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Considering jumping in

Discussion in 'Starting a Lawn Care Business' started by coywade, Oct 29, 2006.

  1. coywade

    coywade LawnSite Member
    Posts: 25

    I posted a couple of weeks ago about a business deal offered to me and was pretty much given an overwhelming no. Through some negotiation, we have come to this and I would appreciate some more brutally honest feedback. I have a friend who is wanting to start a lawn service branch to his current pest control business. He is willing to front all the start up money ($30,000) with no payback on that money. He will own the company 100% and pay me a salary the first 6 months or so. As the company grows and reaches specific revenue benchmarks, I will gain ownership with a max of 75% ownership for me. All of this seems great to me with no initial investment. However, the kicker for me is he would ask for 5-6% of gross revenue per year as a "franchising fee". He would not begin taking this until the business shows a profit. He insists he is willing to be very patient on taking the "franchising fee" in order to give the business time to be profitable. I am very concerned however about what that 5-6% could mean for the business. Depending on the size of the business, thats a new mower, or another employee, etc. I do appreciate, however, the fact of owning 75% of a business I have nothing but sweat in. Not at all downplaying the value of hard work, but I don't have $30,000 to start a business with either. So let me have it with your feedback!! :hammerhead:

    Also one more thing...what is the best way to determine what kind of market you are getting into. I live in upstate South Carolina if anyone already knows this market.
  2. jsf343

    jsf343 LawnSite Bronze Member
    Posts: 1,767

    I wouldn't waste your time doing that. Start your own business! more satisfaction in it. Just make sure you attempt to get your clients on contracts it will help you out in those winter months and give you some teeth if they make the bad decision to not pay. This is just my opinion though, I am sure you will here many others.
  3. dcgreenspro

    dcgreenspro LawnSite Senior Member
    from PA
    Posts: 688

    just a couple of quick broad questions for you and your friend
    1. Have you any expierience with eithier cool or warm season turf?
    2. Ever run any equipment before?
    3. Running a crew?
    4. Renovations and fertility?
    5. Understand what you need to do to maintian a healthy turf and happy clients?
  4. coywade

    coywade LawnSite Member
    Posts: 25

    How do you start a great business with very little start up money. I have read many times on here...DO NOT GET A LOAN!!

    Someone has to have gotten into this with little money. My education and experience are there. I just need some money.

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I think the big thing here is...is this what you really want to do? Not sure if starting a biz is your goal in life or not.

    You seem like a smart guy...if someone was willing to offer me 30K I would have to consider it. I, personally would not like the arrangement but it may not be a bad thing...people pay for all sorts of franchises and make money at it. You would be wise to go over any proposed arrangement with a lawyer first to make sure it's all kosher.
  6. coywade

    coywade LawnSite Member
    Posts: 25

    1. I have been in the turf industry for 7 years now so yes with both. I also have an associates degree in turf grass management.
    2. Yes, quite a bit
    3. Yes, I was a crew foreman for Tru-Green Land Care here in Greenville before taking my current job as the Natural Resources Manager for a 240 acre Christian Retreat Center here in town.
    4. Yes, I am very knowledgeable in both.
    5. Yes to both. Along with my current job comes an opportunity to come face to face with over 20,000 clients a year running outdoor leadership elements. I perform guide services on local hiking and rafting trips for my company. I understand that this is not really lawn care related, but I really do know how to keep clients pleased. People are people and tactics to please those people seem to be the same in any industry.

    On the other hand, my friend is in home pest control. This is why he wants me to open the branch. He knows nothing about the turf grass industry. He does very well, however, with the PR side of his business. Hope this helps!! Thank you for your questions!!
  7. coywade

    coywade LawnSite Member
    Posts: 25

    Thank you. I absolutely love the turf grass industry. Everything and I mean everything about it intrigues me to learn more. I have taken my time to become formally educated in it and have spent 7 years in the field learning the ropes. However, I have not organized or started a business before. It's something I had as a goal from the beginning but have never felt like it was time. I do now. My wife asked me 2 days before my friend approached me when or if I was ever going to go out on my own. I told her that I would love to, it would just be a matter of start up money at this point. I just don't know if this is the best way to do this though. Thanks for your help and keep it coming!!

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    Dollar amounts and percentages aside, will you be the guy calling the shots, even when you're not in ownership, or will your friend? You haven't mentioned that...if you have free rein to run the business your way then it's much more enticing to consider this deal.

    I would pretty much want to have the final say in pretty much all aspects of the business. I'm guessing that's his plan? Otherwise why bring you into it?
  9. coywade

    coywade LawnSite Member
    Posts: 25

    Due to my inexperience in running a business, I would willingly look to him for advice on that part in the beginning. It would eventually, in MY time, be me calling the shots. As I stated, he knows nothing about the green industry so he will give me free reign on anything that has to do with that fom the get go. I have a check to buy equipment with little or no input from him. His idea is that he eventually would just be part of the network as a sounding board when I had questions or needed advice. He has VERY clearly stated that he has no desire to be involved in the day to day operations of the business once it is up and going. Thank you for your help!!
  10. HOOLIE

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    Yes, definitely...I guess I meant more like green industry specific stuff, like equipment selection and things of that nature. If the guy has ran a successful business then certainly he's a great resource as far as that goes.

    Well this runs counter to what a lot of guys think...but I think it's not about being the boss 100% of the time or 'not having to answer to anyone anymore' it's about running a business and making money...so while I'm not sure I would take the guy up on it (mainly due to him being a friend) I still would think long and hard about it.

    One other thing...say you get a loan for 30k...are you good to go? Do you feel you need his contacts or business experience to help you? What I'm getting at is you can borrow 30k for a lot less than giving away part of your gross forever.

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