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Buying a Business Advice please!!

Discussion in 'Business Operations' started by jhaid, Oct 15, 2003.

  1. jhaid

    jhaid LawnSite Member
    Posts: 7

    I am looking for advice on whether this business is for me. A kid from my high school who I know pretty well has just graduated from college and is looking to sell his biz. I am 25yrs old with a college degree and thinking of buying his business because i am sick of corporate america and would like to try something on my own. He has owned this business since he was a kid, he has had most of these accounts for over 7 years. Right now he has 50-60 residential accounts all in one suburban city. Driving time is VERY minimal. He claims he generates 1500-1800$ a week in mowing alone. He is looking to sell all of his equipment (Truck, Trailor, Mowers, whips, etc..) and his accounts for 25k... I would not have to take a loan out to purchase this business, i have enough saved away....Is this even close to being worth it? I know none of these accounts are under contract but he claims that these customers are very loyal to him and will be more than willing to stick with the purchaser of his biz. He is willing to devote his time throughout the first year with any training or consulting (I have 4 years experience commercial mowing but minimal landscaping exp.) What do you guys think? Is this a gold mine given that it is all in one suburban city and it has an opportunity to grow big time. Please shoot some advice if you get a chance, thank you for your help guys.
  2. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    the key word that you gave was "loyal to him"

    They might be upset that they are being switched over to someone else. I would first get them under contract and/or have him help you with the transfer of the customers. 25k for everything though??? Sounds really cheap to me.

    Where are they located, maybe I will have to look into them :) j/k
  3. jhaid

    jhaid LawnSite Member
    Posts: 7

    YEs they are loyal to him but he will definatly endorse me and we have already talked about going door to door and talking with each account.
  4. Randy J

    Randy J LawnSite Bronze Member
    Posts: 1,124

    Something you might consider is agreeing on a price, to be paid over time. You pay so much up front, probably the worth of the equipment, and then over the next 6 months pay a portion of the balance based on how many clients remain with you. In other words, if you keep 100% of the clients, you pay 100% of the agreed price. If after 6 months, or whatever agreed timeframe, you lose 5 % of the clients, you pay 95% of the agreed price. Of course this is a bad deal for the seller, because if you do a lousy job, and lose all the customers... Maybe you can base it on how agree to sign a contract with you when he introduces you to them. You could also put something in the contract that he won't be responsible for customers that leave due to poor quality of work on your part.
    Just some thoughts.

  5. jhaid

    jhaid LawnSite Member
    Posts: 7

    Thanks for your reply.. lets just say 100% of the customers stay.. Is this worth 25k? I want to make a living from this.. is this possible?
  6. Randy J

    Randy J LawnSite Bronze Member
    Posts: 1,124

    You'll get a lot of opinions on the worth, but what it really comes down to is, is it worth it to you? You need to do a cost worksheet - what it costs you to do business based on the price he quoted you. Then since you already have the income figures, or at least an idea of them, you can compare what it's going to cost you vs. what you'll be bringing in. Don't forget to figure in not only the cost of the business, but the cost of fuel, maintenance on the equipment, deprecation (so that you can replace the equipment when it wears out), labor, etc. I know you're paying cash for it, so what return would you like to see on your investment? Set it up as if you were borrowing the money at that rate, and amoritize it out. Does this help? If not, let me know and I'll try to help more.
  7. Team Gopher

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

    Hi Jhaid,

    Here is a post that has a lot of information and links to other posts on this topic.

    Buying lawn accounts?
  8. Green in Idaho

    Green in Idaho LawnSite Senior Member
    from Idaho
    Posts: 833


    There are three component: equipment/accounts/terms

    How much is JUST the equipment & trailer worth?
    Do you need his truck? What is it worth?

    1) What is the value of the equipment
    2) Look at the potential flow of income from the business. Looks like an average of $30/lawn. 10 lawns per day...
    3) Has he talked terms yet?

    Sounds pretty good on the surface.
  9. jhaid

    jhaid LawnSite Member
    Posts: 7

    i am meeting with him tomorrow... He is bringing his equipment as well as his accounting books... What type of questions should i be asking?
  10. cklands

    cklands LawnSite Senior Member
    from MA
    Posts: 360

    I bought 12 accounts off of a guy for real cheap money this spring. He gave me th old "they have always been loyal to me" statement. Well when he sent them all a letter stating I would be taking over the accounts I ended up with four of them signed. I even left their prices alone. Well they were just that...loyal to him. Luckily I made a profit off the other ones this season so I didn't really care.

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