buying an existing lawn service?

[sirsweatsalot]

i was woundering what would a guy pay for a lawn outfit with around 40 to 60 acounts?

[Bill Davis]

Residential or commercial accounts, on contracts or just weekly. Does this include equipment? Answer these and then you can get a little more help.

[sirsweatsalot]

a few comercial but mainly res.. it does include some john deer riders but that about it.

[Bill Davis]

You are being to vague about everything to give you an honest answer

[sirsweatsalot]

could you give me a range

[Bill Davis]

well, how much do you think the equipment is worth.

[sirsweatsalot]

10 grand

[65hoss]

So you were approached by someone wanting to sell. He tells you he has 40-60 accounts. You mean he doesn't know? Thats a 20 customer range that could equal to $1000's per week.

Next, can you handle an add'l 40-60 customers on top of what you already have? The added customers don't just mean added revenue. It means added cost. Added headache. Added employees.

[Scag48]

I'm going through the same thing right now, looking to buy another guy out. I've been told you should buy the account for about 3 or 4 week's profit. Go check out all the lawns and make sure the customers will stay with you. Then pick the ones you want and pay the man. Good luck!

[Rooster]

I can't remember the post topic now but somewhere it was listed to make an agreement with the current owner with a payoff for a certain amount every month or quarter depending on accounts.

Rick

[awm]

if this guys in drought. this might be his last effort to stay out of bankruptcy.
sad thing but u can probably get it cheap. as in take over payments,and a little exstra. for his sake ,i hope this is not the case.

[Sean Adams]

Good point awm. It's not a matter of trying to work an unfair deal, but that is what negotiation is all about.

Like it was said before, find out if his clients fit along the same lines as yours - size, profitability, aggravation, etc...

If his prices are right, and you want the clients, see where he stands in regard to price.

I think Rooster was referring to a post LGF made about paying after the fact based on profit. So many different ways to go about it.

Some people say you pay 3 or 4 mowings, if that is what he does. Hard to figure in add-on service value also.

This would be a perfect example for doing a search on this site. You will probably find a ton of information and 20 or 30 different schools of thought regarding selling and buying a business.

[Mack]

I have a question that you guys might be able to answer on this. My question is when you go to buy this business how do you know the accounts will stay with you. I would think that half the people would fine another service. You know if they are happy with the guy now and someone new comes in they would propley start looking elsewhere. I was just woundering if i am in left field on this or not, just asking.

[rodfather]

Mack,

You don't know if they will stay with you...just a roll of the dice

[nu83]

How about this?

Pay the guy fair market value for the equiptment and then lets say you agree to pay him 4 weeks income from the accounts. I would tell him that I will pay him 2 weeks upfront and 2 weeks of all the accounts at the end of the year. This way your risk is cut in 1/2.

[sirsweatsalot]

you all i have great points. i think it makes real sense to pay the 2 weeks in the start and two at the end. im going to talk to the guy next week. i was trying to take my time so that it would give me time to think. in hopes i don't make a mistake. and sort out the pros and cons.

how many of you have bought out compition?

[Brickman]

I sold my out fit the end of July. I asked fair market value for used equipment, and approx 90% to 95% of one month income. Both my banker and my buyers banker felt this was a fair biz transaction.
As for customers staying with an outfit. If you have signed contracts with them I would imagine they could be void if the customer wanted to persue that. So far every body has stayed with the guy that bought me out. WHY?????? Because it is the middle of the season, and they didn't feel like finding some body new as long as he doesn't screw stuff up.

[lsylvain]

I have just started to sell my business. And have looked into buying other's before. Most of the companies I looked at were high dollar. But the deal we worked out was that I put up a deposit ranging from $1000-$2500. I could only get my money back if the prviouse owner had lied about something. Then He would take me to all of his accounts and introduce me etc. Then if I still wanted to buy I paid the rest of the amount agreed on. We I took over the business the owner was obligated to work for me for about a month in most cases. The broker I was using had sold a lot of service businesses like that, and said that she had never had any complaints about people loosing business.

I don't know about most of you guys but I have never lost a residential customer. If you treat them right and don't give them a reason to look for someone else.

Another good thing to do (if you decide to buy) is first talk to all the people and get to know them, know their kids names what they do for a living, etc. Send out Chrismass cards every year. Get them to like you as a person and they will stick with you.

[nu83]

How true that is, noone wants to fire a "friend". It sucks talking to them sometimes because you are trying to get work done, however its really important that they like you as a person when it comes time to hiring you the next season. I havn't lost any residentials except in circumstances where they move. Or maybe they just say they move so they dont hurt my feelings. lol.

[Brickman]

There have been residentials that I was glad to see go.

[LAWNGODFATHER]

If you buy equipment, only pay about what you can sell it in a hurry for.

Accounts I would in most cases only pay for the accounts after the customer has paid me to service them.

we will say 3 cutting is what you are going to factor as your payment.

Cut the customer 4 times, bill them, when received payment from each customer you will inturn pay him for one cuttings worth of each customer, then the next month the next cutting after you have cut them 4 times, and so on.

I think shrub trimming and most of the other add ons/up sales are utterly worthless to pay for, they are more like a bonus for buying the accounts from him.

The best reason for doing it this way is, if a customer drops you or does not switch in the begining, you do not pay for that customer. If they drop you after say 5-6 cuttings you only pay him for one, and you should have still made some sort of profit off them already.

Here is another meathod.

You would pay a certain percentage of the profit off of the customers each moth or year spread over a year or two. this would be a set amount paid each month, and that person receiving payments would be considered a commisioned employee. (check with your CPA on this) You could do this at a set percent like between 2-8 percent for the first year. On the secon if you chose that long it would be less than half of the first years. I would shoot for the first one I posted over this one, as this one tanks more tima and paper work. I would only use this if he wouldn't bite the first one and you realy realy wanted the customers for some reason or another.

Back to equipment.

If you need it, you should only pay what you think it is worth, "IF" for some reason you didn't want it but had to buy to close this sale, have him finance it or buy at garage sale prices. This reasoning is because you don't want to tie up your capital to long.

There is many ways to buy, but the buyer is in control as we are at the bottom of the todem pole in the service industry as far as selling lawn care operations. They have no net worth even though it says so on paper. Our net worth is property and equipment. The customers are not worth squat in a banks eyes.

Always use what a bank would do when buying a BIZ. This is favorous to you when you buy, sucks for when you sell.

A smart business man once told me when you buy a biz you ssttrrreettcchhh out payment as long as you can. Always try to make a profit off of it before you payed in full and as quick as possable.

Good Luck LGF

P.S. let us know how it goes.

[TaylorLawn]

I recently had another local lawn service ask for my assistance getting caught up. I have been there before and I did offer my help for one day at a set price. Afterward I learned that his business was going south and he may be looking to sell. I inquired as to his probable price and asked him to let me know. He indeed call and offered it to me at what I thought was way too high. I checked out all of his equipment (it was awful) and decided I wanted nothing but the trailer, then after checking out the lawns and commercial accounts, I discovered 12 residentials that were not worth the trouble, mainly because of underbidding on his part. I made a counter offer which was six thousand less than what he originally wanted, and he took it instantly. I then did all accounts at his price one time, and explained to the customer of possible price increases, they were more than happy to pay for better service, and as for the 12 accounts I did not want, I sold them to another service just starting out. Do your homework, 9 times out of ten you will be able to save a substatial amount of money.

[Guardian]

WOW, where you all are from, lawn Co's are cheap to buy. Here, if you have a solid contract based business - you can sell for an average of 4 months income. And if the company is a CORPORATION, then customers are still bound to their contract. Of course, good records are needed to prove your worth and "No Competes" are required.

[TaylorLawn]

Oh, I did not say it was cheap by any means, only that I was able to negotiate a more reasonable price.....ET