Register free!
Search
 
     

The Green Industry's Resource Center


Click for Weather
Reply
 
Thread Tools Display Modes
  #1  
Old 06-03-2002, 09:08 PM
Luket99 Luket99 is offline
LawnSite Member
 
Join Date: May 2002
Location: Athens GA
Posts: 3
Buying business, Need Advise Quick!!

Ad in paper reads:
Lawn Business for Sale
Will train, all equipment, truck, and trailer
$63,000 last year, on the increase this year.
10 years in business
Buy for $60K

I talked with him today, and am meeting with him tomorrow. He says he has 50-55 yards, a 48' X-Mark ZTR, weed eaters, Edgers, Blowers, Push mowers, duel axle trailer, and 94 Chevy pick up. Is it me or does this add up? Should he be bringing in more than this? He said he cleared 40K. How much are the accounts worth?
He says he is burned out.
Reply With Quote
  #2  
Old 06-03-2002, 09:16 PM
KenH KenH is offline
LawnSite Bronze Member
 
Join Date: Jun 2002
Location: CT
Posts: 1,622
It sounds to me like he is just mowing, and probably spring and fall cleanups. Be careful buying someone else's headache. He is obviously getting out for a reason.

When you buy a business, you are not guaranteed to keep the customers.

If you are really interested, ask to see his books----and I wouldnt pay 60,000.

Unless he has some high end accounts, the business is probably worth the value of the equipment.
HTH
Reply With Quote
  #3  
Old 06-03-2002, 09:31 PM
jandmlandscaping jandmlandscaping is offline
LawnSite Member
 
Join Date: Apr 2001
Location: Colchester,Ct
Posts: 23
what part of ct are you from ken?
Reply With Quote
  #4  
Old 06-03-2002, 09:42 PM
LawnLad LawnLad is offline
LawnSite Senior Member
 
Join Date: Jan 2002
Location: Cleveland, Ohio
Posts: 738
There are a bunch of threads on this topic already - you'll get good detailed info by searching some of these old posts.

To buy someone's business for near the equivalent of their sales is not worth it. You can create $60,000 in sales without much trouble. The business, if generating 10% profit (higher than industry average) would take you 10 years to pay off, all things remaining static, with no growth potential for you.

The value is his equipment (0% to 60% of cost new depending on how rough it is) and maybe a MINOR consideration for his accounts. There are no guarantees that his customers will stick with you when you take over.

$63K on 50 yds... that's just over an average of $1K per year. If he's charging bottom dollar and won his customers on price - and you realize this and try to raise prices, you'll more than likely loose most of them.

If he's burned out and getting out, it's maybe because his customer mix wasn't making it for him. Making his accounts worth all that much less. Be very, very leary of buying someone's accounts without knowing what his P&L's look like, the types of relationships with the customers, contracts, etc. Make sure you have a non-compete with the guy as well. Sure would hate to buy him out and then have him turn around with your money, buy new equipment and go back into business.

Take teh $60 K you'd buy the business for and invest it in your own business and build it. In fact, you don't need $60 K to start. You can do it for less and use the money you earn to grow your business.

Good luck!
__________________
Lawn Lad, Inc.
Cleveland, Ohio
Reply With Quote
  #5  
Old 06-03-2002, 11:06 PM
John Allin John Allin is offline
LawnSite Bronze Member
 
Join Date: Sep 2000
Location: Erie, PA
Posts: 1,489
Lawn Lad.....
Man, I love reading your replies....
Well done dude....
Reply With Quote
  #6  
Old 06-04-2002, 09:31 AM
Ground Master Ground Master is offline
LawnSite Senior Member
 
Join Date: Feb 2002
Location: colorado springs
Posts: 505
Price is way too HIGH.

Figure this way:

Equipment- offer what the equipment is worth, i.e. what each piece can be sold for.

Customers- Offer 10 to 20 percent of the first years sales. You'll find a few will want to "jump ship" and go with another company.
Reply With Quote
  #7  
Old 06-04-2002, 05:00 PM
Hawkeye5's Avatar
Hawkeye5 Hawkeye5 is offline
LawnSite Senior Member
 
Join Date: May 2002
Location: Hendersonville, TN
Posts: 295
Customer retention is a big question. For all you know the customers are all family and friends and will dump you quick. It's only the first week of June and he is burned out? As pointed out, that may say volumes about the PITA factor in his current customer base. Frankly, if you have the cash, why buy his equipment? The accounts are going to be up for grabs anyway and you can get your own equipment. JD
Reply With Quote
  #8  
Old 06-04-2002, 09:47 PM
Sean Adams Sean Adams is offline
 
Join Date: Jun 1999
Location: Pennsylvania
Posts: 3,623
I'm not saying I know this for sure, but this person may have seen some of the different ads run in some of the trade magazines. There are companies and consultants who claim they can help you sell your business for anywhere from 100% to 150% of your gross receipts. I have talked to people who have read these ads. They do not look any further. They see that and think that it is within reason to ask for the same for their business. As everyone else said, be cautious. And like LawnLad said, don't even think of opening your check book until you thoroughly review P&L's, etc... It is true - buying a business can make it easier. But $60,000 for a $63,000 business seems a little out of bounds. Best of Luck!
Reply With Quote
  #9  
Old 06-05-2002, 02:27 AM
Mowmyyard Mowmyyard is offline
LawnSite Member
 
Join Date: May 2002
Location: West Central Ohio
Posts: 28
Just finished up a buy myself,

I bought an existing business this year to compliment my fathers small 15 customer list (getting ready to retire from his f/t job to do lawn care full time) and I just bought the customers so I did not have to buy the equipment) I paid 20% of his last year receipts. I signed contract in Jan with 1,500 down payment and the base price was based on customers retained on April 1st. then he took the rest of the money out of the cash flow from the business. I covered expenses and my father and I did the work. I recieved a check from him just today. Whew! He still took all calls and we worked closely the whole time. Went well i have two month of exposure with these customers and so far so good. Did not mean to ramble, just wanted to help.
__________________
Steve
Professional Edge
West Central Ohio
D/C Owner 50"& 72" 52 Toro and Cyclone Rake
Reply With Quote
  #10  
Old 06-26-2002, 10:25 AM
Mr Distinctive Mr Distinctive is offline
LawnSite Member
 
Join Date: Jun 2002
Location: FL
Posts: 16
I have just bought a business of similar size for $45k. I spent 6 months researching the buying process and talked to numerous accountants. The key is not the revenue, but what is termed the 'owners benefit'.

The many business brokers around selling Lawn Care companies set an asking price of 1.0 to 2.0 times the owners benefit. So to reinforce some of the earlier replies get into his P&L and Balance sheet and identify how much cashflow (no depreciation etc) is the owner benefiting from the business. THis may include his medical benefits, car loans, gratis home cuts, entertainment etc.

It can get quite murky especially if the business is loosly managed with no formal financial records.

Also get him to sign up for seller financing i.e. you put down X% and amortize the balance over e.g. a 4 year period at 7%. This helps insure he keeps a passive interest in the fortunes of the business. i.e. if you go under he doesn't get his check. 75% of of lawn care businesses sold have some form of seller financing.
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.comô - Moose River Media
All times are GMT -4. The time now is 02:05 PM.

Page generated in 0.10198 seconds with 7 queries