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  #11  
Old 11-26-2013, 07:58 PM
32vld 32vld is offline
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Location: LI NY
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Quote:
Originally Posted by Turboguy View Post
Valuing a business is no simple task. Two to three times income may be as good a way as any other but there are a lot of other factors that come into play. For example someone is trying to sell a one man lawn care business that netted 20 grand. No one is going to pay you 60 grand for it. They can work at WalMart and make that. Conversely someone has a large operation and has netted consistently a half a millon it might be worth far more than 2 to 3 times income. Service businesses are hard to value.
I would not pay $20,000 for the example you cited. A solo guy's used equipment is not worth $20,000. And that is all you are buying. No yard. No shop. And customers can jump ship.

Net $20,000 out of what gross?

Net $20,000 out of $25,000 or net $20,000 out of $120,000.

For $20,000 grand I can up grade my equipment for $10,000 and spend the other $10,000 on advertising and get more customers then I could handle.
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  #12  
Old 11-27-2013, 05:27 AM
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grass-scapes grass-scapes is offline
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Location: Greensboro NC
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Quote:
Originally Posted by Turboguy View Post
Valuing a business is no simple task. Two to three times income may be as good a way as any other but there are a lot of other factors that come into play. For example someone is trying to sell a one man lawn care business that netted 20 grand. No one is going to pay you 60 grand for it. They can work at WalMart and make that. Conversely someone has a large operation and has netted consistently a half a millon it might be worth far more than 2 to 3 times income. Service businesses are hard to value.
If you go back and read the Original Post, he said 2 times NET.

All in all, before buying any business, you have to look at hard assets, soft assets, and how long it will take to break even.

You can hear all the time about "I'll just take the money I would have spent and buy advertising and get all the customers I can handle" or "I can buy this business for 10 grand and he has 100 customers"

Buying a business is a risk. So is advertising. So is owning your own business. So is walking out your front door in the morning. Choose your risk....evaluate what you want to do and/or buy. Make a decision based on what YOU want....Not what every Tom, Dick, and Harry on a website feel about buying a business.

Would I buy an existing business? Sure, if the terms were right, and I thought I could incorporate it into my business. Advertising takes time. Will customers jump ship? Who knows. Thats where your agreement to purchase comes in. Spend time looking at ALL the possibilities, do your own investigating.
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  #13  
Old 11-27-2013, 08:49 AM
Turboguy Turboguy is offline
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Nice post Grass Scapes. I agree totally. I am sorry but I must not have been clear but I was talking NET. The only real point I was trying to make was that, as you said, you need to look at more than just some number times net income x some factor such as 2 or 3. You are also correct that buying a business has risk as does starting one from scratch.

I have started a number of businesses, bought one, sold one, been through a number of seminars on selling and buying businesses and read a lot of crap about the topic. The one I bought had an asking price of one times net and I bought it for 1/2 times net. Buying that business put me the closest to bankruptcy that I ever was. There are a number of threads on Lawnsite by guys who started a business and want to sell their equipment and get out. Still there are lots of guys who do quite well. Would I buy another business? Probably, but i would be darn careful. Everything in life from crossing a street up has risk but if someone never takes a risk they will never get anywhere in life.

I have to agree that advertising has risks as well. I can recall 15 years or so ago starting a new facet of my business and spending 7 grand advertising it. That 7 grand in advertising pulled in 5 grand in business. Advertising can pay or you can also waste a lot of money if you chose the wrong venue. I still have that part of my business and it does quite well with an ad budget of $ 200 a year.
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  #14  
Old 11-27-2013, 11:01 AM
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grass-scapes grass-scapes is offline
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I am currently exploring opportunities in advertising using different venues.

Angie's list is one, but not sure I'm going to push the button on that one.
Direct mail using a purchased list is another. I use Service Assistant by Real Green now and they claim their biggest strength is the marketing aspect. I may put that to the test this year.

Flyers...Maybe. Seems a bit "low ball" to me.
I am revamping my website and linking to several social media sites so that should get my hits up on the site. May invest in SEO

Customers don't come cheap, as some people seem to think. Ive done this long enough to know that, especially in a "lawn guy" saturated market.

My biggest drain are the employees. I can get work, grow, and expand, but the employees not doing the work requiring CONSTANT supervision is what brings down my business. I am working on alleviating that as well, but the employees in this industry are virtually unemployable elsewhere, which makes them tough to manage when you want things done right and by the book.
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  #15  
Old 11-28-2013, 08:28 PM
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snomaha snomaha is offline
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Quote:
Originally Posted by grass-scapes View Post
If you go back and read the Original Post, he said 2 times NET.

All in all, before buying any business, you have to look at hard assets, soft assets, and how long it will take to break even.

You can hear all the time about "I'll just take the money I would have spent and buy advertising and get all the customers I can handle" or "I can buy this business for 10 grand and he has 100 customers"

Buying a business is a risk. So is advertising. So is owning your own business. So is walking out your front door in the morning. Choose your risk....evaluate what you want to do and/or buy. Make a decision based on what YOU want....Not what every Tom, Dick, and Harry on a website feel about buying a business.

Would I buy an existing business? Sure, if the terms were right, and I thought I could incorporate it into my business. Advertising takes time. Will customers jump ship? Who knows. Thats where your agreement to purchase comes in. Spend time looking at ALL the possibilities, do your own investigating.
Good post.
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