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Buying Accounts

Discussion in 'Starting a Lawn Care Business' started by dustinhuck08, Feb 5, 2010.

  1. dustinhuck08

    dustinhuck08 LawnSite Member
    Posts: 30

    A guy that I know is wanting to get out of the lawn care business in my area. He has some commercial and some residential accounts. What is a good figure on buying accounts I am not sure if it would be one cutting gross income or what I really have no idea. Also, I would probably be buying his equipment I don't know if this makes a difference. Thanks ahead of time for all the responses.
  2. fl-landscapes

    fl-landscapes LawnSite Silver Member
    Posts: 2,542

    Your gonna get a WHOLE lot of opinions on this. But imo the best way to determine the value of a company is to multiply "owner benifits" by 1.5 to 3 times. A 2 million dollar gross sales company running on slim profit margins could be worth less than a very profitable $750,000 company. People want to (or should) want to know how long it will take to see a return on investment. By owner benifits it is their salary plus any benifits like company car, health care ect... Hope that helps.
  3. dustinhuck08

    dustinhuck08 LawnSite Member
    Posts: 30

    Thanks i believe that it grossed 70k or 80k last year but i do not know for sure.
  4. Dave_005

    Dave_005 LawnSite Senior Member
    Posts: 359

    i would pay an amount equal to 3 cuttings for each account. But FIRST Talk to EACH ACCOUNT FIRST and then Pay for ONLY the ones who agree to SIGN a SERVICE AGREEMENT/CONTRACT for you to take over. or you could end up paying your friend for all the accounts and then they decide to go with some other LCO. If you buy the equipment as well it depends on the age and condition of the equipment, so make an offer for what YOU think the equipment is worth to YOU !
  5. fl-landscapes

    fl-landscapes LawnSite Silver Member
    Posts: 2,542

    not starting a disagreement but what if the per cut cost is far below what it is worth???? Thats what I mean about basing it on the profit regardless of amount of accounts. Gross 80k....so he paid himself, what? Maybe he isnt making any money and his per cut is $12 thats why he is selling....who knows. I'm just saying base it on what goes in his pocket and not what he bills.
  6. fl-landscapes

    fl-landscapes LawnSite Silver Member
    Posts: 2,542

    dont look at gross. It means nothing. GM grossed how many billions the past couple years but they net lost billions. LOOK AT NET. Its the only thing that counts.
  7. dustinhuck08

    dustinhuck08 LawnSite Member
    Posts: 30

    that is very true thanks for all the great information
  8. AzLawnMan

    AzLawnMan LawnSite Senior Member
    Posts: 409

    How many commercial accounts, how many residential? How long has he been servicing these clients? Reason I ask is some guys looking to sell will boost their cliental when they get ready to sell. They will under bid to get the client and say they have lots of customers, when in fact 25% of them he got within the last month or two. Second, come up with a price. Ask him what he wants and then do some research. Make a counter offer and go from there. Then make sure you have a "no compete" clause in your contract. Meaning he cannot start another company for x-amount of time. Then after you decide which customers will stay, pay him a small percentage of the final asking price, and after 3 months another percentage for the customers who have stayed on with you. Try and spread this out as long as possible, it will only benefit you. This is business not friendship. You also want to see certified tax returns from himself as well as the company. What is he asking for the company?
  9. zimmerwerks

    zimmerwerks LawnSite Member
    Posts: 14

    last year I purchased over 40 accts. Paying the seller half of what they generated in mowing in a season. This may seem alot, however I'm in a pretty competitive area.and had no money up front to buy them, so I mowed his lawns under the table to "pay" for mine.they were payed off at the end of the season and after the initial investment of about $5000 in equipment. now I own it all free and clear and will make over 7k a month (gross). these were accts he had for 10 plus years. all small so I'm in and out fast. they love my work and refer me to neighbors and friends. I'll continue to buy more accts. this way from him this year as I'm currently @ 54 accts and am shooting for 100.
  10. xclusive

    xclusive LawnSite Bronze Member
    Posts: 1,052

    Wow that is some really good advice!!

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