$50,000 Investment Offered

Discussion in 'Lawn Mowing' started by MowHouston, Jun 14, 2008.

  1. MowHouston

    MowHouston LawnSite Bronze Member
    Posts: 1,012

    So I was piddling around with the thought of having all of the equipment I wanted and how much I would need. I'm sure we all do that.

    Well I submitted my information about my company to an investment site. A week or so later, I get a guy that is interested. Boom, I send him my business plan. He says it will be reviewed.

    Today, I come home with an email with a Letter of Intent from his investment company that they are in favor of the investment.

    The terms are a 25% equity holding of the company, which of course can be bought at the end of the 5 year exit, I get first dibs on buyback or they can choose to sell it to whomever they please.

    Collateral is a stock certificate worth $50,000. I would need to incorporate first to do this I think. I'm still not certain how to issue stock like this. :hammerhead:

    Payment terms are 15% of net profit for 5 years.

    I havent made a decision yet, but what would you do if you were still starting up and had plans to grow your business at a fast pace in mulitple cities?

    I dont want the feedback saying that you wouldnt want to grow that fast, I'm asking you for feedback as if you did.

    It could be a lifechanging decision, very good or very bad.
     
  2. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Posts: 2,513

    Sounds like too much hassle to me. I began my business in '99 with a $400/month contract for my church. I immediately went to Home Depot and financed a Scott's 25/54 garden tractor, Ryobi trimmer/edger, and Echo backpack blower. I picked up my first residential account a few months later.

    In early 2000, I picked up another commercial account and went out and bought a Cub Cadet Tank which I financed. I still had the other stuff and slowly started to upgrade my handheld equipment to commercial quality units.

    I've been doing this same "business plan" all the way up to now. I have an '05 F-250 with three trailers, a New Holland tractor, four ztr's, 5 trimmers, 4 blowers, etc., etc., etc.. Everything's paid for as of this year.

    Yes, it would be nice to have had all this equipment from the start but you have to remember a few things.
    1. Just because your trailer is full of shiny new equipment, people aren't going to just start flocking to you.
    2. Going out everyday with minimal equipment but minimal financial commitment is a whole lot better than the opposite.
    3. Commercial equipment purchases are easier than ever these days. If you land a nice contract and need something specific, some dealer out there will find you a way to get you financed if you don't have the cash and they'll get it to you quick.

    People ask me how's business going and if I ever get tired and run down in this wicked heat. I always tell them business is great but I do get mighty tired. But I'm so thankful I'm not sitting at home with all this stuff waiting for the phone to ring.

    Be careful :)
     
  3. Groh's Mows

    Groh's Mows LawnSite Member
    Posts: 155

    Is your business plan based on accounts you have already talked to, or have some kind of a comitment from? If not what are you basing it on? Do some searches on here about expanding or growing and you will see that it takes time to grow. Don't assume just because you have a high capacity that a large volume of work will come your way.
     
  4. MowHouston

    MowHouston LawnSite Bronze Member
    Posts: 1,012

    The main issue seems to be that just because I've got the capacity to do volume, that I wont have the customers.

    With my current advertising, I land about 15 new customers a week. Actual customers, not leads. I feel that is great compared to other start ups on these forums. But I'm held back by my equpment. Thats one of the main reasons.

    I know I could do it all by cash. Most people do. But I want to expand and not just in this city. At least statewide. And I dont want to take 10 years doing it.

    I still dont know what I'm going to do. I've got a lot of thinking to do and I am really going to sit back and take a look at my numbers and see what would be best for me, the company, and my family.

    Thanks for the input guys.
     
  5. Military Lawns

    Military Lawns LawnSite Senior Member
    from Florida
    Posts: 321

    Care to shed some insight on your advertising?

    DJ-
     
  6. ALarsh

    ALarsh LawnSite Silver Member
    from Midwest
    Posts: 2,412

    15 customers a week in the Houston market? I don't think that is anything out of the ordinary in such a market..... In such a market, don't all you guys run small walkbehind mowers...
     
  7. GrassBustersLawn

    GrassBustersLawn LawnSite Senior Member
    Posts: 983

    Well let's see.....If you want to take on a PARTNER that WON'T BE DOING ANY WORK...and he'll be LOOKING OVER YOUR SHOULDER (and books)....and taking 15% of your money....THEN GO FOR IT.

    Personally, I like to keep my own money.
     
  8. Green Finger

    Green Finger LawnSite Senior Member
    Posts: 839

    If they tell you there is an application fee of $1.00-2000.00 and up it is a scam. Don't be duped.

    Check them out. Ask for their Dunn and Bradsteet Rating and number. Go to thier PHYSICAL location.

    Be careful and watch who you get into bed with. Into business.

    Do your homework.
     
  9. All Season Lawn Care

    All Season Lawn Care LawnSite Member
    Posts: 159

    Good luck if you do it 15%n of your profit is quite big.....
     
  10. johnnybravo8802

    johnnybravo8802 LawnSite Silver Member
    from Ga.
    Posts: 2,313

    I was going to do the US Lawns thing several years ago and backed out after I did a lot of research. Sometimes, things aren't what they seem. To me, a good business isn't what you gross, it's what you put in your pocket after everything is said and done and how hard you have to work to get there. I knew of a guy several yrs ago with the largest lawn service in Atlanta and he was grossing 5 mill./yr but he was working 7 days/wk and only putting $60,000/yr. in his pocket. He got fed up, sold all but one truck and had two helpers and now makes more and is home more. Size isn't everything like she may think!!:laugh::laugh:
     

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