Boy! Do I need HELP.....

Discussion in 'Business Operations' started by 2Sam2233, Apr 5, 2002.

  1. 2Sam2233

    2Sam2233 LawnSite Member
    Posts: 19

    I am currently enjoying lawn maintenance only part time. I have a full time job in a bank selling insurance (what a drag). My passion is to have a full time LCO. I now have an opportunity to buy an established LCO. There are approx 50+ accts - mostly residential with a couple of per cut small businesses. I will also get the equip which is a JD 445 (1996 w/800hrs), 2 echo trimmers (2 & 3 yrs old), a Stihl 420 blower (2yrs old) a Husquvarna blower (2yrs old), a 16 ft trailer w/ rack, and some misc stuff. It seems like an answer to prayer, I just don't want to get burned on the purchase price.
    Any ideas as to what this would be worth. 20 accts are from $20 to $125 wkly (avg $50) the remain are $30 to $250 biwkly (avg $70). Just looking for some ballpark figures to see if I'm close.
    Thanks in advance, I really NEED and appreciate the feedback.

    Hopin to make a go of it ---
     
  2. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Posts: 2,810

    What's the gross sales per year?

    Are they under contract?

    What is the purchase price?

    This has been discussed plenty.. did you try searching for previous threads? Maybe you will find some help there.
     
  3. 2Sam2233

    2Sam2233 LawnSite Member
    Posts: 19

    Gross sales are just under $50K.
    There are no contracts, but most accts are 3-5 yrs old.
    Purchase price $15K.
     
  4. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Posts: 2,810

    I dunno... just under $50K for 50+ accounts is an average of less than $1000 per account per year. This seems low to me.. Do you think it's profitable? Do you know what kind of hours are put in?

    Have you seen the accounts? Does he bill monthly all year round?

    Do you feel comfortable taking over and doing a better job?

    edit: The thing that bothers me the most is the majority are bi-weekly.. but I don't know Alabama
     
  5. DaveK

    DaveK LawnSite Member
    Posts: 84

    Make absolutely sure you have a non-compete clause in the contract if you do go for it. Otherwise, he can start up another company and probably regain many of his old customers (taking them away from you).

    I'm in landscaping and snow removal so I have no idea as to the value of the equipment. I do know how much I paid for my push mower at Walmart. :D
     
  6. totallpm

    totallpm LawnSite Member
    from Utah
    Posts: 50

    Buying existing can be a great way to break into the bussiness.

    HOWEVER

    I think relationships is the key to your customer success and loyalty. Can you take and retain accounts or are they just a name on a paper.

    Look at his books an records, The math on the outside does not seem to add up.

    Break it down how much is the equipment worth.

    Example : I am selling eq. in a local paper. I am selling a Exmark 32, Tanaka trimmer, stick edger, tiller and pole hedge trimmer (4 sep unit) Tanaka blower, Honda 21 Commercial, echo hedge trimmer. I just had the local shop go through it all and I would like to get 2500 to 3000 for everything.

    SHop around

    Also if you take the 15000 and subtract the equipment and you have 12,500 left ??can you anvertise and establish your own clientel???

    In SLC, UT I can send 50,000 money Mailer to homes for about 1500.00. I can send an additional 50,000 in another coupon mailer for $475.00 and put a 6 month ad in a local small paper for 180.00 for 6 months.

    Save the additional funds for working capital and livin expenses as you build.

    Point being I will never pay anyone again for a customer that I did not establish.

    MY ramblin thoughts,

    Kevin total Landscaping
    :cool: :cool:
     
  7. Mowingman

    Mowingman LawnSite Platinum Member
    from Texas
    Posts: 4,666

    When buying this type of business, you should figure fair market value of the equipment and then throw in a LITTLE MORE for the customer list and the "business income". Basically the business is worth little to nothing, as some or all of the customers could choose at anytime to get someone else. Toss in a couple of grand for the "business", payable in 3-4 months. Then pay that amount, reduced by the % of customers that leave.:)
     
  8. MuskTurfKing

    MuskTurfKing LawnSite Senior Member
    Posts: 338

    I can understand where your coming from, but I just don't like the idea of buying accounts, I know you'd be able to go out and get your own, all it takes is hard work and determination. You might buy the equipment though.

    Hank
     
  9. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    Definetly do a search, as you won't get all of the info in this thread, as much of this is repeated.

    Buy the used equipment as one item, as you can buy it from anyone. Figure out the fair market value of it, and set a price. If you don't buy it, someone else will.

    For the accounts, pay a % on customers that remain with you. Don't pay a flat fee up front for them, as there are no guarantees. If you "pay as you go" at least you're making the money to pay the percentage to the seller, maybe 5 or 10% max of gross sales. The key is keeping those new relationships going.

    $50,000 over 50 customers is light for mowing and anything else. The customers are used to the previous owners style of doing things, and you may not want to replicate his style of business. Look at the pricing for the jobs. If he's charging $15 a cut, and you need $25 ro $30, those customers won't stay with you at the new pricing most likely, and the account is worth nothing then. As well, negeotiate the % of the gross sales from his old customers on what HEwas selling them. If you up sell a mulch job, you shouldn't have to pay him for the "extras". Just the basic contract he had with them. And in fact, the contract at his price, not at your new price. Your new price might even then cover whatever % he would be making.

    For sure get a non-compete as was stated earlier. Have an attorney right the purchase agreement. Spend the $1,000 in legal fees to make the deal tight. Figure it into the cost of the purchase of the business.

    Good luck.
     

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