More help on buying company with 100 accounts for $50,000.00

[Emerald]

Spoke with the guy Sunday and told him I wasn't interested in paying $50,000.00 for just the accounts. He said he was willing to take some $ down, with so much a month. He mentioned $15,000.00 down. But still wants a total of $50,000.00. He has sweetened the deal a bit and added 2 1997 Toro Proline 52 inch walk behind hydros with 16 HP Vanguards B&S. Also 2 Tracvacs to mount on mowers with 5 HP B&S, 2 sets of Jarco dethatching tines and 1 Jarco Aerator, 1 Billygoat walk behind blower QB883H Pro series and 1 Billygoat truck loader QL2000VE. Just wanted other professionals opinions.

[KirbysLawn]

My opinion stands from the first post.

10% of all gross sales for the next year, if it's as promised he will get his $50,000, if not you don't get screwed.

Ray

[Nathan]

It sounds like this guy doesn't get the picture. First of all if this was such a great deal as the seller is trying to made it sound, why aren't lawn guys jumping out of the woodwork. Most of important is the fact that you are giving up a lot of money for a lot of risk, where he is getting a lot of money for no risk. I would give him a renegotiated deal on your terms, give him a deadline to think about it and if he doesn't jump forget about it. My guess is that he will eventually see that he has overestimated his businesses value and cave in.

[bob]

Just walk away. I bet come spring time, he still hasen't sold the business.

[Davis TLC]

I agree with the others on this. There has to be a reason that other lawn care companies are not going after what this guy has to offer. Pass it up.

You can spend your money better doing some good advertising. Besides you could get stuck with some real crabby customers.


[Edited by Davis TLC on 11-20-2000 at 05:20 AM]

[tazman]

I would say the only assests this guy has is the equipment. If you want some of the equipment, make him a offer on that. The customer base is not a hard asset and with no quarantees, just to much of a financial risk to you. If he won't take sweat equity, he is not willing to risk anything at all. I also do agree with the other posts that 50K is way to much for something you have no control over. Put the 50K in a mutual fund or something and you'll come out way ahead compared to this guys proposal.

[Richard Martin]

If he insists on cash and you <b><I>really, really, really</b></i> want these accounts offer him the value of the equiptment plus 3 weeks gross revenue. Not a penny more.

[jeffex]

put the money in an escrow account contingent
on meeting each customer and confirming thier intent to stay with you as the new owner. Assign
a value [say $50 for each lawn} and make his withdraw
from the account contingent on valid customers. You will
have to sign an agreement of non-disclosure prior to this
process to prevent you from simply stealing his customer list. You may still loose a few customers in the new season
but for the most part you wont get burned.

[Eric ELM]

Nobody will be paying this much money for these acounts. After re-reading your original question, I realized you have to plow snow, and do spring and fall cleanups plus mow the lawns of 100. That comes out to less than $20 a visit each week. You might as well go out and pay 100 people $500 each to let them mow their lawn. If you do keep all 100 of these, you would be getting $10 a week from each customer for the next year. If you hire someone to help you, that will be reduced, plus gas, insurance ect.

Take a little bit of that money and go spend it on advertising and you will get all those customers that will get dropped when he can't find anyone to pay him. Customers are too easy to find. I spent $30 on advertising to get my start.

[lawrence stone]

The only value this biz has is some used equipment.

Where is the rest of the equipment? If this guy was going out of biz you should get all the two cycle equipment also.
He is just waiting in ghe wings waiting for you to fail and then he will get all his crappy accounts back plus a price increase.

The first thing I notice that this guy is clueless is that he bought new hydro walkbehinds with 16 hp B & S engines. For just a few hundred dollars more the could have bought 20hp Kohler V twins.

Looks like a real scrubby operation at $1000 per customer yearly using 52" machines.

From this this side of the fence all I see is just a bunch of mid size accounts that just "mowing only" jobs.

Who applies the fertilizer, pesticides, to these accounts?

Does you know who with a tanker come and apply liquid urea six times a year at the worst time and you have to cut 6" high grass for weeks on end?

[curlawngreen]

Did you call Phil or Bill?

[bdemir]

dont give that kind of money away. Customers are easy to get. dont be fooled by the scam. You are buying into a nothing. If you do give away that money then i think you will work for free for a nice long time. Listen to what people are saying on this forum and take the advice seriously. Dont make such a big mistake.

[Tomslawncare1]

Eric I spent even less than that on advertising. I made up a flyer on my computer, printed it in black and white, brought it to my full time job and made ohhh 5 or 600 copies. Then on I went and stuffed mail boxes in March. Then when the post master called me to warn me about doing that I waited until Saturday night then stuffed the paper tube. Everyone gets the Sunday paper. It cost me a little bit of time and gas. Then look out for the phone calls. I had about 18 customers the first year.
Emerald. You should try this. It works great! !

[HOMER]

Let me add my .02! First off, getting 100 accounts dropped in your lap all at once is a big mistake. I feel you are looking at the money and seeing things in the wrong light. Have you ever tried to keep up with that many accounts? If your not physically prepared to work 12 hours a day in the scorching heat, mentally prepared for all the phone calls you'll be receiving cause it rained and you missed 1 day of work( ya, one day gets you big time behind) you will regret the day you ever made the deal. I started part time in 96, went full time in 98. It takes time to figure things out. It takes time to develop a customer base and a reputation. These overnight success stories are for the stock market folks, not grass mowers. Take a long hard look at where you want to be 5 years from now, not tomorrow. Johnny Cash got it one piece at a time, but he built the car. He couldn't have got it out the door completely assembled. The truth is, if you bide your time you may wind up with a lot of these accounts anyway. Be a good hunter, still and quiet. If this guy can't sell he will start doing half a@## work or the guy who does buy it will fail! Get yourself in a position to take over the droppings. If you build slowly and steady you have a better chance of succeeding than taking the whole thing at once. Build YOUR COMPANY your WAY! It has taken me since 96 to get 71 customers, I don't want anymore! I don't even want some of the ones I have! There is more to life than work and money. Listen to the advice thats been given, thats why you asked I presume. Nobody's telling you not to buy because they think you'll steal their accounts one day, their advice is to keep you from making a real big mistake. Take 10% of that 50k and get you a yellow page ad, a good one. This spring you'll see that your getting some of slick willy's accounts. Too long I know, just trying to save ya from yourself!

Homer

[Indiana]

I agree with everything that Homer said.

I grew real quick this year and began to hate it later in the summer. It was a real adjustment going from a few commercial to 40 homes, 2 resorts and an industrial center. Luckily I had semi good weather and real good help.

I don't think I would buy anyones accounts because it too easy to loose what isn't secured. I have a pretty good customer base but to sell them is kinda' hard. My customer have me cut the grass, fertilize, etc... because it is me that sold them on the service. Their are alot of customers that deal with people because they are who they are. There is always a degree of customers that deal with who is cheaper. Most of mine have a personal connection with me, I have tried to keep that personal touch.

Anyway, I started advertising in yellow pages and had more work come in than anything I have done yet. That was two years ago and I still don't regret it.

[lawrence stone]

What Homer meant to say was the guy is about to tank.

Buy a old walkbehind with a sulky, place a classified ad and
a single sheet insert for his service areas in early spring.

You could get some his accounts and many more from other contractors for just $500 in ad costs.

One must remember there are only two types of new business.
1. New construction.
2. Existing account that WAS not originally yours.

This guy wants to throw in the towel make it easier for him to reach his goal.

[Greenkeepers]

Amen Rev. Homer-

100 accts all at once is a lot to handle. Plus you have no guarantee that the customers will stay. The equipment is 5 years and probably only worth about 10-13k that leaves 37-40k for goodwill???? It's not worth it. Advertise yourself and grow with a core group of customers that you can handle and WANT...

Just my .02

Mike
Greenkeepers

[Toddppm]

unless that equip. is perfect it's not worth more than 5k all together

[CCLC]

As has been said many times in this thread and the previous one...JUST WALK AWAY.

[bdemir]

I would not touch that with a ten foot pole. THat business is worth about 8 grand and thats because you have no guarantees on anything.



Bedros

[Runner]

This also begs the question: Why is he selling it all in the FIRST place? Come on! 50 grand? This guy didn't know enough about the business going into it, and doesn't know enough about it getting out of it, either. You can build that many accounts if you like for alot less than 50 g's. Also they will be SELECT customers. Not "the bad with the good" and ones that have a predisposition if leariness toward you because you are the one "taking over."

[HOMER]

As old as that post is I bet it's already a done deal! Or the guy kept it and is mowing right now.

[Runner]

I didn't notice! Bedros must have dug this up out of the archives! :)

[lawnboy11]

Old post, but people here advertise businesses for sale for basically at least half of one year's gross. They are in the paper one or two days tops and then sold. I'm talking contracts signed, equipment, etc. 50k is not out of the question at all.

[dmk395]

Your better off to start on your own. By starting small you will learn the ins and outs of the business, with little overhead. 50k sitting on top of you is rather steep. Simply put out some flyers and watch the calls roll in.

[Barkleymut]

Posted by Homer:

If your not physically prepared to work 12 hours a day in the scorching heat........

the guy lives in Minnesota

maybe his brain froze up and he dropped 50 Gs

[HOMER]

You might be right Barkleymut, you might be right!

[Fine Lines Lawn]

Please don't. I would hate to see you bankrupt yoursef like this.

[Michael Fronczak]

I didn't see the original post, so I am going to assume these are all residential customers. In that case I wouldn't do it.

A lawn maintenance/snowplow contractor went out of business last year, we got his customer list & dollar amounts for his contracts (all free). I solicted the snowplowing last fall, even with a letter endorsing us we only got about 25% of the work. I stll have all the info, all the customers he ever had in a mailing list program(around 220 in my town alone), and will contiue to solict their plowing, possiblly their lawn maintenance if we need the extra work.

I called about a co. that was selling out this year, they wanted $ 80,000- his gross from last year, included a 52" WB, a Lazer, a small trailer, 2-cycle stuff, had a 97 Chevy K2500, for another $ 10,000. I talked to him, it was all residential, aside from two commercial-he said mid sized. To me it wasn't worth it.

Back to your question, if you are buying the company-name & all, and they had contracts still in place(guarnteed income), I would figure 15-30% of contracts totals(average profit margin)plus equipment value. This is only if the contracts are guarnteed, period. For instance if I sold out, my contracts are with my DBA, as well as myself, the DBA can be sold or transfered. Unless the information was volenteered, customers would generally assume I had someone new dealing with them, & moved my office. This would give you time to prove yourself, as well as aquire a reputation-name(good or bad??-find out).

Good luck, best advise is to educate yourself very well about this co.