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Business Purchase advice needed

Discussion in 'Business Operations' started by Team Gopher, Sep 29, 2004.

  1. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    Here is a question we were asked and would like your thoughts on.

    "I know this gets asked a lot...so I will try and keep this brief. Never had a lawn care business before...been around lots of maintenance companies in 12 years...never owned one. Am considering it....here is what I have found:

    company #1
    solo operated...55k per year in season....8 months or so....no snow work....basic mow and trim....bush trimming when needed is extra.....aerifiying and dethatching..extra as well.

    52 clients....aerifier and dethacher included....basically buying goodwill and phone#.

    Price : $5500.00

    Yay or nay? Never wanted to be a solo op..but I see it as a challenge....the extra income would be quite helpful...my business in Arizona is able to run without me for the most part...I can schedule and route from the field. no problem...do that now anyway. Perhaps the lawn care business is ready to be expanded w/ employees?

    Business #2

    102 clients....2 employees...owner is absentee for the most part...wife answers phone...does about 80k for the season....most of that eaten up by employees i would imagine....but still profitable.

    All equipment needed to operate is included...truck/trailer...3 walkbehind xmarks 32"...1 21" toro pushmower....2 string trimmers...2 blowers....2 aerifiers...1 power rake....etc....probably not new equipment but usable....

    Price $25,000.00 CASH ONLY.

    Or would it be better to buy some equipment and do advertising?

    My opinion:
    I would think that the solo operated business is perfect for me...small enough to get my feet wet and work it myself for awhile...see if I really want to do this...downside is that I would need to buy equipment. Upside is I could probably keep 75% of these clients...he is really talking me up to them and they seem ok with it. Maybe grow this business enough to hire some guys.

    Any thoughts? "
  2. aquamtic

    aquamtic LawnSite Senior Member
    Posts: 303

    In my opinion- I would say that the solo business is a more reputable seeing that it is operated and managed by the owner. With the other- who really know how many of those 100+ customers are happy customer.

    Go with the solo and you'll build that 100+ customer base before you know it for 20 grand less
  3. parkwest

    parkwest LawnSite Senior Member
    Posts: 678

    second one sounds like a business. first one sounds like buying a job. Would need to see last 3 to 5 years of tax returns and financials to see how the numbers work out (ROI)before making an offer and starting my due diligence.

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    Good points made by all. The point I see is, you've never done this kind of work before, so maybe just start an LCO yourself from the ground up, see how you like it first. Really, if you put the effort in its not hard to get to the size of either of the companies you're considering buying. The bigger company, I wonder how "used" the truck and equipment are. Don't want to blow 25G and right away have a lot of repairs and equipment breaking down all the time. But it sounds like the 2 employees do all the work, so maybe not as hard on you.

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I mis-read your post, I see you have some experience and prior knowledge of the business.
  6. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,439

    I would lean towards buying the 5.5k business or investing in starting his own. The range set is 5.5k - 25k and if starting your own, this range is a pretty nice budget to learn from the ground-up and invest in new equip and marketing.

    With the 5.5k business, if you toss out 2k of it to cover the equip, that leaves 3.5k for what's essentially a customer list (no mention of contracts). 67 dollars for what amounts to a lead and not a sure thing. The term "Goodwill" can be ironically disappointing. If you spent that 67 dollars on prospecting your own customer, you'll be able to add another feather to your "I Understand What Makes a Business Tick" Hat.

    To further expand upon the 5.5k business, the numbers provided, over an 8 month period, equates to approx 33 dollars a cut, or a shade over 2 cuts where you make zero dollars right off the bat. I'd offer him the equivalent of one cut and work from there.

    Makes me wonder if there's a thread on here on "What are the true costs of gaining one customer"?

    Dayton, Ohio
  7. Acute Cut

    Acute Cut LawnSite Senior Member
    Posts: 980

    Great post tony. I am maxed on tossing ya points, but great post either way.
  8. parkwest

    parkwest LawnSite Senior Member
    Posts: 678

    who is this directed at, please.
  9. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,439

    I would assume he was talking to Gopher regarding the fact the gentleman has related maintenance experience.
  10. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    Thank you for the great and insightful replies!

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