buying a business

Discussion in 'Starting a Lawn Care Business' started by jeffwpayne, Aug 20, 2013.

  1. jeffwpayne

    jeffwpayne LawnSite Member
    Posts: 17

    Hey guys I was in the lawn business about 7 years ago for 2 years and enjoyed it until all my equipment got stolen. Managed 60+ accounts with ease. I have the chance to buy a very small lawn business which includes 6x12 open trailer, 44" gravely 620hours stilh weedeater, edger, misc tools ect. The owner owns 10 vacation houses that he's currently paying another lawn business to manage. $700 a month. We have come up with a contract for me to purchase his equipment and for me to take over his 10 lawns, I have to give him my boat as partial payment of $2,400 and also give him $600 cash to equal $3,000 down. Also pay him $500 a month for 6 months then the business will be all mine. He's opening a real estate office and is in good with a large real estate company that's local. Chances are high I could get tons of accounts. I do work a full time job and depend on the income even though its not great pay. What do you guys think of this deal? Thanks.
     
  2. Sean Adams

    Sean Adams LawnSite Gold Member
    Posts: 3,597

    When buying a business, the question to ask is simple.....

    What am I going to pay for the business and what could I do with that money on my own if I decided to buy my own equipment/trailer and advertise?

    I don't think anyone can really tell you if this is a good deal or not - the 10 accounts for $700 a month in revenue is basically $70 per house per month. what is included in this $70? Mowing? How many times? other work?

    If you were able to sell your boat for $2,400 and you have $600 cash I assume you could buy a trailer, used mower and hand held equipment. Then the $500 a month you were going to pay him could be put towards advertising.

    This is just an alternative scenario.

    I am not telling you what to do, just think it all the way through is my advice.
     
  3. MasScape

    MasScape LawnSite Senior Member
    Posts: 258

    Maybe I am misunderstanding... His business is just the equipment and the rights to do 7 houses he owns? So for 6k you are getting a trailer, used walk behind, and some used hand helds?

    For 2k -3k I could get that equipment or better and do $100 in advertising in the Spring and probably have a bigger business then what you are buying... I just don't understand how he thinks he can "Sell" the rights to mow his houses for some serous cash. I would just offer him cash for equipment and give him a price on his lawn care, not buy the rights to mow his properties from him.
     
  4. MasScape

    MasScape LawnSite Senior Member
    Posts: 258

    Not trying to talk down to you but there is no value in buying the rights to do someone's work... I don't do it but I do see why people buy clients from other companies. But all I see here is a land owner that has some equipment trying to get the best deal he can. In 6 months after he is done paying you only $200/month ($700 he pays for taking care of his properties MINUS $500 you are paying him), he can just walk to another lawn care company.

    The value in buying clients from another company is that they had to market, meet with clients, estimate, and sell the service. That is time & money... That is the value of the clients you buy. He did none of this....

    Only value in what you are buying is equipment and I do not in any way see 6,000 in equipment from what you posted. I bought a trailer like that used few years ago for $500. Walk behind that size could run 1k-2k. I see almost no value in used hand helds unless they are BARELY used.
     
  5. jeffwpayne

    jeffwpayne LawnSite Member
    Posts: 17

    I just look at the upside of it. The 6x12 open trailer is worth $600-900, gravely 44" zero turn mower worth $3,000, trimmer and edger low use $300, push mower $150, handheld blower $80, so about 4k+ worth of used equipment. Includes his personal 10 lawns which are mow, blow and go 15-20mins each to complete. On a yearly contract. I bill him for $700 a month and he gives me $200 to cover cost. I will manage the lawns 4 times a month in summer and bi-weekly during dry season. The monthly rate is avg for my area south west Florida. Any additional accounts I add are going to be min$80-95 a month for basic service. Depends on my operating cost.
     
  6. jeffwpayne

    jeffwpayne LawnSite Member
    Posts: 17

    Thanks for the replies guys.
     
  7. MasScape

    MasScape LawnSite Senior Member
    Posts: 258

    Well looks like your decision is already made. Just telling you could get a lot more with 2k in advertising.... I bet the lawn company now did not pay 2k to him to mow his grass. May want to buy the equipment and just try to get his business instead. Anyways good luck
     
  8. jeffwpayne

    jeffwpayne LawnSite Member
    Posts: 17

    No I have not made my decision yet and I don't have 2k to use for advertising so where you get that's from is beyond me.
     
  9. MasScape

    MasScape LawnSite Senior Member
    Posts: 258

    I get that from you saying that the equipment is worth 4k. After your down payment and monthly payments that is 6k. So that means pretty much you are paying two grand to get his houses. Instead of doing that, buy equipment and use two grand in advertising will get you ALOT farther than 10 houses. Plus I think you can find a better deal on that type of equipment. My set up is nicer and I have way less money that 4k in it.
     
  10. jeffwpayne

    jeffwpayne LawnSite Member
    Posts: 17

    I understand what your saying. I was looking at it as if this guy is willing to privately fiance to help me get going its not a bad deal. My thought was to manage his 10 lawns, pickup 20-30 more customers then see where I can go from there. The bank will not give me a loan for anything so can't go that route. Only other option is to sell my boat for $2,500 buy a run down mower, and maybe a pieced together trailer if I could find one and have no lawns to mow.. but once I have cash in my hand from selling the boat I won't want to spend it. I'm a barter king I can trade anything for anything but if cash hits my hand its hard for me to spend it on anything other than bills.
     

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