How do I determine the value of my lawncare business?

Discussion in 'Business Operations' started by ajreeves, Aug 18, 2014.

  1. ajreeves

    ajreeves LawnSite Member
    Posts: 31

    He'd be paying me bc I have a larger business and by merging his revenue and profit would increase
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  2. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,520

    For his to increase, yours would have to decrease. Why would you sell equity in your business? If you a hell bent on doing this, take him on as a minority partner so that he has no say in decisions. It won't go well for either of you but at least you can still call the shots.
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  3. ajreeves

    ajreeves LawnSite Member
    Posts: 31

    I really appreciate your insight. And I do understand your point. For some reason I am still tempted but leaning towards passing on the offer. Thanks to all who took the time to respond.
    However, my original question remains unanswered, how do you value a lawn care biz? Is there a certain formula or method to determining that figure?
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  4. ajreeves

    ajreeves LawnSite Member
    Posts: 31

    He'd pay the 100k over two yrs more than likely.
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  5. wbw

    wbw LawnSite Fanatic
    Posts: 5,406

    Typical small business is worth 2- 2 1/2 times benefit to owner.
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  6. McFarland_Lawn_Care

    McFarland_Lawn_Care LawnSite Bronze Member
    Posts: 1,381

    PLUS business current net worth.
     
    Last edited: Aug 25, 2014
  7. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    The first thing you need to do is have a real accounting done of your numbers.

    Unless you found a way to charge 4 to 5 times what everyone else does for the same service or job, there is no way that your numbers posted are even remotely accurate.

    Dont interpret this as I'm accusing you of BS. I'm not.
    I just think that you're not versed on the accounting terms.
    Your friends neither.

    Understand what youre saying is.....If you went to work this year, paid all of your bills, all of your payroll, all of your material, all of your expenses.....At the end of the year you would have half of your total invoices in the bank.
     
  8. ajreeves

    ajreeves LawnSite Member
    Posts: 31

    Well I understand the skepticism but first trimester my biz profited 80k, 2nd Tri I profited roughly 60k and I am projecting the third quarter just under 50k. Now one thing to understand is that around 30k of this is pure profit from subcontracting work where I have no expenses. Also, this does not include any salary for myself and lastly I try to carry very few loans. I understand what you are saying though, I am sure I am off somehow or somewhere with my formula but the first two trimesters are fact. I do think that my revenue might be a but higher than I originally projected though. I do try to charge a premium for my services but def not 4-5 times higher. We do a lot of higher margin work(hardscapes).
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  9. GaryBK

    GaryBK LawnSite Senior Member
    from Canada
    Posts: 252

    Does that include goodwill?
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  10. GaryBK

    GaryBK LawnSite Senior Member
    from Canada
    Posts: 252

    Why are you accounting on trimesters? Most of us use quarterly and monthly reports. (when we are not crazy busy and get behind. Lol)
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