspects of proper business organization and management.

True but that personal touch is also the bread and butter of a solo operation.

Through the proper application of astute business principles not only am I okay financially, the price I am getting for my business means in a little under ten years I have been able to turn a $35K start-up cost to actual cash in my pocket approaching eight times the initial amount. It wasn't hard to do - just run a business and not a "love" of being outdoors.

Orly, srsly?, no wai!

I have a small business, just me and one guy - yes it used to be more but through a series of events I decided to downsize rather than run my butt into the ground maintaining over 250 acres of property per week.

Explain to me why exactly you downsized again?

Look, I'm not entirely disagreeing but I also speak from experience when I say that it is NOT a wise idea for a solo
to run a business "by the numbers," and when I speak from experience I mean it isn't for lack of having tried.

You understand, you do what you want, but don't think I haven't been down that road.

But I do agree that it's worth what someone else is willing to pay for it,
however I stick to what I said that as a solo it probably wouldn't be wise
to sell out on the customers to the next highest bidder.

I know plenty of broke outdoor guys.

Yes, I know plenty of azzholes, too.
Especially the ones with college degrees supposedly raking in all this money,
yet the half of them net 4-5 times my gross but still can't make ends meet.

yardguy28
11-16-2010, 05:28 PM
i don't put a value to my business in the sense of selling it.

once i decide to get out of the business for whatever reason i will sell all my equipment to whoever buys it. all clients will be told i'm going out of business and referred to someone who is in business that i know does good work.

i don't believe in selling clients or buying clients.

txgrassguy
11-16-2010, 05:37 PM
I downsized as I lost almost $540K in a divorce - essentially cost me all of my capital reserves, a second home and 1/2 half of one year's gross income.
To maintain the current (then) size I would have had to sign several capital funding agreements that were not advantageous as to where I wanted the company to be with-in three years.
Add to this my desire to allow my turfgrass agronomy career to progress to the next level - meaning I am returning to both adjunct teach as well as finishing a Masters at a minimum.
So I re-organized to maintain an operational business model with-in a certain economic subset, and I did so while observing a realistic evaluation of my current economic situation as balanced towards my one and three year goals.
Additionally, no where did I say to avoid those "extras" or uncharged add-ons, but in order to do so intelligently - you MUST know your numbers cold or that "personal" touch will end up eating your lunch.

Profit isn't a dirty word and I am not "selling out" to the next highest bidder. I have exercised my due diligence in vetting the corporation acquiring my business and have structured the agreement in such a manner that my entire client base have all signed agreements to maintain service as long as I am available to interact to their satisfaction.