Business value

Discussion in 'Lawn Mowing' started by DMS, Mar 5, 2002.

  1. DMS

    DMS LawnSite Member
    Posts: 22


    I have a small lawn mowing business, which I have established to pay for college and now it is a supplemental income to my current job. We service around 75 residential and commercial accounts. I have just recently moved a hour north and would like to start cutting in my new area next year. I have had many people contact me and wonder what I wanted to sell the business without the equipment. I really don't have any idea what the business is worth. We annually bring in around $20K-$25K, but there is probably room to double this amount with the same customers if we offered other services (i.e. spring and fall clean-ups, fertilization, pesticide application, hedgetrimming, etc). Is there a rule of thumb to go by or do you just guess? Any help would be appreciated.

  2. landscaper3

    landscaper3 LawnSite Bronze Member
    Posts: 1,354

    I think the rate is around 10% of gross sales without equipment. Do a search many many posts on this!
  3. About 3 cuts in all. The rest doen't mean squat.
  4. parkwest

    parkwest LawnSite Senior Member
    Posts: 678

    Please check my math:

    $25,000 gross revenue divided by 75 acounts = $333.33/customer now divide that by 32 cuts = $10.42 a cut average.

    If thats correct then this looks like you have a hobby not a business. But don't despair like W.C. Fields is quoted as saying, "theres a sucker born every minute"

    My concern if I was the potential buyer is how many customers would you have if they were charged at least enough to cover expenses.
  5. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Posts: 2,810

    I had to do a double take myself...

    75 accounts = $20-25,000. Is that right?

    You also mention "we"... Do you split all that with someone?

    Something does not seem right.. I hope it was a typo.

    Maybe he means net?

    Like LGF said... maybe 3 cuts.
  6. Bladewielder

    Bladewielder LawnSite Member
    Posts: 56

    I have "bought" a mowing business before. Keep this in mind: you cannot sell clients. All you can do is charge to introduce and recommend someone to your customers. Even if they buy your equipment and name (equipment is not worth retail and names are worth anything or nothing) they have no guarantee the customers will even like the looks of them. They can expect to lose half of the ones they "buy" in a single season-some as soon as is known you're quitting. As far as what an account is worth think about what you'd pay for it. As a buyer I would never pay more than say 3x what an account makes in one mowing. How many times would you want to mow a yard before you made any money?
  7. Guys try this; use 37 not 75.

    I get $20 a cut.

    They must be alot of every 2 weekers.

    In that case 1 cut would be what I would pay tops, but not sure I would even take them for free if they are bi-weekly.

    I missed number as gross/annually.

    How did I do that? Hummm.:confused:

    I'm sorry buddy, but if you get some one to pay you for these take the money and RUN!!!!! No pun intended.
  8. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    75 accounts and only 20-25 grand??? Either I missed something or you're practically working for free.
  9. yardman1

    yardman1 LawnSite Senior Member
    Posts: 458

    Please do not come to my town and offer those prices because you would put everyone out of business and have the largest company volume wise but with no profit. but anyway you may want to consider going up on your prices if you sell and start over in another town. I will not even get out of my truck for less than a minimum of $30 and don't like to do it for that. :blob2:
  10. landman

    landman LawnSite Member
    from NJ
    Posts: 110

    I have bought and sold accts before and this is how we do it. If the company we are buying has signed contracts we purchase them for 1 1/2 months services (lawn maint only). Our payment is made over 3 months. 50% down (of the total cost) paid 30 days after taking over, 25% after 60 days of service, and the remaining 25% 90 days. Now if we don't retain some of the customers after the 90 day period it is deducted in the final payment, if the amount exceeds the amount owed we are entitled to an additional refund for the accounts not taken. We always do this with a signed contract with the seller so we are covered. Equiptment is bought and sold seperately.

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