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  #41  
Old 05-01-2012, 06:35 AM
jrs.landscaping's Avatar
jrs.landscaping jrs.landscaping is online now
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Quote:
Originally Posted by dahammer View Post
What happens if he has a bunch of $30 lawns scattered all over the place and it's not possible to make them profitable at that rate? If he couldn't make a profit with the route, then you may not be able to either. You have to dig into it versus worrying so much about the superficial stuff and trying to run some formula on it.
If each account was $30 and the business grossed 63k. (not great with math so correct me if I'm wrong) he would have to mow each account around 161 time a season, I know my season is less than 1/4 of that. The Op needs to look into the books, but lets be honest as a solo guy how much would you try to write off? Net is kind of useless for a solo operation because people are looking for purchases to add as write offs. Maybe he had a good year and "needed" to buy a UTV to help with tax burden? Just look at what he has, how he does it, and how you can improve it to make it more profitable.
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  #42  
Old 05-01-2012, 08:48 PM
32vld 32vld is offline
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Originally Posted by dahammer View Post
It's not misleading at all. The things you mention are variables. That's why you dig into the books to determine what the "real" profit would be if you owned it.

But in my wife's case, the business employs her, another full time employee, and a part time employee. They are all paid a salary + commission + (bonuses in good times), so the more they produce, the more they make. What was left after everyone got theirs was 18k in profit for the business.
Still misleading because out of 3 million did your wife as the business owner make 50,000 or 500,000 salary?

See with the info you have provided one can not place an accurate value of the business that your wife owns.
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  #43  
Old 05-02-2012, 10:38 AM
ClassicLawnCareInc ClassicLawnCareInc is offline
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On the 3million dollar company he was talking about, the fact that they only showed a 18k profit is good on their part. Who wants to show a huge profit? If you show a larger profit you have to pay more taxes. That 18k profit is probably more than they wanted to show.
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  #44  
Old 05-02-2012, 11:16 PM
32vld 32vld is offline
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Quote:
Originally Posted by ClassicLawnCareInc View Post
On the 3million dollar company he was talking about, the fact that they only showed a 18k profit is good on their part. Who wants to show a huge profit? If you show a larger profit you have to pay more taxes. That 18k profit is probably more than they wanted to show.
True but it does not change that his wife's business can not be valued based on the info he provided. So his numbers are meaningless.
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  #45  
Old 05-03-2012, 04:04 AM
MowingMowingMowing MowingMowingMowing is offline
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I actually just sold my business this year and have been transitioning the buyer as I prepare to graduate from college.

If anyone wants actual specifics feel free to PM me. FWIW, I sold for a multiple of gross revenue + inventory + intangibles (primarily the website, MKT pieces, etc.).
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  #46  
Old 05-03-2012, 04:05 AM
MowingMowingMowing MowingMowingMowing is offline
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A multiple of gross monthly revenue*
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  #47  
Old 05-03-2012, 04:19 PM
dahammer dahammer is offline
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Location: Mississippi
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Quote:
Originally Posted by 32vld View Post
True but it does not change that his wife's business can not be valued based on the info he provided. So his numbers are meaningless.

For the last time, my numbers aren't meaningless. My wife does NOT own the business, she manages it. The 18k is what was left after everything else was paid. The OWNER took that home with her and that's what she made off of it. My wife made more off of the business than did the owner last year, a lot more. But the owner is disconnected, comes in and looks at the books from time to time, but beyond that she is not involved in the operation of the business. So the owner made 18k off the business last year without lifting a finger. She pays my wife well to manage the business for her and has other businesses that take up her time.

At the end of the day, all I'm saying is that you need to look at the books and determine what the TRUE NET income for a business is before purchasing it. That is the only way you can determine what you could reasonably plan to make from it, based on your business model. Perhaps your business model doesn't involve paying someone to run it for it you, so you'd lump their pay into the net profit and might be willing to pay a little more than someone else that doesn't plan to run it themselves. But you still need to determine what that is.
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  #48  
Old 04-07-2014, 03:20 PM
Keev12 Keev12 is offline
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Customer databases are an asset.... as they say online Its all in your list!

Hell I bought several online businesses just FOR their customer databases.... screw the rest.


Quote:
Originally Posted by 32vld View Post
Client lists are not assets.

A building is an asset.

Vehicles, trailers, equipment, are further examples of assets.

Some assets are universal and some business assets are business specific.

A customer list unless these customers are under long term contracts, and the contracts can be sold to you and these customers are legally obligated to stay bound they are not an asset.

What is a customer list?

An introduction to new potential clients. Some will try you out, some won't.

So you pay the seller equivalent for the first round of mows of those that agree to take you on. Think of it as the cost of advertising to get new accounts.

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