First Question from new member

Discussion in 'Starting a Lawn Care Business' started by Marie, Apr 21, 2005.

  1. Marie

    Marie LawnSite Member
    from Florida
    Posts: 1

    My son, who is an experienced landscaper from Massachusetts has been with us in Florida helping repair our home after Hurricanes Frances and Jeanne caused heavy damage (we are in Ft. Pierce the bullseye for these 2 storms). He has indicated he would like to relocate to Florida. His father and I would like to help him start a lawn business. We have inquired into a few business that are currently for sale, but wonder if it might be wiser to start from scratch. Prior to the hurricanes I took care of 7 late stage alzheimer loved ones inc. my mom in my home which was a state licensed ALF. I have decided not to rebuild my business so would be in a position to assist my son (billing, scheduling, cold calling etc.). The prices being asked for existing companies seem to be numbers pulled from a hat. The one we are most interested in includes 32 lawn mowing accounts, older equipment in good working order with an asking price of $22,000. This seems to be a little high and we would have to purchase a truck, but the gentleman is personable and moving out of the area and has no problem in introducing my son to his customers prior to finalizing the deal. Any advice or thoughts you might share would be greatly appreciated. :angel:

    Thank you
    Marie
     
  2. pagefault

    pagefault LawnSite Senior Member
    Posts: 492

    I would get some details about the equipment and get on eBay, turfquip.com, traderonline.com and any other site you can find with used equipment and try to get an idea of what you would spend to buy comparable used equipment. The difference between that and the $22k is the value he is placing on those customers. Then, you need to decide if you agree with that value. What does he do for these customers? What does he charge? What does it cost? How likely are they to stay with you when ownership changes hands?

    Some of these questions he should answer; some you just need to trust your gut on. Would he be willing to stay on as an employee, consultant or associate for a year or maybe two, to smooth the transition from one owner to the next? If so, I would expect better results in holding onto the customers. If not, I would not plan on keeping many of them. I would hope to keep them and I would work like hell to keep them, but I wouldn't gamble too much money on the chance that I would keep them.
     
  3. marko

    marko LawnSite Senior Member
    Posts: 963

    From what I have heard on here. Pricing is rock bottom in Florida. I would PM some of the Florida people on here and get advice from those that are there. I think buying customers is tricky and you will have a percentage leave no matter what. You are currently looking at paying $687 per customer. What is their total annual revenue? Cost for aquiring customers is from $30 - $100 for me. This includes doorhanger artwork, printing, etc.
     
  4. Cut-Rite2

    Cut-Rite2 LawnSite Member
    Posts: 74

    Try to find out the total value of the used equipment (Assets), add that to the total income to get a rough idea of the total value of what you are buying. Find out how long the mowing contracts are good for. The yearly income will tell you how long it will take you to recoup your initial investment. If you decide to buy it, have an accountant go over the owner's income, expenses and contracts.

    There is a formula which Commercial Real Estate people use to evaluate a business. I was selling commercial real estate and business opportunities in Port St. Lucie about 12 years ago. If you are interested in using the formula to calculate what you should pay for the business, PM me, and I will go into my old real estate info and find it for you.

    My own personal opinion is to start your own from scratch. It will take a little longer to start making money, but you will save a lot more in the long run. You can find almost all the information you need here. For less than 22k, you could buy all new equipment and have some left over for marketing material, and office stuff.
     
  5. Tider6972

    Tider6972 LawnSite Senior Member
    from Alabama
    Posts: 649

    *Contracted* accounts are worth 6 to 8 weeks gross, no more. If he doesn't have his "customers" under contract, simply do not pay him up front for them, instead pay him a percentage of your agreed upon price over a 5 to 8 week period, there is a good chance that those will stay with you, therefore have value to you.

    His old equipment may not have much use left, with new you get warranty.

    You are most likely going to be much further ahead to start from scratch, in my experience.

    The realtors/business brokers are going to be WAAAY high on a small lawn care business.
     
  6. Reliable Lawn Care

    Reliable Lawn Care LawnSite Member
    Posts: 136

    I would definitly start from scratch. I am not a real big fan of buying "Blue Sky". I am also not a big fan of "Stealing Accounts" by any means, but with minimal advertising cost, and new equipment, a good business plan, you just may end up with some of those accounts anyway for the fraction of the asking price. With a good attitude and willingness to learn, and from parental support, he should do fine. I have found alot of good people on this site, that do want to help.
     
  7. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    In 1997 I borrowed $10K from my parents ...I had a business partner ..... already had a little Ford Ranger 4x4 ..... bought a 36" Snapper belt drive, 6x12' trailer, NEW 2 cycle stuff (that was all most as the used 36) all this for under $3k .... BAM I was in business ..... I ran from here to there & ANY where I could cut a yard ... 15 miles or 1 mile .... even at a break even ....just to get out n be seen n door hang areas I was mowing .... we sent out 10k of postcards (small response) this was like $2500 to do ..... door hung everywhere .... in the first year I think we were around $3k in monthly billing .... which was little to survive with & I delivered pizzas at night until I could make it

    Year later .... we bought out a small list ..... like $2500 in monthly billing .... looked it over .... went & cut the yards fore 2 weeks with the guy ... meet the people let em know what was going on .... we let them send our 1st months of mowing to the old guy .... & gave him $2500 cash ... it was a good bump in billing ....cut the yards for 2 years & then sold em as we were growing local & these jobs were in an area 45 min. away

    The year we sold these accounts we went & bought out another local on the island .... husband with 1 worker .... $8500 in monthly plus a nice 16' trailer & 54" hydro & 36" exmark (which I sold for $1K) .... $15k for the package & we did as before .... so we really only had to come up with ... $7500 .... we cut the yards 2 weeks to meet everyone & Kept the employee (he had been mowing em fore 7 years) .... I still have at least 40% of those accounts & had over 95% after the 1st year .... people move, we raised prices & other reasons some left

    3 years ago I bought out my partner .... have over 250 accounts now & don't work in the field except for vacations or sick people

    I would not do it any different .... at the time buying accounts produced instant billing ....but I did my paper work .... checked em out ....met the people ....some accounts bought were under priced ... we just did a bang up job & later raised the price ....some left ....many stayed

    It's not the number of accounts ...it's the monthly income ....down here cutting year round month in month out is nice as we really never have a "contract" to expire ....some problems arise when customers cancel in fall & say we'll call back in spring ... I say sure but the price is going up

    I have built my business with the idea of selling 1 day .... as it is right now it's "turn key" .... I have employees & customers deal with my foreman (or call the office to me) .... when I sell the buyer will be getting a great deal .... I'm making sure of this ....so I can get the max price ..... & at this point it will be mid 6 figures

    So many issues come up when running a business ....buying accounts is a very good way to get it going ....just be careful

    Good Luck
     
  8. jim dailey

    jim dailey LawnSite Senior Member
    Posts: 614

    You state that your son is up here in Ma. Let him realize the difference in living styles. The difference in the economies. The price of gas is even higher down there than up here. The price of the mowing is 1/2 of the prices up here. The bread and the milk cost the same at the store. You have to work harder and smarter down there. Listen to everyone that has replied. It can be done, but it is hard. AND, it is year round. If he has his heart into it, he will make it. I am coming down in a couple of years, to Daytona, and I want a go at it...even at my old age. I love the weather down there. Even with the hurricanes. Just finished rebuilding my 2 places there in Daytona this past winter. Really enjoyed myself what with working with aluminum, in January and February, in my shorts and t-shirt. I'll be down. He can hire me. Tell him good luck.
     

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