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jdwilliams1
11-12-2004, 09:40 AM
I am considering putting my business up for sell on ebay, and starting the bid at $100. 2001 $48000 2002 $99000 2003 $140000 this year looks like $110000, the decline is due to the fact that I put all my efforts towards spraying and fertilization program during the end of this season. I have no contracts, but I have a list of my customers would be willing to help with transition by sending letter to my customers an notifying them of the change. Most customers are in $500,000 and up homes in Zionsville and Carmel, I do mostly mulch, mowing and landscaping jobs, leaf removal, trimming shrubs, even landscape lighting and holiday lighting. I am anxious to really push my squirt and fert business next year and would be willing to sign a no compete for one year in Hamilton and Boone counties for everything but spraying ie lawn, trees, for pests and fert. This could be an excellent opportunity for someone, I have no idea of the value of my business but it must be worth something after 4 hard years. I might have alittle equipment available as well. I want to be fair and will make no garauntees of which customers might stay with potential buyer, I mow about 28 to 30 lawns at about $55-60 per hour, mulch about 30-40 lawns at around $60-$65 per cu yd put down about 500 cu yds. Make no mistake this must have some value, if you are familiar with the area most of my customers are in Austin Oaks in Zionsville and Kings Mill in Carmel, and several others here and there. Again reason for selling is I want to focus on squirt and fert and I want to remain a one man show and not hire. The 2002 $99000 was me by myself, the last 2 years I have hired guys to help with mulch in early spring, I make after all is said and done about $45000 a year and I dont touch a peice of mulch, not bad for about 35 weeks of work. God Bless

Ryan Lightning
11-12-2004, 10:49 AM
Why not hire someone to do the maintenance while you take care of the other stuff? Thats what I plan on doing next year.

grassbandit
11-12-2004, 02:13 PM
I know that area fairly well. I am on the westside of Indianapolis. Maybe we could talk.

jdwilliams1
11-12-2004, 03:13 PM
Ryan lightning, I have been down the hire someone road twice now once in 1994 and once this year for a month or so, and I am just not a very good leader, I admit it, delegation is a problem because no one will ever care to the level I do and incentives just do not work,

I will be sending info out to a few local comapnies before UI place business on ebay grassbandit

jdwilliams1
11-12-2004, 07:44 PM
Thanks for feedback, I also do cleanups spring and fall

Lawn-Scapes
11-12-2004, 08:41 PM
What percentage of the yearly revenue is fert & squirt?

jdwilliams1
11-12-2004, 09:48 PM
I just got certified so none, just bought z spray

jdwilliams1
11-13-2004, 02:04 AM
I will try to get a time for those interested as to when I will list

kipcom
11-13-2004, 07:19 AM
JD.....I sent you a PM

jdwilliams1
11-13-2004, 03:03 PM
I will be sending out info to some companies about the auction

MMLawn
11-13-2004, 03:07 PM
Without Contracts it really is not worth much except for your equipment. You should be able to get market value on the equipment and as to the accounts again without contracts and esp since you say that you would would send a "letter" to the customers instead of a personal contact by you and that you said that you cannot guarantee any of the customers then only a foolish person would pay more than 5% of the revenues.

What an educated buyer will/would do is offer you a percentage of the revenues of the customers that actually stay with the buyer and sign contracts.

Good luck on it though!

MMLawn
11-13-2004, 03:16 PM
You'll also find that if they even sell at all that businesses bring only peanuts on ebay.

jdwilliams1
11-13-2004, 04:45 PM
I understand your comments, however we can agree do disagree, these are worth something, MMLawn you seem to be somewhat knowledgable however you have no clue, having not asked, the relationship I have with my customers. The relationship is where the value of the company is, not in a contract, I have been in this line of work for many years and you know as well as I do a customer can drop someone in a heart beat, I don't know if you noticed or not but your not the only one prividing this service in your town, use your head alittle, everthing has value and if nothing else I am offering a list of customers that have this knid of work performed on there homes, I am willing to work to make a seemless transition and if I had to bet not everyone will stay onboard with new company but a mojority will.....oh and by the way I think it said you were from somewhere in the Carolinas, were you planning on commuting everyday or just trying to drive people away from an opportunity, I always wonder about people sometimes. God Bless and have an extremely awesome day MMLawn

Smithers
11-13-2004, 05:07 PM
JD,

Mike is right. If you just offer to write a letter to the customer, i'd not pay much for that either.....If you have such a great relationship with your customers, why send out letter then?

Why dont you go to them and intruduce them to the new owner? I'd not pay much for a business with no contracts. I'd just pay for the fair market value of the equipment.

muddstopper
11-13-2004, 05:18 PM
Heres you a forumla to help you figure the worth of the business.
FV=PV(1+I/cp) to the Npower. FV being future value, PV being present value, I being interest ( assuming expected return if you invest your money to draw interest instead of buying the company), Cp is the number of compounding periods if your money is invested in and interst compounding fund. N power is the number of years x's compounding periods in those years, you would expect the purchase price to return your investment. This will give you the top dollar value of the purchase. Of course the goal is to purchase below the top dollar value, otherwise you could just invest the money in the interest bearing fund and achieve the same results.
Using the $45000 average yearly income and spreading out the return on investment over 5 years for a total worth of $225000, (45000x5), and then figureing in a return on investment of 10% compounded yearly, the absolute max selling price would be $186,000. Then one must figure in the number of lost or potential lost costumers and other risks involved and also the depreciation value of any and all equipment that would go with the business. (No way I would give $186,000 just for a costumer list) to figure in the final offering price. The $186,000 is a number that would depend on a 100% costumer retention rate and includes all property that is owned by the selling company. This would mean land and buildings, not just mowers and such. Since there is no mention of land or there values no number was entered to determine their true value. By adding value the actual FV of the company could increase over and above the $225,000 of just future wages. This would also increase the selling value. The numbers that where posted as year to year earning have no relevance to the purchase price. The bottom line is the $45000 in net earnings. The $186,000 price tag also just figures in a return of 10%. ( in other words you would only make $39000 total for 5 years) You would starve on this return. So infact these numbers I posted are useless and only serve as an example on how to figure the worth of the company.

jdwilliams1
11-13-2004, 06:34 PM
[ I am willing to work to make a seemless transition and if I had to bet not everyone will stay onboard with new company but a mojority will.[/QUOTE]

petrentz, Everybody is hung up on a letter to the customer, is there something you do not understand about a seemless transition. Come on all you lawnsite experts this is not rocket science, Ebay allows one to pay what they think it is worth and not a dime more, where is the confusion in this. A couple of you are acting like I am serarching for $1,000,000, you guys crack me up but your alright in my book. :)

muddstopper
11-13-2004, 07:52 PM
Selling a business usually includes the equipment used to run that business. What equipment are you letting go with the business or the dollar amount of that equipment. Not what you paid for the equipment but what it is worth if you sold it. Also need some sort of percentage of the retention rate of your costumers to determine future income. The worth of your business can be worked out mathmaticly, you just have to fill in the blanks. For perspective buyers, you need to figure out the rate of return for your investment dollars. Factoring in your wages that you need to make while running the business. This will determine the amount of time that is necessary for the business to become profitable to you. If you give me some meaningful numbers, I can give you a pretty close value for the business. The only number I have to work with right now is adverage income for a short period of time. $45000 a year for 4 years. cant figure value with just part of the equation. (hint, I bet its not close to the $186,000 in my previous post)

DennisF
11-13-2004, 08:45 PM
Here in Florida I've seen several lawn care business's sold during the last year. Those sold for the equivalent of 2 month's of gross revenue plus the value of any equipment. That seems to be about the average selling price for an established customer list here in the sunshine state. It might be different in your area. There is one for sale at this moment in the county where I live. The owner is asking $25,000 ( he said the price is negotiable ) for the customer list (no contracts) which contains 120 mowing accounts. The equipment is for sale as well, but not included in the $25,000 asking price.

all ferris
11-13-2004, 08:49 PM
IMO the business is worth nothing without contracts. Just because you have a good relationship with your customers doesn't mean that the new buyer will. I would try to get the customers to sign contracts for next year and after you've got the contracts then sell the business. Then the buyer would be able to depend on at least one full year of revenue and that would allow him time to build a relationship with the customer. It's the contracts that are worth the money.

tonygreek
11-13-2004, 08:59 PM
interesting shots you took at mmlawn, and in doing so, you made his point. the contracts issue in determining a possible sales value is not an opinion. it's a simple fact of business. as for mmlawn's point that you apparently unwittingly reinforced is this:

"you have no clue, having not asked, the relationship I have with my customers. The relationship is where the value of the company is, not in a contract"
AND
"Everybody is hung up on a letter to the customer, is there something you do not understand about a seemless transition"

the key point here is: YOUR RELATIONSHIP WITH THE CUSTOMERS, not joe bob the ebay buyer. and in business, 99% of the time, you've hit the lotto if you can retrospectively use the term "seamless". if you don't go with the business, what exactly is the value, above and beyond your implied word? i don't think he's trying to drive away your potential buyers as you so deftly pointed out, but more than likey was encouraging you to take a bit better look at how you market your company for an impending sale. the dollar signs go down the more that you reinforce that the real value is YOUR relationship with the customer. i would love for you, or anyone else for that matter, get as much as they can for their business, but my opinion is you may want to rethink your sell strategy. as such, you might seriously want to consider going on the offensive with a buyer's strategy. maybe advertise it as a % of the gross over a sliding schedule. smaller fixed price up front, and then as those customers sign on with the new owner, the buyout fee climbs in concert. usually this method is at the behest of the buyer, but it may serve you better to offer it up in this fashion. it also allows you to select someone reputable to carry on your good name, and make both of you more money in the long run. that should be the goal of any exit strategy.

personally, i'd avoid the ebay sale, unless you protect yourself with a minimum bid. any rational buyer would want to have a long conversation with you, and a look at the books. not allowing someone to do so through the efficient sell process of ebay will cause the possible sell price to plummet. so instead of repeating your post of "it'll be out there soon", i'd start seriously talking with the people who pm you or networking to find a local buyer. i can almost guarantee you would receive a significantly better package than the ebay route, where you could end up with a less than admirable owner who crushes the relationships, and your name, with your former customers.

and let me toss this one in: "Ebay allows one to pay what they think it is worth and not a dime more". this is great for the buyer, but absolutely sucks for you. you want full value, from a person who strives to retain the relationships you've cultivated. you do not want to immediately put a prospective buyer in the drivers seat, which will be the result, for something you've carefully built.

good luck, and if you don't mind, keep us in the loop on the process.

tony

tonygreek
11-13-2004, 09:05 PM
great point, All Ferris. if it's doable, that's the #1 approach i'd take.

as for 25k for a no contracts customer list of what amounts to 120 qualified leads, that's insane. personally, i'd rather take half that money for advertising to generate a like number of potential retainees and sink the other half into a roth ira. but what do i know...

tony

jdwilliams1
11-13-2004, 09:20 PM
Thanks guys, all points duly noted, I have many pms from local guys, and discussions are good, I certainly will keep information up to date

I have begun selling equipment, but can include 48" 2001 exmark w/ sulky hydro ecs, 2002 dump trailer, 2003 leaf loader, 2001 dodge 4 x4 truck w/ ez dumper brand new and other odds and ins

Fresh-cut.com
11-13-2004, 10:22 PM
I'd also want more than just a one year no compete agreement. For all one would know you could have a great relationship with your customers and maybe your right most would stay but one year later you could go and scoop up your customers assuming the realationship was that good. Me and my partner Just bought out another company and it will probally take us half of next season to recoup the money from the purchase (granted we got some equipment also) It would be a major blow for us if he were to sneak in next season and get the jobs back. (we got a 3 year no compete)

jdwilliams1
11-14-2004, 11:47 AM
Tony greek, several excellent ideas, especially the fairness of the sliding schedule, seems fair to all involved. I will break things down alittle better, and would be willing to get a feel for customers staying with me and go door to door with new owner

1 final thing I would like to keep my company name

jdwilliams1
11-14-2004, 09:47 PM
any other feelings on this topis, or interest from the Indiana guys

lawncat
11-15-2004, 07:42 PM
PM me with more information.

thanks

Lawncat

jdwilliams1
11-15-2004, 08:25 PM
I am looking to sell my customer base and will try to make transition as seemless as possible for my customers. Will have truck, 48 hydro exmark, dump trailer, leaf loader misc item, everything in awesome shape and 2001 or newer, my phone number is 317-439-7923, I must be honest I have several interested parties but have not given any firm numbers to anyone. I desire to perform anything but fert and squirt, aeration and snow removal have deminished but the customer base is excellent and they does spend money, someone that is driven could easily gross $200,000 next year. I am 1 man op and hire through temps for large jobs, I never have advertised....period....word of mouth only. I have never had the desire to be big and my growth in 2003 had me backing off this year and turning a good deal of work down. I truley think that if I could provide my current customers to the buyer, this should be worth $5000-$20000for customers, give me a call and we can discuss317-439-7923

jdwilliams1
11-15-2004, 08:30 PM
sorry meant to pm

Lawn-Scapes
11-15-2004, 08:36 PM
Too bad you're not in my town. It sounds like you've built a nice little biz. I'd consider giving you 20k for it.

jdwilliams1
11-15-2004, 10:04 PM
Thanks , I wished you lived here as well!!! :)