Register free!
Search
 
     

The Green Industry's Resource Center


Click for Weather
Reply
 
Thread Tools Display Modes
  #41  
Old 12-23-2009, 12:24 AM
Az Gardener Az Gardener is offline
LawnSite Gold Member
 
Join Date: Sep 2005
Location: Phoenix, Az
Posts: 3,895
Quote:
Originally Posted by AI Inc View Post
Once ya take away the equitment, all ya got left is a bunch of uneducated employees and a bunch of people that pay you to do something they can do themselves but just dont want to.
Maybe that's whats left of your company but a company that is churning 1 mil a year in volume most likely has systems in place to keep the business running no matter who owns it. Therefore it is a money making machine and has value beyond the value of the equipment.
__________________


“If I accept you as you are, I will make you worse; however, if I treat you as though you are what you are capable of becoming, I help you become that.”
Reply With Quote
  #42  
Old 12-23-2009, 12:50 AM
xmorgans xmorgans is offline
LawnSite Member
 
Join Date: Dec 2009
Location: Pittdburgh , PA
Posts: 3
i would get more info:

how many in a crew: what are workers paid in hour:
how many lawns per crew/week

what is total overhead before profit is made.. seems like there is alot

be ready and know what your doing with no contracts, see if there is a upfront allowment to take over and money paid back to buyer if some clients quit in the first year.
Reply With Quote
  #43  
Old 12-23-2009, 01:05 AM
FYS777's Avatar
FYS777 FYS777 is offline
LawnSite Silver Member
 
Join Date: Jan 2009
Location: Central, OR.
Posts: 2,305
maybe this is covered in misc, amount?
Shop and yard area with fencing,
mechanics
cell phones for crews
Reply With Quote
  #44  
Old 12-23-2009, 06:03 AM
PTP PTP is online now
LawnSite Bronze Member
 
Join Date: Nov 2004
Location: Tulsa
Posts: 1,324
If I were to buy a small company, say 30 lawns or so, equipment plus 1-4 months gross would be the top that I would pay. That is because there really is no package deal on the business. You are only buying a couple of things that are fairly easy to go out and get by yourself. They don't have much value other than their face value.

However, a large, profitable company is worth more together than just the sum of it's parts. Let's say that you are servicing 1,000 lawns per week and are doing so in a professional, legitimate manner. You are not going to be able to operate that on a "leave money under the mat" sort of basis. You also cannot operate that out of your garage. You are going to need to be organized and have various systems in place in order to make your business work. It takes a different sort of a person to run a large business than to run a small one. Anyone can run a small business and the value of a small business is low. Not anyone can create a business that is large and profitable and therefore the accompanying value is much greater.

Suppose that I created a business that did service 1000 lawns per week and that all of my equipment was worth $120,000 (current value, not new value). The lawns run an average of $35 each so that is $35,000 per week. Is the business only worth $155,000? What if I told you that the owner took home $200,000 after all expenses? Would that make the business worth more? That is only 20% or so and a very doable number. Actually, it is quite low. You think, "I certainly wouldn't pay premium for a company where the owner only nets 20%." But then you find out that the business can largely run itself without the owner present. The owner makes the large decisions in the business but the day to day operations (maintenance, advertising, billing, scheduling, mowing, customer sign up, etc.) are hands off for him. He can take off at any time for a week or two if he needs/wants to. Is this business still worth the equipment plus 1 week mowing? Of course not.

So, the moral of this story is that a small, unsophisticated business is worth the sum of all of its parts - equipment plus customers. However, a larger, well run business will be worth significantly more than that because the sum of all of those parts working together is producing something that the small business cannot achieve. The more autonomous or semi-autonomous a business is, the greater value it will have.
__________________
The trouble with trying to make yourself stupider than you really are is that you very often succeed. -- C. S. Lewis

Soli Deo Gloria
Reply With Quote
  #45  
Old 12-23-2009, 02:52 PM
Lawn Man Dave's Avatar
Lawn Man Dave Lawn Man Dave is offline
LawnSite Senior Member
 
Join Date: Dec 2009
Location: Indianapolis, IN
Posts: 420
Quote:
Originally Posted by willretire@40 View Post
99.9% of the members up here would never reach 1000 lawns a week, but yet some are saying why pay for a company of this size.

1000 lawns a week x $35 x 30 weeks = $1,050,000
Employee pay per crew per lawn = $13.20 x 1000 lawns x 30 weeks = $396,000
Fuel $2 per lawn = $2000 x 30 weeks = $60,000
Door hangers printed and delivered 100,000 a season =$13k
Equipment renewed every 2 years including trucks $8,000 a year= $60,000
biz Insurance and truck insurance $15k
office help $50k
credit card fees $23k
subtotal $617,000
plus 20% for misc $123,400
Total $740,400
plus $80k for taxes

Final Total $820,400
Owner profit $230,000

Rough numbers
If you are getting new equipment every two years for that many accounts seems rather high considering someone would have that many crews.

I have also never heard of someone spending 13k for that many door hangars and hanging them per season.

Quote:
Originally Posted by willretire@40 View Post
This company is not real. I was just trying to see where people was on this subject. Like I said before so many people on here act like you should only pay a few bucks for each account. Now there are companies out there doing more then 1,000 lawns a week. I know of one that is doing atleast 5,000 if not 6k-8k lawns a week. It can be done and profits can be good. This thread helps seperate real business people from the average lawn boy IMO.

If you do some searches on this and other lawn sites 90% of the people out there will tell you they are not going to pay alot for accounts because who knows how long they will stay will you. if you get $35 a cut for one and you pay $500 for it and he keeps you for a month was it worth it to you? Or if he or she is under contract and drops you at the end of the year and you make near what you paid for it was that worth it???

If someone wants to pay 800k for a company that makes 300k a year.... you better hope you don't have many drop you before you can get your investment back.... that would be about 3 seasons if you did not expand any..... not to mention if all the equipment is junk and starts breaking down.

Paying 800k is not a risk I would be willing to take....... Im not saying it is not worth that or more... just saying finding someone to pay that would be really hard...........

Last edited by Lawn Man Dave; 12-23-2009 at 02:57 PM.
Reply With Quote
  #46  
Old 12-23-2009, 03:12 PM
topsites topsites is offline
LawnSite Fanatic
 
Join Date: Mar 2005
Location: Richmond Virginia
Posts: 21,677
Quote:
Originally Posted by willretire@40 View Post
This company is not real. I was just trying to see where people was on this subject. Like I said before so many people on here act like you should only pay a few bucks for each account. Now there are companies out there doing more then 1,000 lawns a week. I know of one that is doing atleast 5,000 if not 6k-8k lawns a week. It can be done and profits can be good. This thread helps seperate real business people from the average lawn boy IMO.
Yeah but who cares, you ain't even got the money either so why even ask, as for what it separates
the guys who said a dollar were evidently right on, dreaming while out working is one thing but this
is 5 pages of wasted time and some might think nothing of it but I figure a lot of folks put real effort into it.

The thing is someone wants 50 grand for something you really need to have that kind of money first,
because banks usually don't just loan it to the next guy walks in with a nice credit rating either.

Last edited by topsites; 12-23-2009 at 03:22 PM.
Reply With Quote
  #47  
Old 12-23-2009, 03:32 PM
arninglawns arninglawns is offline
LawnSite Member
 
Join Date: Sep 2001
Location: Friendswood, TX
Posts: 68
$13k for 100,000 door hangers is about right. My flyer distribution service charges $200 to print $400 to distribute 5000 flyers. At that rate, it would be $12k for 100,000. Maybe the extra grand would cover the extra cost of door hangers vs. flyers.

I would like to spend at least 5% of gross on advertising, so I'd probably go for 300,000 to 500,000 flyers over the course of a year.

And FWIW, we buy new equipment every year. You end up spending much less that way and have zero down time. Plus, people pay top dollar on eBay for 1 year old stuff.
__________________
Bill Arning
Arning Lawns
Reply With Quote
  #48  
Old 12-23-2009, 04:15 PM
Lawn Man Dave's Avatar
Lawn Man Dave Lawn Man Dave is offline
LawnSite Senior Member
 
Join Date: Dec 2009
Location: Indianapolis, IN
Posts: 420
Quote:
Originally Posted by arninglawns View Post
$13k for 100,000 door hangers is about right. My flyer distribution service charges $200 to print $400 to distribute 5000 flyers. At that rate, it would be $12k for 100,000. Maybe the extra grand would cover the extra cost of door hangers vs. flyers.

I would like to spend at least 5% of gross on advertising, so I'd probably go for 300,000 to 500,000 flyers over the course of a year.

And FWIW, we buy new equipment every year. You end up spending much less that way and have zero down time. Plus, people pay top dollar on eBay for 1 year old stuff.
Now that I have tought about it I could see it being that much.... just depends on how much the final cost is and how much it costs to hang them.

I know some are pretty cheap.... just depends on the area you live in I guess.
Reply With Quote
  #49  
Old 12-23-2009, 04:40 PM
AI Inc's Avatar
AI Inc AI Inc is offline
LawnSite Fanatic
 
Join Date: Dec 2007
Location: Southern NH
Posts: 21,470
Keep in mind , to keep that many customers , one is always advertising and always has a help wanted ad in the paper.
__________________
Reply With Quote
  #50  
Old 12-24-2009, 12:22 AM
PROCUT1's Avatar
PROCUT1 PROCUT1 is offline
LawnSite Platinum Member
 
Join Date: Dec 2003
Location: TN
Posts: 4,840
The type of person who would be buying that example company is not likely on lawnsite.

Anyone who would make an offer like the examples here would be laughed at like a little kid.

That example is "big boy world"
__________________
Trying to figure out how to get rich and not leave my bed.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump





Powered by vBulletin® Version 3.8.6
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Copyright ©1998 - 2012, LawnSite.com™ - Moose River Media
All times are GMT -4. The time now is 10:30 PM.

Page generated in 0.11365 seconds with 7 queries